Did you know that 32.6 million residences in the U.S. are multi-family housing units?
There are several housing types to consider, and multi-family homes are great for novice real estate investors looking for a passive income. Multi-family homes are growing in popularity right now due to their financial benefits.
Are you interested in a multi-family home? Read on for our list of pros and cons of living in a multi-family home to decide if it is the right decision for you.
What is a Multi-Family Home?
A multi-family home refers to any residential property that contains more than one housing unit. Each unit has its own kitchen and bathroom. This can be a duplex, apartment complex, townhome, or semi-detached house.
If property owners are living in their multi-family home, then it is an owner-occupied property.
Multi-family homes have separate entrances for the different families occupying them. They will typically have four units or less, as any property with more than four units is considered a commercial property.
Ultimately, multi-family homes allow multiple families to live on the same property completely independent of each other.
Pros of Living in a Multi-Family Home
Multi-family homes are perfect for multigenerational families. They provide a great option if you want your family to be close but still have a level of privacy. You can buy a property together but still have designated spaces.
Family members can move in together to save money on housing or to help each other out.
If you are considering investing in a multi-family home, you can enjoy a range of benefits. You can collect rental income to help you pay property ownership bills and increase your cash flow. You can also pay off your mortgage more quickly.
When you own a multi-family home, you will have more tax breaks and you are usually eligible to deduct expenses for units that you aren’t living in. It is also typically easier to secure a multi-family home because it is easier to qualify for a property that has the potential to bring in more income. And, mortgage limits are higher for multi-family homes vs. single-family homes.
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Cons of Living in a Multi-Family Home
When you have multiple families and so many tenants living in one unit, the potential for arguments and disagreements grows. There may be fights over parking, smoking, messes, and more. Even though you are living separate from the other families, you may still cross paths and it can be stressful if anyone does not get along.
And, multi-family homes are much more expensive than single-family homes, if you are looking to buy or invest. You will need to put down a bigger down payment in the beginning. You should also be aware of potential cash reserves or cash backing.
Is a Multi-Family Home Right For You?
We hope our list of pros and cons helped you decide on whether a multi-family home is the right choice for your life.
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