Everyone wants a home of their own. Well, almost everyone. But lets face it, with the high rise in prices in past years it is just not economially feasible. Here is where you have to decide if becoming a landlord yourself is the right choice for you. First of all, we are going to concentrate on 2 and 3 family buildings. Anything over that is considered multi family and in most states there are different zoning regulations, fire regulations etc.
First of all, you can count the projected income from the rental units in with your income requirements. They may only allow a portion of the rent, having to allow for a percentage of vacancies. But it could be the difference in being able to qualify or not. Also, depending on the lending institution, you may be required to live there.
There are different types of 2 and 3 family homes also and some may seem to be 2 families but are not. If a house is advertised as having a mother-in-law apartment it is not a two family home, it is what is called a mother and daughter and the extra apartment is to be used for family only and not rented out. Also, in some areas, basement apartments are not legal. If they are, they usually have to have windows larger than normal for easy egress in case of an emergency and also have 2 entrances. In many areas, a bank will not give a mortgage on a property with a basement apartment.
There are basically two types of two family homes, ones that were constructed as two families and ones that were converted from a one family home. If you are considering a converted two family, make sure you check and make sure it was a legal conversion, with papers filed with the county clerk. It will all come out at closing anyway and would probably cancel the deal. You would have lost a lot of valuable time, so do your checking early. Your lawyer will be able to do it in no time flat. Speaking of lawyers, try to use one that has experience in real estate law. They are up to date on all the changes and regulations and every phase of law is a speciality. You would not use a corporate lawyer for a criminal case. The same should be done for real estate.
If you are buying a two or three family that was constructed as such, you will not have that problem. You will also probably pay more. In most instances, the rooms are larger and the houses will appraise higher.
Remember, you will be sharing your home with strangers in most cases so you do not have all the conveniences of a one family house, but that is no different than renting and here you make the rules, within the laws of the community. Check up on what the tenant’s rights are in your state. You can usually get a booklet from your states Attorney General’s office that will explain the tenants rights and obligations under the law. Know what you are getting into before you get into it and if it looks like it will work for you, go a head and start your search.
