Author Topic: Multi-family Dwellings  (Read 3016 times)

Katemustache

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Multi-family Dwellings
« on: April 20, 2012, 03:13:25 PM »
I am considering buying a multi-family home and I was wondering if anyone had any experience with this.  I think it would be a great way to get started in both the real estate ownership and also be able to be a landlord.  I can't see myself taking a risk on a property (high rent/expense/major city) just for rental income (single-family home).

What type of numbers should I be looking for?  Does anyone know any great books or mentors out there to help me get started with research?  I am concerned because I don't have a lot of "do it yourself" know how.  How is privacy maintained?  What about legal issues?

Thanks!

AJ

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Re: Multi-family Dwellings
« Reply #1 on: April 20, 2012, 03:26:42 PM »
I am concerned because I don't have a lot of "do it yourself" know how.

Are you willing to learn? If not, owning any property will be expensive. But if so, be prepared to spend time and money to learn. DH and I knew nothing about home maintenance before we bought our first house in 2008. Expect that the first time you tackle a new type of project, it will cost you as much as it would have to hire someone, and 10 times the time/hassle/headache because you will make mistakes and need to fix them. The reward is that all subsequent times you need to do the same or similar project, it will not only cost you less money, but will often save you time and hassle not having to coordinate the person you hire. It is definitely worth the investment to learn if you plan to own property your whole life.

How is privacy maintained?

Ha ha ha. Its not. That is the downside to living in a multiplex. Even worse when you are the landlord. Its just a trade-off you make.

billc

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Re: Multi-family Dwellings
« Reply #2 on: April 24, 2012, 08:23:15 PM »
Depends on what you mean by privacy.

If you don't want the tenants in the building to know you're the landlord - then you can hire a property management firm to deal with the tenants and don't say much to the neighbors. This obviously costs $. It's not ironclad of course, but is probably suitable for the type of privacy you desire.

If you want complete anonymity but still really want to live in the same building as tenants then I suppose you could purchase the building through an LLC or some other device, but that doesn't seem like it's worth the trouble.

It's really a lifestyle choice. Make sure you do some research on what the market rents are and such to make sure the numbers are what you think they are. I don't think multi units are more or less risky than single families. It all depends on the deal, the market, etc.

The website biggerpockets is a place to start, but you'll have a hard time finding deals that meet some criteria found over there. MMM posted about this here: http://www.mrmoneymustache.com/2011/10/10/lets-buy-a-foreclosure-episode-2-what-is-the-50-2-rule/

Good luck.

P.S. What city are you looking in?

arebelspy

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Re: Multi-family Dwellings
« Reply #3 on: April 25, 2012, 09:27:04 AM »
If you want complete anonymity but still really want to live in the same building as tenants then I suppose you could purchase the building through an LLC or some other device, but that doesn't seem like it's worth the trouble.


Anonymity aside, purchasing in an LLC can be worth the trouble due to the liability protections offered.
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slugsworth

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Re: Multi-family Dwellings
« Reply #4 on: April 25, 2012, 05:52:35 PM »
Minor things that you might not be thinking about:

1. If the property is 4 units or less you can get conventional financing for it. If the property is 5 units or more you will be dealing with a commerical mortgage. The former will be siginfcantly easier to finance your first time.
2. Don't believe the income and expense data that a seller or realtor posts in their ads - unless verified.  I have seen extremely unscrupulous realotrs in this sector.

With regard to privacy, one of the things I would ideally be looking for is a property that was built to be multifamily, ideally. There are a lot of things that can minimize noise transfer if that was something thought of from the get-go e.g. how the floor joists are installed, etc.