Should I Buy That Two – Family House?
By [http://EzineArticles.com/expert/Richard_Brody/492539]Richard Brody
Some people purchase a two – family house, because, they hope to live, in one apartment, and rent the other, in order to significantly reduce their cost of living! While, this is a great solution, for some, it is not for everyone. For some, they need more privacy, and/ or, don’t want the responsibilities involved, in being a landlord. Other individuals purchase two – family houses, for investment purposes, and it’s essential and important, to begin this process, with your eyes – wide – open, understanding, both the advantages and disadvantages. While, a well – considered, properly priced, property, may be a fantastic investment opportunity, there are some others, that may not be, for certain reasons. With that in mind, this article will attempt to consider, examine, review, and discuss, these two scenarios, and the process, one should go through, prior to making the commitment.
1. Owner – occupied: An owner – occupied, two – family house, is eligible, for very similar mortgage conditions, and requirements, as a single – family home. Often, this is about 0.5% or more, lower rate, than when the owner does not live there. What rate of returns, and other relevant concerns, should be considered? Begin, with considering, cash – flow, meaning, the owner’s outflow, versus, the rent, collected, How will this compare, with your costs, if you purchased a single – family home? How comfortable will you be, being a landlord? Are you handy, or will you need, to hire others, whenever there is a necessary repair, etc? Do you have the type of personality, which might handle, some of the inherent stresses and strains, involved? Will you be happy, sharing the property, ensuring your tenant, takes decent care of the part, they occupy, and any potential challenges, in terms of privacy, and other issues?
2. Non – owner occupied: Begin, with a realistic evaluation, and analysis, of the revenues, versus expenditures. Will you generate sufficient cash flow, to avoid having additional financial challenges, and stresses? Unless, you are convinced, there will be a cash flow – positive, situation, you usually should avoid the investment. Consider only about 75% of the realistic rent – roll, in order to account for vacancies, and other unforeseen contingencies. On the expense side, add your mortgage payment (including principal, interest, real estate taxes, and escrow), to your monthly contributions in various reserve finds, for repairs, renovations, upgrades, etc. If this is positive, then move – on, to a rate – of – return, or ROI/ return on investment, analysis. Consider your total cost of purchasing the property (purchase price plus initial renovations/ upgrades/ repairs), and your annual rent – rolls. Seek at least a 6% return.
An investment property may be your smartest move, or a risky, unwise one! Take these easy steps, from the unset, and proceed accordingly.
Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson, for a decade+. Rich has written three books and thousands of articles. Website: http://PortWashingtonLongIslandHouses.com and LIKE the Facebook page for real estate: http://facebook.com/PortWashRE
Article Source: [http://EzineArticles.com/?Should-I-Buy-That-Two—Family-House?&id=10095786] Should I Buy That Two – Family House?