Monday, May 4, 2009

The Value of Buying An Owner-Occupied Multi-Family House

When I was growing up they were called tenements or tenement houses. I haven't heard that term in years; they are now most often referred to as multi-family houses or just multis. I grew up in a city in the Northeast with many textile mills and neighborhoods full of tenements. Back then it seemed most of those houses of 2-3 units or apartments were owner occupied and often housed several generations of the same family.

That practice became less common as people who could afford to left the cities and moved to the suburbs often keeping the multis as investment property and becoming absentee landlords. Without the landlord right there to keep an eye on things, the properties often fell into some disrepair and showed less pride of ownership. When values of real estate skyrocketed in recent years, many of these owners sold their multis at incredible prices. Now we are seeing many, many of these multis being sold as short sales or after foreclosure. The poor condition of some of these houses is unimaginable.

If you are considering buying a multi-family property to either live in or invest in, my advice is to try to find one that is or was owner-occupied. Certainly that is getter more difficult in this market but it's not impossible. Sometimes you can tell by the information available on the multiple listing service (MLS) or your Buyers' Agent may be able to find out. It doesn't hurt to ask.

An owner-occupied multi is less likely to be for sale as a foreclosure or as a short sale so the price may be more of a conventional market price and not seem like such a bargain. But the condition of the property may more than make up for the additional cost of purchase. Also if the house is vacant and needs work before you can get paying tenants in there, every day it's empty is a negative for you.

No matter which way you go, find a Buyers' Agent to represent YOU and do your homework!

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