Housing demand remains high even while supply shrinks. This extends to rental properties as well. If you are in the market for a new home, you may want to consider buying a multi-family property. However, there are both pros and cons of owning a multi-family Jersey Shore home that should be considered first.
Pros and Cons of Owning a Multi-Family Jersey Shore Home
When I say “multi-family home”, I mean anything from a duplex to several units in one building. If you’ve never owned a multi-family property before, I suggest that don’t take on more than two to four units. You occupy one unit while you rent out the other(s). This can prove beneficial as well as problematic. It’s up to you to weigh the pros and the cons.
Pros of Owning a Multi-Family Jersey Shore Home
One of the pros of owning a multi-family Jersey Shore home involves the financing. Believe it or not, getting a mortgage on a multi-family home could prove easier than its single-family counterpart. How? The potential rental income factors into the equation. The rent from the other units also assists in covering most if not all of your mortgage, taxes and insurance when fully occupied.
Don’t have 25% to put down? As long as you occupy one of the units as your primary residence, you might qualify for a mortgage loan with as little as 3.5% down. That’s because it can be financed as your own home instead of an additional investment property. Therefore, you potentially qualify for an FHA, VA, Fannie Mae or Freddie Mac loan. These programs allow you to include as much as 75% of rental income in qualifying for your mortgage loan. But that is only the case if you utilize one unit as your primary residence. Also, the rental income generated from your tenants helps you pay down your mortgage and build equity faster.
Cons of Owning a Multi-Family Jersey Shore Home
Since this will be your primary residence, you will be in constant, close contact with your tenants. One way to combat this is to hire a property management company to act as your “go-between”. For a small percentage of the rent, they become your tenants’ contact for any problems that might arise. Your tenants won’t even have to know that you’re their landlord unless you want them to. Even so, as the owner, you need to address any repairs or replacements right away. Also, you are ultimately responsible for paying the mortgage…even if you have vacant units. Utilities cost more in a multi-family unit than a single-family home as well.
All in all, it is up to you to weigh the factors before deciding whether or not you want to own a multi-family Jersey Shore home. All expenses lie entirely on your shoulders. However, other people could help you build equity in your own home. Talk to a Jersey Shore REALTOR@ or financial adviser today.
FEATURED JERSEY SHORE HOME OF THE WEEK
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