Things To Remember When Buying Multi -Family Houses
by: David gaIan
When buying multi-family houses it's important to remember the differences between a single family-residence and multi- family houses. First time-buyers especially, only see the prospect of a regular income source, and don't think about all the other factors involved in making the purchase of a multi-family house.
Some of the things to remember about multi-family houses are:
1) Multi-family houses are sold by commercial real estate brokers. Some real estate businesses do combine residential and commercial sales, but it may be wise to do business with a company that specializes in commercial property.
These agents can offer you specialist advice, and may well have a larger selection of properties available. They may also be able to give you advice on obtaining a loan to make your purchase.
2) Obtaining a loan for multi-family houses is different from obtaining a loan for most other residential properties. Instead of the lender looking solely at your credit ratings and your ability as an individual to repay the loan, he also looks at other aspects. The lender's main consideration will be in how much income the property will generate. A loan offer will almost solely be made on this decision. If the income generated from a property is enough to service the debt, then the loan will be granted. If the property is deemed to not generate the necessary income, then the loan application will be refused, no matter how good the buyer's credit rating may be.
3) When buying multi-family houses don't forget you are now in business, you have a loan to repay. You have competition from other landlord's and properties. You have to acquire tenants to make your investment profitable. Unless you buy multi- family houses that are fully occupied, you will need to attract tenants. You should do some research into other buildings in the area that are similar to yours. What are their rental rates? What type of tenant do they attract at these rates? What is employment like in the area? (If there is lots of employment, there is more opportunity to attract tenants.) Are you close to public transport routes? What kind of facilities are nearby?(retail outlets, cinemas, bars, restaurants etc.) These are the type of things prospective tenants of multi- family houses take into consideration. As an owner you should take them into consideration too.
4) Multi-family houses also have one thing most residential properties don't have…tenants! Before buying a property that already has tenants, you should evaluate their suitability. Find out how long each tenant has been living in the property. Ask to see their payment histories. It's no use buying a property where you have trouble collecting payments on time. You still have to make your loan repayments on a specific date each month. Make sure your rents will be coming in on a regular basis, or you could find yourself owning a property that is losing you money!
5) You also have to remember that you will be responsible for the maintenance of your multi-family house. In multi-family houses this is sometimes overlooked by potential buyers. If you have some basic handyman skills, it could save you quite a lot of money, especially if the building you have acquired is an older one. The cost of having to call out a plumber for instance can be quite high, after all this person will have to service more than one family in multi-family houses. If you can perform these small tasks yourself it can be a great benefit.
The buying of multi-family houses is an investment. Like all investments you should take care of it, and make sure you are maximising its potential.
|About the author:|
David gaIan has been in the real estate business for over 10 years. Beginning with a single rental he now buys houses for cash, can stop foreclosure, and provides information for commercial properties. David gaIan is the owner and operator of houseoption.com a website dedicated to helping homeowners facing foreclosure and other house related problems. You are free to publish this article unedited on your site as long as all links back to us remain in tact. We Buy Houses
e-mail: david_commercial at houseoption.com