Looking To House Hack? How To Find Multi Family Homes for Sale in 2022

3.22.2022 | Category: Homebuying

A single-family home would serve you well economically. Historically, it is an asset that appreciates in value over time. But you also wait to profit from it while shouldering all the current expenses. If you want to generate a passive income or jumpstart a career in real estate investment sooner than later, buying a multi-unit property or house hacking may be the right path for you.

What is house hacking?

House hacking is the modern term of buying and maintaining a multi-family home. Your options range from duplexes to apartments (up to four units or families living separately) to commercial buildings (more than four units). This approach allows you to live in one unit and rent out the rest. So, in this case, your tenant will pay the mortgage while you build equity for the property – which can be much bigger than the value of a standalone home.

Nowadays, of course, house hacking is preferred by people who are entering into expensive markets or just want to cut back on upfront costs. Whatever your reason, it’s important to adopt a good house-hacking strategy, starting with effective ways to shop for multi-family homes.

Tips On Finding Multi-Family Homes For Sale

There is no one-size-fits-all approach to purchasing a multi-unit home. You have to factor in many variables, like your long-term goals, before actively searching for a property to invest in. But the house-hacking process involves some basic steps that can work for a lot of people. So let us walk you through these steps to make the whole undertaking less daunting and complicated:

Choose Your Preferred Multi-Family Property And Investment Strategy

It’s true that you’re combining homeownership and property investment when house hacking, so it’s a high-stakes situation.

If you’re a first-time investor, you may want to consider choosing a duplex. This type of property is often the most affordable multi-family property. It may also be less difficult to manage if both units are identical – you can collect the same amount from the tenants if you’re not occupying one unit. You can even rent out the second unit to a family member, friend, or relative. However, this option also comes with a few disadvantages:

  • Sharing walls with your tenant requires ground rules that compromise your freedom (and theirs)
  • Rent income is not always guaranteed
  • Repair and maintenance are your responsibility as the landlord

Meanwhile, if you’re interested in managing a multi-family home, you should consider the complexities it has. Even a handful of units already mean you’re pricing for differences in square footage, bedroom count, amenities, and more. You also need to consider hiring a property manager if you want somebody else to handle the day-to-day operations.

Of course, a 10- or 20-unit apartment can grow your portfolio and generate profits in less time. The rewards can negate the risks in the end.

Your decision comes down to your personal choice and risk appetite. So take your time with the first step and consult with professionals if you can.

Check Active Listings

Whether you’re looking for a multi-unit home or duplex for sale, you can start your search online. Various sites and platforms allow you to explore available properties in your neighborhood, as well as compare listings to narrow down your options.

Furthermore, you can categorize your search according to the following listing types:

  • Residential: You may already be familiar with some of these residential real estate platforms. For instance, Zillow is quite popular because of its broad coverage of properties across the country, including smaller-scale choices like duplexes. Trulia, Owners.com, Oodle, and Homes.com also offer “home type” filters to streamline your search.
  • Commercial: As mentioned above, multi-family homes for sale with more than four units fall under this category. You can visit platforms with the widest on-market coverage, such as LoopNet, to find your dream property. Other sites recommended by the National Association of Realtors include Brevitas, Catylist, CIMLS, and CREXi.
  • Local/regional: Your house-hunting continues with Craigslist and location-based platforms. To customize your online search, type “multi-family homes for sale near me” in your chosen search engine.

Be On The Lookout For Off-Market Listings

Investing in off-market properties is attractive for some people because of its advantages. But first, what is house hacking, off-market-style? It’s a sale that is not advertised publicly on the listings site we mentioned above. Sometimes, the seller prefers a more exclusive approach called pocket listing, which a local agent shares with prospects directly or with a smaller group of agents in the area. In any case, the seller opts for this route to protect their existing tenants or business interest.

As a property investor, why should you check out off-market options? Here are a few reasons:

  • An off-market duplex or multi-family home is off-limits to the public, so you have fewer competitors to beat. This opportunity allows you to take your time and dive deep into the property before you make an offer.
  • If you are working with a real estate agent, you can lay down the exact requirements you’re looking for in a property. In turn, your broker will do their best to meet the investment criteria you have.
  • If you choose not to use an agent or broker, you can avoid paying additional fees or getting entangled with competition-driven price hikes. You can also tap into their existing relationships with sellers to capture a good deal.

Seek Help From The Experts

Partnering with a local agent can make your life easier. These real estate experts can be a trusted and reliable source of critical information, such as the most appealing locations to renters, property and rental trends, and industry dynamics.

In some cases, you can also find someone with an established relationship with on-market and off-market property owners. You can also tap their network if you’re interested in buying more than one duplex or multi-family home.

Still, it’s also imperative to do your research on your target area, especially if the neighborhood is unfamiliar or located far away from your current address. You don’t want to miss out on a good location, but you also do not want to invest in a bad one.

Get The Funding

Like borrowing capital to buy a single-family home, you can apply for a mortgage for 2-4 unit multi-family home. Lenders will then consider your credit score and history, income, assets, and debts to assess your application.

Since you’re interested in a multi-unit home or duplex for sale, you can also be eligible for using the projected rental income from the additional units to qualify for a loan. But do note that this provision may require a signed lease from each of the renters for the payments to be considered. In addition, you may need to provide documentation of said payments to the lender.

You must also comply with Fannie Mae guidelines when counting rent from your tenant-occupied units. For example, a multi-unit residence should have two, three, or four units, if owner-occupied. Or it must be a one- to four-unit investment property to qualify for a mortgage.

The Right Partner Can Bring You Closer to Owning Your Multi-Family Home

If you have done your research and decided on which apartment complex or duplex is right for you to buy, it’s crucial that you also work with a mortgage firm that has your best interest in mind. Don’t settle for the first result you find after typing “mortgage lender near me” online.

Entrust the rest of the process with a reputable lender like Mutual of Omaha Mortgage. Our dedicated team of mortgage bankers ensures your house hacking ends on a high note through a smooth loan application process.

Contact us today to learn more about how we can help make your home purchase a painless experience!

Get pre-approved or start your home loan application today!

It’s never been a better time to explore your buying options

Get Started

Why Choose Mutual

What makes Mutual of Omaha Mortgage the right choice for your home mortgage?

Click Here

Why choose Mutual of Omaha Mortgage for your home loans?

The confidence of a name trusted by millions of customers over 100 years

Personalized service through the loan process forms an experienced mortgage expert

Manage the entire loan process from anywhere with our easy-to-use mobile app