Why Invest in Multi-Family Housing
Why Invest in Multi-Family Housing: For the purpose of this article lets consider why a multifamily dwelling — a condo, duplex, or townhouse — and they can be a smart choice.
With interest rates at historic lows and a strong rental market in Ottawa, people are investing in real estate. Many investors automatically think “single-family home” when they set out to buy a property, and while this may be a smart move in some cities, there are definite advantages to buying multifamily real estate that should not be overlooked.
Here are six tips from real estate pros on why invest in multi-family housing may be a smart choice:
1. There’s less maintenance with condos and townhouses
If you’re buying a property with a homeowners’ or condo association (HOA) that takes care of the exterior (roof, windows etc) you’ll have fewer landlord responsibilities on your plate. With most condos, everything outside your own walls is typically considered a common area, which your HOA takes care of using the dues you pay. These common areas usually include the landscaping around the building, the roof, parking garage, and amenities such as a pool and clubhouse.
Remember to factor in the monthly condo fees dues before you invest: Dues in condo and townhouse communities could run you hundreds of dollars per month. Certain condos have restrictions on renting out the units. Make sure to have your Ottawa real estate agent and your real estate lawyer analyze the condo document before purchase.
2. You can save on taxes and insurance with a duplex
Think of buying a duplex or triplex as buying a potential deal. A duplex is really one structure. But one that has been divided into two apartments, either side by side or upstairs/downstairs. As such, when you buy a duplex as an investment property, you can rent out one of the units and live in the other. Alternatively, you can rent out both units.
3. It’s easier to get started in investing with a duplex
You typically need a bigger down payment to buy investment property than you do when buying a property you will live in. For mortgage advice on renal properties in Ottawa contact an experienced Ottawa mortgage broker. A great mortgage expert can help obtain that all-important first mortgage on an income property. If you purchase a duplex or triplex you may qualify it differently if you live in one of the units.
4. You could make more money with a multifamily unit
The potential to earn more money — otherwise known as having “greater cash flow” in investor lingo — can be greater when you buy multifamily homes for sale. “The rent-to-purchase price ratio is almost always much better with multi-unit investments,” says Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage. They can provide cash flow better than a similarly priced single-family house.
5. You’re looking for retirement income
Baby boomers have always broken new ground, so as this group approaches (or is in) their retirement years, they’re redefining the way they live. Many boomers choose to live in age-55-plus retirement communities. Others prefer to rent. So a shared-housing arrangement can present a great investment opportunity for homeowners. Empty nesters who have plenty of spare bedrooms can rent out one or all of them to fellow retirees. If you do this, make sure you have a lease and specify house rules. Such as a laundry schedule, which food will be shared, and who pays for which utilities.
For more ideas and info on investing in real estate in Ottawa contact Jenna Swinwood at 613 699-2079.