Multifamily homes are basically huge houses divided into several housing units in which several families live together and share some aspects of daily life, or co-exist peacefully.
This same concept has existed in the Arab world since forever; it is usually called ‘The family house’ or ‘The big house’. Often times the big house is shared by different generations of the same family, smaller families that make up the bigger family.
Why is this concept taking over the real estate world now you ask? Several reasons! Why is it disappearing in the Arab world? No one knows for fact!
If you are in the market to buy a home know that your choice is not limited to a single-family dwelling. Expand your choices and explore the idea of multifamily homes. They are considered one of the more affordable techniques to navigate a pricey housing market.
Multi-unit real estate is usually classified as either small or large. Small multifamily real estate includes two to four units, while large properties include five or more units. Both have their pros and cons.
Let’s take a look on the reasons why the world is now interested in multifamily homes.
If you purchase a multifamily home you can always live in a unit and rent out or sell the rest of the units.
House hacking basically means that instead of buying a house you buy a multi-unit property, live in one unit, and rent out the others. In this scenario the generated income from the rental units can pay for your expenses while you live there.
Not only does the income cover your expenses, but you also get to live in a great house, supervise your investment and make considerable revenue, all at the same time.
The great thing about house hacking is that it is a unique mix between a residence and an investment.
You get to live in the property while learning the basics of real estate investment. Recovering from any mistakes you might make during the learning process is much easier when you live in your investment.
More hands and/or cash
Living in a multifamily home means that the public areas and shared amenities of the property either get maintained by more people or simply more people pay for such maintenance.
This can either save on maintenance costs or give you the landscaped garden of your dreams, your choice.
Plus, when several home owners or tenants pay for the maintenance of the swimming pool it is much easier and reasonable to keep it in good shape.
Sharing can be fun
If you are a first time home buyer, it might be more affordable for you to co-buy a multifamily home.
Consider this, co-buying a house with someone you know and paying affordable installments or getting overwhelmed with huge installments at the beginning of your career? The answer should be obvious.
You might even find that living in a community is fun, your multifamily property can be your small gated community.
Multifamily homes make a savvy investment opportunity, whether you are buying one to share or to rent out or both. Oftentimes you get much more space for less money than with single-family homes.
Multifamily properties can produce significant income from day one. Moreover, rents can be increased a small amount for each unit or expenses decreased and the accumulation of those small changes can considerably increase your cash flow.
What makes a multifamily rental property a very desirable investment is that it boasts multiple units with each one of them generating a monthly rental income. Even if one of the units is vacant, there is still a good monthly income generated by the property. Unlike single family homes where a single vacancy means that the property as a whole has become a burden to the investor.
Easier property management
It is much easier by far to manage your investment when all the units you have to manage are situated in a single property. Even easier when you live in said property!
And while there are dozens of books out there on how to deal with bad tenants, advising you that maybe you should not live with your tenants on the same property, the fact is most tenants you will encounter are hardworking people looking for a decent place to call home.
Choose a good property, be a good landlord and you will probably attract good tenants.
Make an informed decision
Of course, and as with any other investment, you need to make sure that you are making an informed decision before you buy.
For instance, if you are buying a multifamily home with several other families you need to have all details written and signed before you start your co-buying journey.
Or, if you are buying a property with the intention of renting some units you need to familiarize yourself with the real estate legislation in your city.