A multiunit property can be a fantastic option for someone who wants to be a little bit hands-on, who doesn't mind sharing a property or being the occasional landlord. Oh, and who doesn't want a home that pays part, if not all, of its own mortgage! Having that additional income can really help offset your monthly carrying costs.
My first home purchase in Los Angeles was a duplex. It was a wonderful 1920s up-and-down duplex with terrific details and charm to it. I lived in the downstairs apartment and rented out the upstairs unit. The most amazing thing about this property was that I was able to live there almost mortgage free because the rent from the upper unit covered the expenses.
Thinking about purchasing a multiunit property? Let me break down the pros and cons:
You may be able to live for free. With rent coming in from the other unit or units, you can have a big chunk of your mortgage and carrying costs covered.
It's such a fantastic benefit to know that someone else is handing you money each month to pay off your home's mortgagemonth after month and year after year.
- A duplex or triplex or home with a guesthouse may not be much more expensive than a single-family home. But you have that extra income bonus.
A fantastic advantage to purchasing a multiunit property is that when you are ready to move up or move on, you can hold on to this property and keep it as an investment. This will become the first step on your road to building a real estate portfolio that will provide you with income for life.
- You will have to learn very quickly how to be a landlord.
- While having one or two rental units to manage is not a massive undertaking, you will still be responsible for keeping them rented and keeping your tenants happy.
- Multiunits have at least twice as many things to repair and maintain-two or more kitchens, lots of bathrooms, two heating systems, two sets of plumbing, etc.
- You give up some privacy. You may have to share a backyard, driveway, hallway, laundry room, or garage with your new tenants.
So, even as I list all the pros and cons, I think purchasing a home with income potential is a brilliant way to safeguard yourself in today's market. Yes, you do have to kick in some extra time to be a part-time landlord, and you will have to fix someone else's leaky faucet on your day off. But in the long run, it's an excellent way to buy a home, have a great place to live, and pay off your mortgage with the help of strangers!
Michael Corbett is Trulia's real estate and lifestyle expert. He is also the host of EXTRA's Mansions and Millionaires on NBC. In addition to his regular segments on ABC's The View and Fox News, he is a national bestselling author with three critically acclaimed real estate books: Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! His years of experience in buying, renovating, and selling homes have made him a sought-after nationally recognized real estate expert.