What you need to know about Multi-Family Home

What exactly is a Multi-Family Home?

A multi-family home is a single structure that has been divided to house more than one family living separately. They can range from a duplex (two dwellings in one building) to single-family homes or small apartment buildings with up to four individual units. (Typically, buildings with more than four units are classified as commercial properties.)

A multi-family home owner can either live in one of the units and rent out the others, or live elsewhere and rent out all of them. The rules for financing a multi-family property differ depending on whether or not the owner intends to live there: If you do not intend to live in your property, you are considered an investor. You may be able to use the property's projected rental income to help you qualify for a mortgage, as well as a larger loan amount.

"When you look at a single-family home, you're only thinking about your own needs," says Charlotte Winckowski, an iKey Realty Realtor in Toledo, Ohio. "When looking at a multi-family home, you have to think of it more as a business: What will your tenants' needs be?" What kind of income will it generate, and how much will you spend? ”

Single-family vs. Multi-family Home

While a single-family home can be rented in part or entirely, multi-family homes have additional characteristics. Some began as large single-family homes that were divided into multiple units by an owner or developer. Each unit in a multi-family home has its own address, kitchen and bathrooms, and, in most cases, entrance. However, because of shared walls, those living in multi-family homes may have less privacy than those living in single-family homes.

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Types of Multi-family Home

There are various types of multi-family homes to consider, each with a unique layout and living space. Each type of house has its own set of advantages and disadvantages.

Townhouse

Townhouses or townhomes, like duplexes, are homes that are connected by a common wall. They usually have two or three stories. They are larger than apartments and require far less maintenance and upkeep than a single-family home.

Duplex/Triplex

The term duplex refers to two units or homes that share a common wall, ceiling, or floor. There are three in a triplex. A duplex or triplex has its own entrance for each unit. Separate yards and garages are also possible.

Semi-detached

Semi-detached homes, like townhomes, share a wall with another home. Semi-detached houses, on the other hand, are typically larger than townhomes. These homes may be less expensive than a freestanding single-family home. They may also provide less expensive maintenance because semi-detached home owners may share upkeep costs.

Condo

A condo is typically a unit that is individually owned within a community or building that is made up of other individually owned units. Condo owners are typically required to pay monthly fees to a homeowners association. These fees cover the costs of upkeep for any amenities that may be included, as well as insurance for the building or community in some cases.

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Is it worth it?

Buying multi-family real estate is ideal for those who want to get into real estate investing to generate wealth and are willing to accept the additional responsibility and time commitment that comes with being a landlord. If you occupy one of the units and the rent from the other units is sufficient to cover your monthly expenses, you may be able to live rent-free. Rent from multi-family homes can become a passive source of income once the mortgage is paid off.

They can also be a smart choice for multi-generational families interested in buying a property together while having their own dedicated space. Typically including anywhere from two to four units, multi-family homes allow extended families to live under the same roof while still enjoying the benefits of having the privacy of individual units.

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Where to find Multi-Family Homes?

Multi-family properties, like single-family homes, are listed for sale on real estate search websites, where you can typically filter the results based on the type of property you're looking for.

A real estate agent, whether with a residential or commercial specialty, may also be able to assist you in locating investment opportunities in your area, and may even be aware of opportunities that have not been advertised online.

Do your research to learn about multi-family home prices in your area and what you can expect to pay.

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Different Housing Type | Which is best for who?

1. Apartment -  ideal for anyone looking to stay in a prime location near shopping, restaurants, and entertainment centers at a lower cost than purchasing a condo or single-family home.
2. Townhouse - excellent choice for first-time homebuyers or other budget-conscious buyers seeking more space than a condo typically provides.
3. Condominium - those seeking a low-maintenance lifestyle, a home with a sense of security, and opportunities to socialize with neighbors, among other things.
4. Single-family home - ideal for families who want a large yard with plenty of space to spread out. Others prefer a low-maintenance condo or townhome with amenities such as landscaping, snow removal, and exterior maintenance.
5. Modular home - appealing to empty nesters looking to downsize, couples looking for backyard units similar to tiny homes, and families looking to upgrade their dated properties in desirable but pricey neighborhoods.
6. Bungalow home -  great option for young families looking for a starter home, retirees looking to downsize in a home without stairs, or single homeowners who want the single-family home lifestyle but don't want to manage a large property.
7. Multi-Family home-  ideal for those who want to get into real estate investing but aren't afraid of the extra responsibility and time commitment that comes with being a landlord.
8. Ranch home - ideal for anyone who prefers living on one level. A ranch house can appeal to singles, couples, and families with children.
9. Patio home - one-and-a-half stories and part of a larger association, are ideal for homeowners who do not want to deal with stairs or maintenance.
10. Co-ops -  most commonly found in major cities, and they can be beneficial for those seeking security or neighbors who abide by the building's rules and policies.