Keith Flenniken is a real estate investor who owns Flenniken Enterprises. His portfolio of New Hampshire homes includes many multi-family properties, which offer unique benefits over single-family homes.
Multi-family homes have not historically attracted much investment interest as single-family homes but are now growing in popularity. Younger first-time buyers are especially enthusiastic about multi-family units, in many cases choosing to live in one unit while renting out the other(s) to generate additional income. This can make it easier to find a lender for the purchase price of a multi-family property, as lenders often factor in some portion of anticipated rental income when calculating a prospective buyer’s total income. Here are a few tips for investors who are considering buying a multi-family property:
- Decide what type of multi-family property to purchase. Buyers should ask themselves whether they plan to live in this property, as this will help determine space and location requirements.
- Evaluate the local market. In some areas, duplex-style rentals are more popular while others see higher market value for condominium style homes. Buyers who gain a better understanding of what is in demand in their market will be better equipped to identify properties with investment potential.
- Research size availability and preference. Investors should also research their market to figure out what types of units are currently in demand. Young professionals might prefer one-bedroom units while a newly married couple could prefer a two-bedroom unit for when they want to have kids.
- The more units the better. While a property with five apartments will have a higher asking price than a property with only two, it also helps investors protect themselves from loss. Assume that at some point there will be months when property units are empty and this amounts to lost income. Having one of two units vacant hits an owner’s wallet a lot more than having only one of five vacant.