It is often said, and with good reason, that real estate is an excellent investment and a good way to build wealth. Of course, there are many potential ways to do this, but for many people purchasing rental properties is a great way to get started. While purchasing and renting single-family homes or vacation homes are always good options, another option that is becoming increasingly popular for many real estate investors is to purchase a duplex, or even a multi-family unit like a triplex or a fourplex, which the investor lives in and rents out at the same time. Doing so is a way to have a home upon which others essentially pay the mortgage, potentially allowing you to build equity and potentially significant rental income in the long-term.
When considering whether or not this might be the right move as a real estate investment, there are a few factors to consider:
- Consider the Pros and Cons: When making any major decision, taking a well-rounded approach to the decision-making process is important. Thoroughly consider not only the benefits, but also any potential drawbacks of a particular path. Obviously, for many of those considering purchasing a home with attached rental units, one of the biggest benefits for the homeowner is that the tenants can subsidize all or part of the mortgage. Additionally, many buyers are planning for the future, and certainly, after the mortgage is paid off, the equity in the home itself, as well as the additional rental income are likely to improve your financial well-being and standard of living. On the opposite side of the coin, it is important to keep the reality of the situation in mind from a practical perspective too – when you own and live in a rental property, tenants will be living next to you. Simply because of the nature of the situation, you may not have as much peace and quiet or personal space as you would like. It is important that you think through these realities and weigh their importance before making a decision. It’s also necessary to realize that from a financial perspective, while you will be building equity and potentially making money in the long-run, you also have to deal with the extra responsibilities and expenses that come with owning and maintaining two or more homes.
- Focus on the Financial Details: Those who are considering buying a property with a rental unit should also know that doing so requires certain particular financial considerations. One thing to consider, for example, is how you will qualify for the loan on the property. Sometimes, potential owners make the mistake of assuming that rental income will be counted during the preapproval process. However, unless you are currently a landlord or have previous experience as a property manager, this might not be the case. It would be helpful and wise to speak to a trusted financial advisor who can review your budget, your financial status, and your goals, and help you plan ahead to make those goals a reality. In making this assessment, it’s also important to keep in mind that you’ll need extra cash for things like repairs, renovation, and upkeep of the units, as well as maintaining cash reserves for times when you may go for a stretch of months without having any tenants. Thinking through the big picture ahead of time can save you a great deal of headache in the long run.
- Reach out to a Realtor You Trust: If you’re considering purchasing a duplex, triplex, fourplex, or other rental property, one of the most important steps of the process is considering what realtor you might want to assist you in the process. Choosing a realtor you trust, and who knows the community well, to help you find the best home in the most ideal area for your needs will be key to helping your venture be successful. A good realtor will be able to advise you not only on what types of homes you might want to look at, but also with respect to the rental trends in a particular neighborhood or area so that you can make the best and most well-rounded decision as you move forward.
If you’re considering purchasing a duplex, triplex, or fourplex and you need a realtor who can help you find the perfect property to fit your needs – connect with one of the over 2,000 trusted real estate professionals at www.GayRealEstate.com, we’re here for you! We are passionate about helping members of our LGBTQ community connect with agents who can provide the highest-quality assistance for all of their real estate needs, and we would love to have the opportunity to help you too. Get in touch with us at any time. We’re here for you.