Are you considering the purchase of a small multi-family property? Such properties, such as duplexes, triplexes, or quadplexes, are an ideal choice for house hacking, where you can reside in one unit and rent out the others. These properties also offer the opportunity to secure them with a lower down payment through conventional, FHA, or VA loans. If the property consists of four units or fewer, you can qualify for a reduced down payment, as it is still classified as residential.
A word of caution for those interested in multi-family properties: often, these properties are older and may lack the modern amenities that renters or tenants expect, such as high ceilings or walk-in closets. It’s important to note that newer apartment complexes or multi-family properties tend to offer more luxurious features compared to older ones. If buying an older multi-family property is what you are interested in, it is important to remember to properly price your rental when underwriting the deal. It is critical that the buyer of an older multifamily property knows where their property stands in market value for monthly rent. This will allow for proper budgeting for renovations and overall rent expectations before buying the property. You do not want to assume that a 1970’s built duplex is going to be competitive with a larger complex that offers amenities such as a pool or gym. Location is always a factor as well, and tenants will ultimately gravitate to the unit that offers them the most value.
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