Obtaining a traditional mortgage is really only one way to become a home owner. Right now, 40% of those who apply are denied mortgages. Fortunately, there are some other more creative ways to reach your goal of owning a home if you fall into that 40%. In this short series, we will explore several other creative paths to homeownership.
Even if you can qualify for a traditional mortgage, you may want to consider this first creative path. At the very least, you could save money, but you also may be able to live basically mortgage payment free.
Creative Path #1: Owner Occupied Multi-Family Homes
Purchasing a multi-family property and living in one of the units is a great way to become not only a home owner, but also to save money and possibly even make money. When you purchase a multi-family property as an owner-occupied property (meaning one that you will live in as your primary residence) you may be able to count the rental income towards your monthly income and thus improve your debt to income ratio enough to qualify for a mortgage. In addition, the rent collected can pay most (and in some cases all) of your monthly mortgage payment...and maybe more depending on the property.
Tips For Living Mortgage Payment Free In A Multi-Family Home
Choose the property carefully! A building that is in a desirable area and in good repair (like the one in the video below) will not only make you more comfortable, but it will also help you to attract and keep good tenants.
Choose your tenants carefully! After all, you will be living right next to these folks. Be sure to use a rental application and call the listed references and employer when it is time to fill a vacany. ALWAYS run a criminal background and credit check on potential tenants. I don't care how nice they are, this is an important and necessary step. Here in Maine, leases survive the sale of a property. If you are uncomfortable with any of the existing tenants, be sure to have your agent include which units the seller will need to have vacant at closing. Trust me, you do not want to go through the eviction process to get rid of a troublesome tenant.
Fully evaluate the income/expenses for the property! Some multi-family properties may look appealing at first when you just look at the rental amounts for the units. However, you need to dig deeper into the income/expense report for the property (your agent should be able to get this for you.) Multi-family properties will have greatly varying expenses tied to them - utilities, taxes, insurance, trash/snow removal, repairs, etc. I have tools available to help evaluate the actual net proceeds you can expect to receive from a property.
Build a team for support! The responsibilities of acting as a landlord are not for everyone. However, surrounding yourself with a team of professionals from the start will greatly impact your success and lower your stress. A little research will help you to assemble a team of people that you can contact when you need them including: a Realtor experienced with multi-units and rental processes, a general handyperson, a competant insurance agent, a plumber, an electrician, etc.
Please feel free to contact me if you would like to explore owner-occupied property opportunities. Some will be simple duplexes, while others may be large 3-4 unit buildings like the one below.
The Maine Real Estate Network - Kristen Wheatley - Lewiston-Auburn Maine Real Estate
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Copyright © 2013 by Kristen Wheatley