Purchasing a Multi-Unit Housing Property
Lately a very popular way to invest money and get a somewhat rapid return on your investment is to purchase a multi-unit housing property. Typically, this is a duplex or triplex home or just large home that been converted into several apartments of varying size. This can be a great way to add a revenue stream to your income, but there are a few things you should consider before you make the purchase.
You must first be certain that the property (land and building) is in good repair. You do not want your tenants calling you during their first week of occupancy complaining about a leaking faucet or malfunctioning refrigerator. If the unit you are renting out is unsafe, or if the yard contains hazards such as debris piles or gopher holes, you could be sued by your tenant if they get hurt. All repairs and maintenance to the building inside and out, will be your responsibility, legally and financially, so make sure future repairs are budgeted in.
Get yourself a lawyer. A good lawyer can help you determine what should and shouldn’t be included on the lease as well as translating all the “legalese” you will encounter. This lawyer should be prepared to stand up for you in court should the tenants ever decide to stop paying rent or sue you for some unforeseen reason. Your lawyer should also be willing to answer questions when they arise. You need to be able to trust your lawyer and be certain that he or she is looking out for your best interests.
You will also need to determine what you should be charging for rent. In order to be fair, you should check out similar units for rent in the immediate vicinity. You don’t want to short-change yourself by charging too little, but at the same time tenants won’t stay long or may have trouble keeping up their monthly payments if the rent you’re charging is too high. If you want to charge more than the market will allow, you could consider sprucing up the unit with new appliances or offer to include heat and/or hot water at no additional charge. Tenants will pay a little more than usual if they are relieved of bills they would normally be responsible for.
You might seek out other multi-unit housing property owners to find out what experiences they’ve had renting their units. You may be able to avoid a lot of obstacles by heeding their advice and listening to their stories. Learning from the mistakes of others makes the lessons much less painful.
The old adage “Look before you leap” is quite apt when looking into multi-unit housing. Take some time before you make your purchase to be sure you have all your ducks in a row and it will pay great dividends in the end.
Jim Miller is a full time full service licensed Realtor® in the Southern New Hampshire area with Bean Group and has many years of experience buying and selling New Hampshire Real Estate .
Contact Jim direct at 603-801-3987.
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Purchasing a Multi-Unit Housing Property