Does A Single Family Property Gain Equity Quicker Than A Multifamily Property?
If you are in the market to buy property and have a dilemma, whether a duplex up through a fourplex will gain equity faster than a townhome, condo, or single family home is not the main question.
As an owner occupant of one of the units in a duplex, and comparing it to a townhome. What arises as significant is that you will be placing a portion of your full mortgage payment by renting out the other half of the fourplex. By showing a real life sample.
In Los Angeles, California currently the average condo price is approximately $270,000. With 10% down that puts your payment right around $1564 per month. A review of duplex properties for sale in Los Angeles, you may find one for close to $340,000. So with 10% down payment, your mortgage payment will come out to be roughly $1934. So for an additional $400 a month more, you get a full extra unit available for passive income.
If you live in one half of the duplex, and lease the second unit out for $1000 per month that will make your mortgage payment decrease to less than $934 a month! This is lower than renting a unit! Also, there will be annual rental increases to the tenant, the appraised value is determined not only by location but also the rental income the property recieves. So, equity orappreciation will move up due to not only rental increases but also due to location. As an owner with the extra rental income from the other unit, you may qualify for a home equity loan you otherwise would not as an owner of a single family dwelling if your debt to incoem ratios are borderline. An additional hidden benefit is that because you are going to occupy one of the units, you are able to secure regular financing or FHA loans to purchase your property. This means a lower down payment than if you were to purchase it as an investor, or non-occupant.
This means that you can get into an owner occupied property with as little as 3.5% down, moreover there is ongoing discussions regarding letting buyers who get an FHA loan to be qualified to receive their $8,000 tax credit as their down payment or part of it. If this were to become a reality, a person could get into a duplex for below $5,000 from their own funds. That is nothing short of incredible during so-called tough times for mortgages!
There is no pressure to not buy a single family home, condo or townhome, versus a multifamily property if you have the money to get either one. It is strongly suggested to seriously consider a duplex on up to a 4-plex to occupy as your home.
If you are ready to buy 2 to 4 units purchase a live-in multifamily property in California please go to Tristar-Property.com can surely assist you with your needs.
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