Find a Multifamily Home · Step 2.Choose a Loan · Step 3.Make an Offer · Step 4.If you're wondering how to buy multifamily homes, it pays to have a good idea of where to start, how to choose a type of loan, and what it means to make a solid offer. Once the financing has been arranged, you are ready to make an offer on your property. Don't count on anticipated rental income to help you qualify for a loan. Conventional lenders evaluate rental property based on revenue stream and generally structure a loan based on the financial viability of both the property and the lender.
If you're a first-time homeowner, not all lenders will count potential rental income as part of the total income needed to finance your purchase. Lenders like to see a healthy rental history for their investment. The owner of a multifamily property can occupy one of the units and rent the others or live off-site and collect rent remotely. Federal Housing Administration (FHA) Department of Veterans Affairs (VA) loan investment properties are owned by remote homeowners who can work with a property management company to maintain buildings and serve tenant needs.
Investors only qualify for conventional loans. Let's go ahead and analyze the numbers for the hypothetical 10-unit multifamily property that I described earlier in the BiggerPockets Rental Property Calculator. When applying for an FHA or conventional loan, you can count 75% of your rental income from a property you already own, or the rent you expect to receive from a future property. Investors can depreciate their multifamily property to offset a large portion of the rental income they collect from the property each year.
Indeed, because condominium buildings, apartment complexes, duplexes and other multifamily properties offer the option of renting multiple rental properties and accumulating additional appreciation in value over time, there are many advantages to recognize from successful multifamily investment activities. From there, Brandon began buying both single-family and multifamily rental properties, as well as fixing and changing single-family homes in Washington State. Two- to four-unit multifamily properties are a great way for first-time investors to immerse themselves in the waters of rental properties, as they are typically financed by banks in the same way as single-family homes. Owning multifamily properties can be a small or large business, depending on the number of rental units the property contains.
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