Multi-family homes are used mainly as rental homes but some of these structures are also used as retirement or assisted-living facilities
. They are quite popular among property investors as they can provide a steady flow of income for their owners. A great source of this type of housing is the U.S. Department of Housing and Urban Development or the HUD. The HUD runs a program called the Multifamily Property Disposition through which it goes after foreclosed multi-family homes and resells them.
Purchasing multi-family homes from the HUD requires cash payment. These homes sell competitively even without financing and insurance due to their great profit potential. If you plan to invest in one and buy it through the HUD, you are required to provide a deposit which is considered earnest money. All types of foreclosed properties require some level of repair and renovation to make them habitable again and this holds true for multi-family dwellings. Buyers would need to include this expense when they compute for the value of these properties.
A Wise Investment
Many enterprising people purchase multi-family properties for pretty obvious reasons. For starters it generates income even if it is not fully occupied. It is a self-sustaining investment as the income generated from it can cover the cost of the mortgage, utilities, taxes and all other expenses. Multiple tenants translate to multiple income streams so even if you lose one or two tenants you have others to sustain your income. This decreases your risk of going bankrupt or being in danger of foreclosure.
There is also the possibility of earning ancilliary income from multi-family homes in addition to the rental income they already generate. This income can come from businesses who would like to offer their services to your tenants such as laundry services or vending machines.
Finally, it is easier to find financing for these homes also because of their income-generating potential. So the next time you consider investing in real property, make sure you also check out multi-family dwellings.