Purchasing a multifamily property is a great idea for people who had previously bought a single family home and converted it for tenants to rent. That’s why it’s essential to find a multifamily lender that can assist you with financing to either purchase or refinance smaller real estate properties.
But before you even consider applying for a loan, consider a few factors to help you decide whether such investment suits you.
Consider the income it’ll generate.
Most lenders are always cautious about real estate properties with rents that are lower than the average asking price in a specific market.
Rental properties that are below the market usually raise questions about whether if it’s marketable or not. You may want to ensure that the property that you’re planning to invest on can generate enough income that’s on par with the market.
Imagine living in one of the units.
One way of seeing if the property can be a great investment is if you can see yourself living in one of the units. Once you decide to purchase a building with less than five units and live in one of it, you’ll be able to apply for owner-occupied financing with less than 20 percent down payment.
It may also allow you to buy another investment in less time since the debt-to-income ratio will be much lower than what most banks require.
Consider possible expenses.
Once the building is fully operational, you may want to think about the operating expenses associated with it. You need to determine how much money you’ll need to operate the building and also save an extra fund for any emergency repair.
Applying for a loan to purchase a building with a few rental units is a great way to get extra income. That’s why it’s vital to coordinate with a real estate agent to know more about your options and some tips on how to make it successful.