If you have hopes of owning a multi-family make sure you understand the full array of moving parts that come with it. These properties are not a get-rich-quick scheme that is constantly pushed on Instagram and Tiktok (ie. buy 1, leverage it to 2, then 4, then 8! No. Don’t do that. Being highly leveraged is very risky). In my 20+ years doing this, I have seen people create incredible wealth through the targeted purchase and hold of great multi-families, and I have seen people lose big. Below are some things to think about if looking to own a multi and become a Landlord:

Do you have the bandwidth in your life? Multi-families are not a passive investment. They are an unpredictable form of work where a call can come at any time. And, most every call that comes in is $ out of your pocket. So you need to be sure you have the time, energy, and resources to manage the costs and unpredictability.

Do you know the property-type you are interested in? There is a big difference in owning a 2 family and 4 family, and any property with 5 or more units will not qualify for conventional lending – this will substantially increase your expenses, even with the increased rent of additional units. Make sure you define what you are able to handle and the amenities you wish to have + costs related with each. For example, if you have a driveway and yard it will be more annual cost of maintenance than if no driveway and a stone patio.

Do you know the area purchasing? I have studied intently any market I have purchased a multi-family in. You need to have full clarity on what you are “getting yourself into” before purchase. If not, you will inevitably be hit with unwelcome  surprises – these can range from poor tenant quality, detrimental governance, negative impact developments, flood/fire risks of each area; etc. There is a lot to look for when researching a specific area on both the macro and (often more importantly) micro level.

Do you have 25% down? Most banks will require this as minimum downpayment. I am always of the mindset to put down as much as you are comfortable (over 25%) while leaving reserves for repairs and vacancy. The more you put down the better the investment as the mortgage/debt will eat away at your proceeds and appreciation.

Do you have familiarity with mechanical systems and operation of a home? You will want a good understanding of how systems work (ie. how roofs/windows/appliances are replaced; etc). This will help you understand pricing and process when repairs come due. And, may allow you to make some minor repairs yourself before paying someone else.

Do you have trusted vendors? If not, before you close on a multi-family you will want to interview plumbers, electricians, handymen, exterminators; etc. Having good and reliable tradesmen is a necessity when owning a multi-family. If you need to track down contractors during an emergency it is very stressful and will be much more expensive if there is no pre-existing relationship/trust.

Do you know how to rent a property? If not, you should become familiar. This entails learning how an apartment should be prepared and marketed. Additionally, you will want a very strong lease agreement that helps limit liability. Having a good agent is critical when it comes to renting your property, but you should also know the basics to avoid or catch any mistakes. You can always hire a management company but this is going to significantly cut in to your proceeds and not necessarily cut down on your workload; and, there are very few (if any) management companies I would trust with my properties.

Do you know being a “slumlord” is not acceptable? I have seen people purchase multi-families and then let them deteriorate and treat their tenants as numbers not people. This is a terrible practice. If owning a multi you should be prepared to treat it in the same way you will treat your family’s home. This means being responsive, making all best efforts to complete repairs in timely manner, addressing concerns even if trivial, resolving disputes, ensuring work is done properly; etc.

Owning a multi-family home can be an incredible investment, to the point it creates generational wealth. But it is not for everyone. Before considering you need to make sure it is a fit for you and your family.

**The above are extreme basics. If you have any questions please don’t hesitate to reach out.**