People buy and own multi-family homes for a variety of reasons. Some do it because they feel it is a more affordable way to enjoy the benefits of homeownership, because the rents collected help offset costs. Others buy these, strictly for investment purposes, evaluating the historical advantages, from a financial perspective, of using the properties to advantage. In any case, however, it is important to proceed, wisely and in a prepared manner, to find out if this is the best approach for them. With that in mind, this article will briefly attempt to consider, examine, review and discuss, both examples, of owning this type of property, either for personal use or as an investment vehicle.

1. Personal use: A 2-family house often makes sense, for one, who no longer wants to rent the place where he lives, but, nevertheless, finds it extremely difficult to pay, to do so! One must begin by giving oneself a check-up, from the neck up, and examining whether he would be happy living in a place, where he is also an owner? Are you ready, willing and able to take on these responsibilities and also have to take care of a tenant? If so, the next step should be to do a financial analysis. This starts with looking at the anticipated rent, the apartment, that you won’t use, that you could demand (and do it conservatively). Deduct three-quarters of the amount from your monthly payments, including interest and mortgage principal, property taxes, and necessary reserve, maintenance, and renovation funds. Does this approach make sense and is it one that helps you enjoy your life experiences?

2. Investment purposes: If you are not going to live there, understand that, in general, you will need different qualifications to qualify for a mortgage. In many cases, this requires a higher down payment. Also, it often means having to prove that the rents, received, will cover, at least, the necessary expenses, etc. Once you’ve qualified, it’s important to work through the numbers and see if the rate of return meets your investment standards. In addition, you must consider the actual rate of return, both based on the total purchase price and cash flow, and have the discipline to maintain your standards. I suggest using a 6% calculation for these purposes. For example, if your total monthly costs are $ 2,000, you need to receive cash flow in excess of $ 2,120, plus an additional 25% or $ 500, to insure against any ramifications, including major / minor repairs. / renewals, vacancies, etc. Also, this $ 2,620 (the original $ 2,120, plus the additional $ 500), multiplied by 12, or $ 31,440 per year, means that you should not spend more than $ 524,000 on this property. representing a 6% rate of return.

A wise approach, well considered, is the wisest of how you could use the house. Are you prepared and disciplined to do what is best for yourself?