Some Buyers Find Affordability in Multifamily Housing
WASHINGTON – In expensive housing markets where inventories are tight, some buyers are finding it more affordable to invest in a multifamily property rather than purchase a single-family home, The Washington Post reports. The buyers can live in one of the units in the building while renting out the others to defray some mortgage costs and build equity.
Lenders are offering incentives for such multifamily investments, including competitive interest rates and lower down payment requirements than a single-family home.
“I didn’t want to be sitting on the sidelines and playing this waiting game to own a home,” says Frantz Jacques, 25, who purchased a multifamily property in the Chicago area. He says he became interested in a multifamily investment after losing out in several bidding wars on single-family homes.
“It feels like the longer I wait, the more out of reach homeownership would become,” Jacques says.
The share of home sales purchased by investors eclipsed 11.3% last year, marking a two-decade high, according to data from CoreLogic. The uptick is being driven by small investors looking to get into real estate for the first time.
Low interest rates may also be driving multifamily investments. The share of borrowers taking out multifamily mortgages increased 24% in the third quarter of 2019 compared to a year prior, according to data from the Mortgage Bankers Association.
Younger buyers in particular are coming “to realize that they can’t afford the kind of home they want in the area of the city they want to live in,” says Leslie White, a Redfin agent in Washington, D.C. She’s seeing more clients consider multifamily investments instead, particularly drawn to three-unit rowhouses priced from $750,000 to $1.5 million.
“They’re mostly young couples that could never afford to buy a single-family home in these areas, and they like the idea of having tenants help pay their mortgage,” White says.
But becoming a landlord isn’t for everyone, housing experts warn.
“Homeowners need to know that it’s not just about collecting rent,” says Susan Bishop, a broker with Four Seasons Sotheby’s International Realty in Rutland, Vt. “Occasionally, dealing with late-night repairs and quick fixes around the house should be expected.”
Source: “Multifamily Housing: An Innovative Avenue for First-Time Buyers,” The Washington Post (Jan. 23, 2020)
© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688
Information provided by Florida Realtors. Click here to see the original article.
Reprinted with permission Florida Realtors. All rights reserved.