I currently own my dream home! It’s a beautiful 5 bedroom home with 2-car garage on almost half an acre. I didn’t think I could purchase such a home. Ultimately, owning a multi-family helped me afford my dream home. I thought I’d share my story to help other buyers decide whether a multi-family is a good stepping stone.
Why I Bought a Multi-Family
15 years ago, I simply couldn’t afford a single family home in Eastern Massachusetts. I really liked the Wakefield/Reading area and single family properties were easily $400,000+. I could certainly afford a condo in the area, but having previously owned a condo with an unpredicted $2,000 assessment charged to each unit owner, I wasn’t thrilled about the idea. The only way I could feasibly buy in such a nice neighborhood was with a multi-family.
I found a two-family for ~$450,000. My monthly mortgage, taxes, and insurance were $3,200/mo. With each unit containing 3 bedrooms, my rental income for the second unit was $1,800, leaving $1,500 as my own housing expense. As interest rates dropped over the years, my housing expense reduced to just $1,100 per month. I lived in this house for much less that it would’ve cost me to rent or buy anything else!
Market Appreciation and Equity
Over the years, I slowly paid down my mortgage and the market steadily increased. As I prepared to sell a few years later, I expected a moderate amount of equity to put towards my purchase of a single family. I surprisingly ended up with 10 offers and a bidding war which drove up the price an extra $50,000. The low expense of owning a multi-family coupled with the equity earned over the years allowed me to purchase my dream home!
Retaining a Rental Property
As I think back to that multi-family, it was one of the best decisions I could’ve made. Although it was still like apartment/condo living, I had the freedom to make improvements and design changes as I saw fit. It was an affordable yet pleasant living environment. If I didn’t need the equity from that multi-family as a down payment towards my new home, I would’ve kept it as an investment. I hope this story of how owning a multi-family helped me afford my dream home inspires you to evaluate similar options.
by Lani Sanethong, a member of the MultiFamilyProperties.com team.