1. The option to collect rental income
When you buy a home that can house more than one family, you get the option to rent out whichever units you don’t need for your own family. That rental income can then help you cover your property ownership costs, or simply increase your cash flow. It can also help you pay off your mortgage sooner, thereby saving yourself interest over the life of your loan.
2. Easy multigenerational living
Sometimes, family members move in together to help one another out, or save money on housing costs collectively. But living in shared quarters is easier said than done when you’re talking about, say, two grown adults with children plus those children’s grandparents. The benefit of buying a multifamily home is that you’ll have the option to live together, but separately. And having that layer of privacy could make for a more harmonious arrangement.
3. Added tax breaks
When you own a home, you’re eligible for a number of tax breaks, like the option to deduct your mortgage interest or write off your property taxes. But when you own a multifamily home with rental units, you may be eligible to deduct expenses related to the units you don’t live in yourself, such as maintenance, upgrades, and depreciation on the property.
4. Easier financing
Multifamily homes tend to cost more than single-family properties, and as such, you’d think it would be harder to secure a mortgage on them. Not so. It’s often easier to qualify for a property that has the potential to generate income like a multifamily home does, but more so than that, mortgage limits (the amount lenders can loan to borrowers) are higher for multifamily homes than they are for single-family homes.
For example, in most of the country, mortgage limits for conforming loans top out at $484,350 for single-family homes. But for two-unit properties, they go up to $620,200. Similarly, the limit for Federal Housing Administration (FHA) loans is $314,827, but for a two-unit multifamily property, it's $403,125.