Learn More About Investing in Real Estate
Multifamily Homes in the Hudson Valley can be a smart investment!
Multifamily properties seem to be a popular topic. I recently met with an old family friend that I had not seen in a while. We spent a good part of the time catching up on family fun, travel, work, pets and then of course the biggest topic is always our children. Seems that no matter how old my girls get they remain an important part of my life. The discussion today was not only about where all of our children were living and their jobs, but now as they are maturing the topic is turning to investment properties.
As a very involved dad, my friend shared with me that his son is looking to purchase a multifamily home to live in. As recent graduate and newly employed, he wants to be a homeowner/landlord. Even though he has limited savings and the fact that he is newly the possibility remains quite real that he can begin the adventure. There are programs available to help him along as a first time homebuyer. Lots of hoops to jump through, but in the end he can be a homeowner. As a concerned father, the question put to me was; “is buying a multi-family home now a good decision”? Well, my instincts say yes, and no. There is never a simple answer.
The first thing to consider is that Real Estate is Local! The answer about investing needs to be looked at from a numbers point of view. Knowing the local market is important. If the deal is good today but the neighborhood is deteriorating, then that is not a great place to invest. The idea is to find a location that works. The right home, at the right price point can be a winner. While no crystal ball is available, learning about where you are buying is one of the most important parts of this equation.
The second thing is value. Numbers are key when purchasing an investment home. With location a given, the condition is important. No matter where the property is, if the condition is not reflected in the price then there is no value. How do you determine this? I suggest begging with these three steps:
- View the property.
- Compare other homes in the area to see how this one fits into that market.
- Inspections and repairs estimates need to be done.
When an offer is made it should reflect similar properties, in the same market, that have already sold. It does not necessarily take into consideration things found on a home inspection. Some things can be obvious, others more subtle that a trained inspection would alert you to. An inspector won’t give you estimates on repairs. Any defects of concern should be followed up with an estimate for repairs. Knowing what these numbers would or could be, will help you to understand at what point the investment is no longer viable.
Once you know what the value of the property then an understanding of a budget and what you can afford is a must. Multifamily homes are able mortgages are rather similar to those of a single family homes. Speaking to a local loan officer is the best way to gather the information that could highlight any differences. Learn early on what you can qualify for and how to get ready for that process. My friend’s son was using a program that required him to attend classes. Those tutorials were aimed at helping him understand the expenses of homeownership and how to plan for the future. He is learning that the word budget is not a bad thing.
I only wish my girls were in a neighborhood that they could get started in a similar process. Getting in on the ground floor for this type of investment paves the way with smart choices for the future. Buying a property today, renting out half and living in the other apartment is a great way to begin. Tenants can help pay down the mortgage and help to build equity. It also teaches a new investor many parts of how business works. This is a skillset that is not taught in school. It provides on the job training and is such a smart way to plan for future financial security.
Learn the pros and cons. Start young and get educated about the process. It can be a great retirement plan.
This advertisement does not suggest that the broker has a listing in this property or properties or that any property is currently available.
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published by: your real estate expert Janis Borgueta Key Properties of the Hudson Valley as a community service in Newburgh NY. To receive more real estate information please subscribe to this blog. Looking to buy a new home? Search the MLS for New Homes in Newburgh NY. You can contact Janis at (845)-527-7115 or find her on Google+