The Benefits of Buying a duplex, Triplex or Fourplex as an investor or Owner occupied.

First, lets tackle the Owner occupied side of this equation. For a first time  home buyer ,this is the best of both worlds. Not only do you get tax benefits beyond the normal single family home, but you also have a lower monthly mortgage amount as someone (your tenant) is paying a portion of your monthly mortgage.

Yes, I know some people feel uncomfortable living next to their tenants, but if you picked the right tenants to start with, many times there are advantages. Or simply rent the other side to a relative.

Also, Owner occupied units received better treatment from lenders in both the buying and refinancing of a multi-family structure then what an Investor would be granted. Many Lenders have better loan programs for owner occupied buyers than Investors.

Just think, as a young couple you could buy a duplex with the tenant paying say 1/2 your monthly mortgage while you pay the other half. BUT as a smart young couple, the half that you would have normally had to pay on the mortgage (the tenant portion) you put into the bank.

As an example:

Your mortgage payment is $2400 per month (remember we are using California values) The tenant's rent is $1350 leaving you with $1050 as your portion of the monthly mortgage payment. NOW, since you were qualified for the loan at $2400 per month (meaning the Lender knew you could pay the $2400 per month in case you had no tenant). You simply put that extra $1350 from your pocket into a saving account. 4 years later (1350 x 48) you have $64,800 (plus interest) as a down payment for your dream single family home.

So, after 4 years, you now would have a nice single family home, PLUS an income producing Duplex (and Tax Shelter). Hey your on the way of becoming a real estate millionaire. See our wealth plan for a faster route to becoming a millionaire.

With respect to the Investor (the majority of owners of multi-family units are Investors), the main concern is cash flow and the potential for increase in value. See Increase Value for ways of increasing the value of a property.

The Investor has many options. They can hold a property for a short time by increasing the value and turning it over for a profit, or they can hold the property for the long term and create future wealth.

Some Investors look forward to the tax benefits a multi-family property can offer them. Often the property throws off a "negative" tax benefit that shelters a portion of their regular income. In fact is the primary reason a lot on investors get into buying small income properties, is just for the tax breaks they can accumulate.

As an added bonus:

Ok, buying a multi-family structure is not a quick process. Here is a short list or the process of buying a property:

1. Find a property, either by yourself or with the help of a real estate professional.

2. Determine the value of the property and then the price to offer the Seller.

3. Arrange financing of the Loan (actually this should be done before you make an offer, or at least sit down with a Loan Representative to know you options and limits).

4. Do your Due Diligence and Verification of the property (both before the offer is made and during the contract period).

5. Closing the deal, either with an Escrow Company for the West Coast or a Title Lawyer for East Coast Buyers.

Yes, this is a simple list and I could go on for hours breaking down each of the five main categories above, but this gives you a general idea of the process.

Make sure you check out the Wealth Plan and ways of Increasing Value for more benefits of why investing in Small Residential Properties is one of the best ways to create wealth.