Buying a multifamily home can put you on the path to financial freedom. How? You’ll own multiple units in a building, which means you can rent them out and generate additional income, some of which can even cover your mortgage payments. It’s a sweet deal, right? But before you start stocking up on welcome mats, it’s important to consider the realities that come with owning and managing a multifamily property.
What is a multifamily home?
A multifamily home is defined as any residential property in which there are two or more separate dwelling units, each with its own kitchen, bathroom, utilities, etc. That includes everything from duplexes to apartment complexes with hundreds of homes. Also known as multidwelling units, or MDUs, they’re often attractive to people who want to begin investing in real estate. Owners typically either rent out all of the units or live in one unit and rent out the rest for extra income.
Upsides to owning a multifamily home
The biggest advantage to buying a multifamily home is the immediate potential for income by renting out the units you’re not living in. Under the best circumstances, other people will essentially be paying your mortgage.
“The best reason to buy a multifamily home is to pursue financial freedom,” says Jason Reed, a real estate agent in Minnesota. A multifamily home “can start them off on the right foot, reduce their mortgage, and create cash flow.”
“When you buy a multifamily home, the price per square foot is generally on par with that of a single-family home of the same quality and in the same area,” says Gabe Peterson, a real estate agent with Northwest Homebuyers in Washington.
Other benefits can include tax breaks. With investment properties, you can typically write off all expenses on the units you don’t live in, including mortgage,…