Real Estate Marketing & Beyond
As real estate markets struggle with low inventories of homes for sale, some buyers are opting to investing in multifamily properties instead of buying a single-family home, the Washington Post reports. The advantage of doing so is they can live in one of the units and rent out the others to help with mortgage costs and build equity.
Now, it seems lenders are hoping to cash in on the trend through incentives for buyers. The incentives include more competitive interest rates and lower down payments than are required for single-family homes, the Post reported.
“I didn’t want to be sitting on the sidelines and playing this waiting game to own a home,” Frantz Jacques, 25, told the Post after he bought a multifamily property in the Chicago area. He explained he became interested in a multifamily investment after losing out in several bidding wars on single-family homes. “It feels like the longer I wait, the more out of reach homeownership would become,” Jacques said.
Investors saw their share of multifamily home sales grow to 11.3% in 2019, marking a two-decade high, according to CoreLogic data. Much of this is being driven by smaller investors looking to get in on the real estate market for the first time. Low interest rates are also proving attractive to investors. The share of borrowers taking out multifamily mortgages increased 24% in the third quarter of 2019 compared to a year prior, according to data from the Mortgage Bankers Association.
Leslie White, a Redfin agent in Washington, D.C., told the Post that young buyers especially are starting to “realize that they can’t afford the kind of home they want in the area of the city they want to live in.”
She added that more and more of her clients are considering investing in multifamily properties instead. They’re particularly drawn to three-unit rowhouses priced from $750,000 to $1.5 million.
“They’re mostly young couples that could never afford to buy a single-family home in these areas, and they like the idea of having tenants help pay their mortgage,” White said.
That said, becoming a landlord may not be for everyone, one expert said.
“Homeowners need to know that it’s not just about collecting rent,” Susan Bishop, a broker with Four Seasons Sotheby’s International Realty in Rutland, Vt., told the Post. “Occasionally, dealing with late-night repairs and quick fixes around the house should be expected.”
