Three ways to buy one property: exploring multifamily for affordability

multifamily real estate

Everyone is looking for ways to make homeownership more affordable. But have you considered all of your options? I want to take you through three different ways to buy one property – 1) by yourself or with a spouse, 2) in partnership with another person or family, and 3) living in the property but also creating a rental unit on the property.

We’ll look at the nitty gritty of how to do it financially, and also compare the options to each other over the long term.

Let’s open the aperture a little for what’s possible

There’s a whole bunch of Millennials and Gen Z’ers who want to achieve the dream of homeownership but are feeling like it’s out of reach.

Perhaps you yourself feel confined to a life of renting? While your friends, or your parents build equity with each mortgage payment, you think you’ll be forever just paying your landlord as your rent keeps going up.

But what if you can expand your options for homeownership just by thinking outside the box a little? What if there are other options out there that seem complicated but really aren’t?

And with rents up 22% in some areas over the last three years you owe it to yourself to explore all of your options. Maybe thinking about homeownership in a different way can get you out of renting and into property ownership.

Selecting one property that can be bought three different ways

In doing this exercise, want to pick a property that can be split and also that can have a rental unit. Luckily there are many of these properties available all around the country. Homes or townhomes where zoning allows for changes.

(If you watched this video I did a little while ago, I cover how zoning laws are changing and how you can take advantage of them.)

Let’s pick this one.

This home is classified as a multifamily home.

What I’m going to run through with you are the following scenarios:

  • What it looks like to buy this alone
  • What it looks like to buy this in a partnership with another family or individual
  • How to buy this yourself with a rental unit

As you can see there’s a number of possibilities to think about and consider.

If you’re looking at other parts of the city that are expensive, you’re not going to end up with the same square footage and might not be able to divide it as easily.

Looking at areas where you can get more square footage might be a good option because you have more possibilities.

Some important things to consider

The first thing you want to do is to meet with a seasoned mortgage professional because you want to get a sense of what you’re going to qualify for. And, it’s not a bad idea to go with a mortgage broker as opposed to a bank since they have access to a lot of lenders.

Sometimes a certain lender won’t want to do a multifamily property, or meddle with a rental or give you worse rates because they don’t specialize in them. Or they could require a higher down payment.

So you want to work out these constraints before you go out and bid on something. And you don’t want to overspend. You don’t want to be a victim of FOMO or YOLO when buying a home! Your future net worth will thank you.

In conclusion

Don’t limit your search to just one type of property. You could end up getting more square footage for the same price by opening up your possibilities.

You can also explore novel partnership or rental unit options which may result in even more net worth for you in the future than if you simply bought an apartment for yourself individually.

And finally, work through financing scenarios before you go out looking. You’ll have a better sense of how to compete competitively, how much you can afford, and what type of lender constraints there are and how to overcome them.

Then you can confidently seek out the best property for you and your future.

If you need help, here’s my contact information and don’t hesitate to reach out.