If you are considering whether to rent or buy a multi-family home, you need to weigh the pros and cons of owning a property that is your home and an investment property.
When you purchase a multi-family home, the rent you collect from tenants helps make the mortgage payments and provide savings for repairs. However, you will be responsible for damages and repairs for every unit, not just your own home. While you know how you maintain your living space, you don't know how others will.
You can buy foreclosed homes as investment real estate and possibly get the homes for prices lower than market value. Foreclosed homes often need repairs immediately though and you must pay for those repairs out-of-pocket unless you get a rehabilitation loan that allows you to mortgage the repair costs.
Purchasing a multi-family home is usually much more expensive than buying a traditional home because the property is large and income-generating. It's more expensive to maintain as well because you are responsible for multiple kitchens, bathrooms and heating and cooling systems. Yet you will probably always have income coming in as long as the units are livable. When you choose whether you want to rent or buy a multi-family home, one plus is that you will probably always be able to find tenants.
The buy vs. rent debate also hinges on how much money you have to invest. Even if you qualify for a Federal Housing Administration (FHA) loan, you will need 3.5 percent of the home price for a down payment. If you get a traditional mortgage, you may need as much as 20 percent down.
Choosing to rent or buy a multi-family home isn't an easy decision. If you want to be a landlord, find tenants, and manage the day-to-day finances, it may be a great way to build net worth. You may also hire a property management company to handle the tenant and repair issues, provided you pay for its services. To explore the rent or buy a multi-family home further, you may browse foreclosure listings in your area for multi-family properties that would be good investments. Click here to get free foreclosure listings from RealtyNow.