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Multi-family homes—or dwellings that house more than one family unit—can be a good way for investors to generate income, as long as you have the cash on hand to buy and manage the property.
Here’s what you need to know about multi-family homes and how they’re different from single-family properties.
What Is a Multi-family Home?
A multi-family housing is any home that multiple families live in at once. Types of multi-family homes include apartments, condominiums, duplexes and townhomes. Here’s what you should know about each type.
- Apartment: Apartments are multiple-housing units within one building. There might be many units or a few units, depending on the size of the building and each apartment within it; there can be one-, two- and three-bedroom apartments. There are also studio apartments, which are usually one big open space (no doors to other rooms) that has a living and sleeping area.
- Condominium: Condos are similar to apartments, but you can buy and own one unit or multiple units to rent out. Units for purchase are condos, while those that are rented are called apartments. If you buy a condo, you’ll likely be responsible for paying a homeowners association (HOA) fee and other costs required to manage each condo that you own.
- Duplex: A duplex has two units next to each other, separated by a single wall. Each unit has its own entrance. There are also triplexes for three-unit structures and quadruplexes that have four units in a single row.
- Townhome: A townhouse tends to have many levels—usually two or three—and sits in a row next to other townhomes. The homes all have their own entrances and living spaces, but are separated by a single wall.
Related: Condo Vs. Townhouse: Which Should You Buy?
Cost to Build a Multi-family Home
The cost to build a multi-family home depends on a few different factors including:
- Where the property is being built
- The cost of materials, labor and contractors
- How big the property is and how many units there are
- Your credit score and cash on hand
Because of this, the total cost to build a multi-family home can vary drastically. But you can expect to pay between $64,500 to $86,000 per unit. Larger multi-family buildings, like an apartment can total millions of dollars.
Pros and Cons of Owning a Multi-family Home
For some, real estate …….