Property investment is a huge decision no matter what kind of home you choose to buy. Mostly, when people think of owning a home, the picture is usually a single-family detached house. But there are more options for homebuyers, including multi-family homes. These are homes with more than one living space. You can opt to live in one unit and rent out the other. 

Also, they are ideal for multigenerational families living together. It makes it easier for people to live independently, although basically under the same roof.

Things to Know About Multi-Family Home Buying

Multi-family homes can consist of several units owned by one person, unlike apartments or condos. They make suitable investments for first-time homebuyers as well as repeat home investors.¹

The Location Matters

Most of the time, the aim of buying a multi-family home is to earn rental income. Therefore, the location of the home is key to ensuring that you get tenants quickly. You should check if the area is popular or has great potential in becoming an upscale neighborhood. What demographic like family size and how likely they are to rent your units. 

Other essential issues to check are the economic activities, amenities, and accessibility to the transport system that connects residents to employment centers.

Challenges In Getting Financed

It can be a challenge finding mortgage lenders for multi-family homes. Even though you can use the rental income from the extra unit(s) to repay the mortgage, you need to have good credit. Besides, you also need good credit utilization and a low debt to income ratio. The downpayment for such homes is also likely to be larger. Lenders are aware that tenants can move out anytime, and you still need to have the ability to make mortgage repayment even then.

You Will Have Less Privacy

If you have one or more units that you are renting out while living in the same home, your tenants can stop by anytime with their rental unit issues. As the landlord, it’s your job to ensure that the units are in habitable condition at all times. It can be quite inconvenient, especially when you have many tenants. It’s also possible to also hear noises and interference through walls.

Complicated Tax Rules

Tax filing for landlords is more complicated. Multi-family home buying makes you a landlord. The internal Revenue Service (IRS) has special rules for rental income tax filing. In the publication dubbed Publication 527, the rules cover depreciation, rental income, expenses, and tax reporting requirements, among other areas.²

But, you also get tax advantages, including the ability to write off expenses related to your rental income.

Multi-Family Buying As a Homeowner Option

Buying a multi-family home option is an excellent way to start real estate investing. It’s also a great way for state employees to earn supplementary income. But, be ready to deal with investor and landlord problems.

Otherwise, if you find a lender you can become a homeowner and investor at the same time


“About Mountain West Financial and the CalPATH Home Loan Program

Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm). A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!

Sincerely, Joe Moore – Branch Manager”


Links to External Sources:

  1. Multifamily Housing and Innovative Avenue for First Time Buyers
  2. About Publication 527, Residential Rental Property (Including Rental of Vacation Homes)