Whether you’re looking for an affordable family home or perhaps an investment opportunity, multi-family homes are an excellent option that can be found among the real estate listings. A multi-family home is a classification of housing that is composed of two or more units within one residential building. This guide will go into more detail about the different types of multi-family dwellings.
Other great tidbits that can be found within this article include where to find multi-family residences, some things to keep in mind when choosing a home, and a helpful list of questions you may want to ask before you make any purchases.
The goal of this guide is to hopefully provide you with a better idea of whether or not a multi-family home is the right fit for you and your specific lifestyle. If you’re considering jumping into the world of multi-family dwellings, read on to further understand all about this particular form of real estate.
Understand the different types of multi-family homes.
One of the most important factors to consider when you’re purchasing any sort of real estate is to know what you’re looking for. Multi-family homes, also known as multi-dwelling units or MDUs, come in all shapes and sizes. The main characteristic of these properties is the multiple units contained within one residential building, but this can look different with each establishment. Sometimes, these buildings are grouped together to form an entire community or neighborhood, such is the case with many townhome developments.
To actually qualify as an MDU, the property must be made up of at least two adjacent housing units. These units can be set up vertically or horizontally, as long as they reside within the same building. The following list outlines some examples of multi-family homes.
- Apartment Buildings and Condominiums: Apartments and condos are some of the most common types of multi-family buildings. These properties are typically made up of many units situated on a number of floors. These buildings come in the form of low-rise to high-rise buildings and can have anywhere from a handful to hundreds of homes on the premises. The most popular location for apartment and condo buildings is busy cities, particularly where lots are smaller in size so the buildings must build up vertically rather than horizontally.
- Townhomes: A townhome is similar to a detached, single-family home in many ways except for one. Townhouses are set up as a development consisting of multiple houses attached side-by-side. Each home includes an individual entrance from the outside but they share a common wall with the home beside them. In the case of multiple townhomes, three or more, situated alongside each other, the development is referred to as row homes.
- Duplex: Many duplex homes started out as one single-family home but have been converted to consist of two separate units. These units can either be split up side-by-side or by the story. Each unit consists of a separate entrance, similar to a townhome. The difference between a townhouse and a duplex is that duplexes only ever share one wall with their neighbor while a townhome has the potential to share a wall on each side of the home.
- Mixed-Use Building: This particular type of multi-family dwelling consists of not only residential units, but can also include commercial, institutional, or industrial units. Many of these buildings can be found in downtown areas of cities or towns, hosting retail shops in the bottom units lining the streets and offering apartment units up on top. These are great buildings to invest in if you’re looking to rent out retail or industrial real estate while living right up above the units.
Where can you find multi-family homes?
Just like the traditional detached, single-family homes, MDUs can be found among the standard real estate listings. If you’re beginning your search online, you can filter your search results not only to the specific location that you’re looking at, but you can also filter your search results to show you only multi-family real estate options.
When you first begin your search for the perfect multi-family dwelling, you can let your real estate agent know that you would like to tour these types of homes. The same goes if you’re looking for an investment property. Be sure that your realtor is experienced with the area you’re looking to invest in and they will be able to guide you during the process and let you know where the hotspots of town can be found. An experienced real estate agent will also be able to let you in on real estate opportunities that have not yet been showcased online.
As with any type of real estate, commercial or residential, detached homes or multi-family dwellings, you need to do your research. Take your time, figure out exactly what you want, and check out homes that are within your price range.
Some questions to ask before making a purchase.
Before you sign the documents or agree to any contracts, you’re going to want all the details pertaining to your potential property. Sometimes it helps to jot down a few questions to ask when you go to tour a potential home. Here are some examples of what you may want to inquire about:
- What’s the deal with the parking? When it comes to parking, detached, single-family homes usually have a very clear driveway. Multi-family homes can be a little more difficult to determine the parking situation. Some buildings, such as townhomes and duplexes, have access to private driveways. Other buildings, such as apartment buildings and condominiums, offer plenty of parking in their own private parking lot. It’s important to ask about parking upfront, as some buildings will charge additional parking fees or passes, and some offer access to underground parking lots.
- Do I need any special insurance? Most residential properties have a standard setup when it comes to insurance. However, if you’re planning on purchasing a multi-family dwelling to rent out the space to other tenants, you’ll need to look into additional insurance coverages. This includes factors such as loss-of-rent coverage as well as liability coverage.
- Will I still need to have a home inspection completed? During the typical process of purchasing a free-standing home, it’s incredibly important to receive a report on the condition of the homes before you make any official agreements. This includes the state of the roof, the electrical system, and the condition of the septic or sewer system. When you’re purchasing a multi-family home, it’s up to the owner of the building to keep the building in top condition and up to date. Make sure you ask your real estate agent about any additional inspections you should have ordered.
- Should I expect any additional costs? There’s always the possibility of unexpected costs when you purchase a new home. Many first-time buyers don’t factor these costs into their budget and can get into trouble as a result. Before you sign any paperwork, be sure to factor in any repairs or renovations you may want to have done, including painting and appliance upgrades, as well as the possibility of any homeowner association fees.
What else is there to consider?
Buying a home is one of the biggest decisions you’ll make in your life. To make sure you’re getting the most out of the experience, it’s best to enter into this stage prepared and well-informed. After you’ve figured out what your budget will look like and you’ve found a suitable real estate agent to work with, your next step is actually determining what you’re looking for. If you’re leaning towards a multi-family development, here are a few things you’ll want to consider:
Location, location, location! This phrase couldn’t be more true when it comes to purchasing any form of real estate. When you begin your search for the perfect multi-family dwelling, you may find your options are slightly more limited than a standard, free-standing home. If you’re seeking a quiet, rural oasis, you may have a hard time finding an MDU outside of the more urban areas of a city. Multi-family homes are primarily found within busy cities and lined up in various subdivisions.
If you’re looking to invest in a multi-family residential building, you’ll need to take into consideration the popularity of the location you’re looking at. Potential tenants will want a home that is in a more desirable area of town, close to the local amenities and attractions. The more attractive the location, the easier it’ll be to fill your building with tenants and keep a steady income.
An affordable option. A multi-family home is an affordable option for those looking to break into the housing market, particularly for first-time homebuyers. Housing prices are a constant yo-yo over the years, switching between a buyer’s and a seller’s market. One thing that is consistent is the fact that MDUs are typically a more affordable option as opposed to a free-standing, single-family home. This is because you’re buying a single unit rather than an entire building. Land factors into the price as well, many multi-family homes are situated on smaller plots of land, which will decrease your property tax and maintenance fees.
One of the first steps to purchasing a home is to sort out what kind of budget you’re looking at. Sitting down with your financial advisor or a mortgage broker will give you an idea of what sort of down payment you can afford and the overall budget you’ll need to stick to while touring homes.
Gaining a sense of community. One of the benefits of being a part of a multi-family development is that you are not only gaining a home, but you’re also gaining access to a tight-knit community. Many apartment buildings and condominiums offer a common space where residents can get to know each other. Some neighborhoods offer communal amenities such as playgrounds and pools that are perfect for socializing and gathering with your neighbors.
There are so many fantastic reasons to purchase a multi-family home, whether you’re simply searching for your next living space or you’re looking to dive into the landlord position. MDUs can suit a variety of lifestyles including first-time homebuyers, bustling urban dwellers, and retirees looking to downsize in a charming community. Multi-family dwellings can be found all over the country in countless amazing cities so no matter where you’re looking to settle down, you can rest assured that you’ll be able to find an ideal housing development to suit your needs. These developments are an excellent real estate opportunity and are definitely worth your consideration!