Owning a house is often seen as a critical milestone in the American Dream. But what if you could use that same house to start your own business? It’s possible — and here are tips to make it happen.
The Benefits of Buying a Multi-Family Property
One of the best ways to buy a house and start a business simultaneously is to purchase a multi-family property. This type of property usually consists of two or more units you can rent to tenants. By doing so, you’ll have a place to live and a source of income that can help you start your business. There are several benefits to this approach.
1. It’s a cost-effective way to get started.
When you buy a multi-family property, you’re essentially getting two (or more) homes for one. This can give you a significant financial advantage when starting your business.
Since you’ll need a mortgage to buy a house, it will also stand as your loaned capital for your business. You won’t need to look for startup capital.
2. It’s a low-risk way to test the waters.
If you’re unsure if starting a business is right for you, buying a multi-family property can be an excellent way to dip your toe in the water. If it turns out that running a business isn’t for you, you can always keep renting out the units and use the income to cover your mortgage.
On the other hand, you may find that you are good at it and enjoy being a landlord. This can be the starting point for a more extensive real estate business.
3. It can provide a steady source of income.
If you can successfully rent out all the units in your multi-family property, you’ll have a reliable source of income. This can give you some much-needed financial stability as you’re starting your business.
It can also provide a cushion in case your business doesn’t take off right away. Even if it takes a few months (or years) to get your business up and running, you’ll still have the income from your tenants to help cover your costs.
How to Finance the Purchase of a Multi-Family House
Now that you know the benefits of buying a multi-family property, you may be wondering how to finance such a purchase. Here are a few options to consider.
If you have good credit and a steady income, you may be able to qualify for a conventional mortgage. This is the most common type of mortgage that can be used to finance the purchase of a multi-family property.
If you have a lower credit score or a smaller down payment, you may qualify for an FHA loan. This type of loan is backed by the Federal Housing Administration.
If you’re a veteran, you may qualify for a VA loan. This type of loan is backed by the Department of Veterans Affairs.
If you’re having trouble qualifying for a traditional mortgage, you may be able to qualify for a portfolio loan. This type of loan is offered by some private lenders.
In some cases, the seller of the property may be willing to finance the purchase. This is known as seller financing, and it can be a good option if you’re having trouble qualifying for a traditional mortgage.
It is crucial to shop around so that you can choose the best mortgage lender for your needs. Compare the interest rates they offer, as well as the terms and conditions of the loan. You should also make sure that you’re comfortable with the lender. After all, you’ll be working with them for a long time if you decide to go ahead with the purchase of a multi-family property.
What to Look for When Buying a Multi-Family House
Now that you know how to finance the purchase of a multi-family property, it’s time to start looking for the right one. Here are some things to keep in mind.
The location is one of the most important factors to consider when buying a multi-family property. You’ll want to choose an area that is safe and has a good school system. You’ll also want to pick an area that is growing. This will increase the chances that your tenants will be able to find jobs and that the value of your property will go up over time.
Another important factor to consider is the condition of the property. You’ll want to make sure that it is in good condition before you buy it. Otherwise, you may end up having to spend a lot of money on repairs.
Another thing to keep in mind is the size of the property. You’ll want to make sure that it is large enough to accommodate all the tenants you’re hoping to attract. You’ll also want to consider the number of units on the property. If you’re hoping to rent out all the units, you’ll want to make sure that there are enough of them.
Of course, one of the most important factors to consider when buying a multi-family property is the rental income. You’ll want to make sure that the property will generate enough income to cover your mortgage payments and other expenses.
Enjoy Your New Home and Business
Now that you know the benefits of owning a multi-family property, it’s time to get started. Shop around for the best mortgage lender and start saving up for your down payment. Once you’ve purchased your new home and business, be sure to enjoy all the advantages that come with it.