Recently I wrote about the differences between buying a single-family home and a mutli-family property, focusing on using that property as a primary residence. But what if you’re considering buying a multi-family home as an investment property? Investment properties are popular right now and can be used to supplement your income. What are the main benefits and drawbacks of buying an investment property?
First, it’s important to note that expected rental income can be used in calculating the mortgage you will be taking on – but only in part. Usually an FHA (Federal Housing Administration) underwriter will only be able to use about 85% of that rental income in considering your overall assets. The rent that you are charging your tenants must also be considered fair and common for the area in which the property is located. You may also be required to show previous rental management experience in order to have your future rental income considered as part of your mortgage application.
Here are a few benefits you might enjoy as a landlord …
… and here are a few drawbacks that you might want to consider.
Buying an investment property can make sense depending upon your financial picture. To get a good idea of how carrying an extra mortgage will affect your finances, talk to a loan officer to get a clearer idea of whether an investment property could be the right decision for you.
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If you’re thinking about purchasing a home, you may be planning to buy a traditional, single-family property. And while any home purchase is a sound investment, you might want to consider the particular benefits of buying a multi-family property instead.
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