The multi-unit building is starting to look like a better investment as of late. In the past, investors were content with backend profit and tax breaks, when holding and selling investment property. It was a good place to park cash, but the highly leveraged property rarely cash flowed and, if by chance, a property did came on the market that could financially sustain itself, it was gone in a flash.
But that has changed recently. Perhaps it is due to fewer buyers and tighter lending practices on jumbo loans; one of my clients just told me he has to provide more financial documentation on a three flat we are purchasing than he has ever given before. Additionally, higher rental income is favorably impacting these assets, and the combination of these factors make the multi-unit property a flexible purchase option and investment.
Seemingly enough, it is the rental income that makes the equation work: Prices are coming more into alignment with rental incomes as investor-anticipated, real property appreciation comes back to a more historical, single digit figure. And this is a good sign in my opinion. It means prices are stabilizing and stability in housing prices signals an easing of anxiety over current housing concerns.
Another of my clients is purchasing a two flat now with plans to convert it to a single family home within the next three years. He gets a good price now, fair rent and plenty of room to expand. How can he go wrong . . .
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