Do you want to learn more about multi-family investment properties in Kansas City? Check out our post for some of the pros and cons!
Investing in Kansas City, Multi-family properties is one of the fastest ways you can help to grow your real estate portfolio. Investing in multi-family real estate is one of the more popular paths newer investors take when starting their investing careers. One way of getting started investing in Kansas City multi-family real estate is by using an FHA loan to house hack. You buy a property with up to 4 units, you live in one and rent out the rest. The advantages of this are that by using an FHA loan you are getting a low down payment and your tenants will be helping you pay your mortgage each month when they pay their rent. Basically if done right, you will be living for free while building up your equity and saving money on your mortgage and expenses.
In this article we will be discussing some of the pros and cons you can expect when owning multi-family properties. We will be discussing not just owner-occupied properties, but properties that are completely tenant occupied as well. Learn more about what’s involved than give us a call to find the best deals on multi-family properties in Kansas City!
Pros
Lower Vacancy Rates
When you have your eggs in more than one basket, a vacancy won’t be as big of a deal. Look at it like this. You could have one single-family home in which you collect $2,000 per month in rent. If your tenant moves out, you are collecting nothing. Or you could have a duplex, with each unit renting out for $1,000 each month. If a tenant moves out, you will still be making $1,000, which is much better than $0.
Low Funding Costs
Explore FHA loans as a low down payment alternative to a conventional mortgage. You have the flexibility to use an FHA loan for purchasing a primary residence or an investment property with up to four units in Kansas City. This approach necessitates residing in one of the units as your primary home for at least 12 months. Subsequently, you can transition to renting out the entire property, facilitating equity growth and mortgage repayment.
Lower Maintenance Costs
When investing in real estate in Kansas City, it is crucial to prioritize major repairs and renovations to maximize cost-effectiveness. Opting to address issues comprehensively in one go can save time and resources in the long run. For instance, if the roof of a triplex in Kansas City requires replacement, tackling it once ensures prolonged durability without frequent interventions. Conversely, managing repairs for multiple properties can escalate expenses and consume substantial time. By focusing on comprehensive repairs, real estate investors in Kansas City can enhance property value and minimize maintenance hassles.
Cons
More Work
Managing a multi-family property involves overseeing multiple tenants, handling frequent repair requests, and mediating neighbor disputes. This dynamic real estate investment opportunity in Kansas City provides the chance to generate consistent rental income while navigating the challenges of shared living spaces.
Turnover
Multi-family properties are often viewed as transitional spaces rather than long-term homes. This dynamic nature can lead to higher turnover rates, necessitating more frequent tenant screenings and professional cleanings. As a result, there is a potential for a greater loss of rental income compared to a single-family property with a stable, long-term tenant.
Less Privacy
If you opt to use an FHA loan to purchase an owner-occupied investment property you will have to live on site for a year. This gives your tenants the ability to contact you any time day or night. Hopefully, you have tenants that will respect your space and your privacy. When you have the right people in place, owning a multi-family investment property can be your key to building wealth through real estate.