A Multi-Family Building - WICU12 HD WSEE Erie, PA News, Sports, Weather and Events

A Multi-Family Building

By Jim Sulski, Studio One Networks

On the surface, it sounds like an easy get-rich-quick plan: Buy a multi-unit building, sweat equity into it, rent out the units, then sit back and reap the profits.

While many people have created a large nest egg with a great cash flow, purchasing such a building is not as easy as it seems. And there are pitfalls to being a landlord.

In fact, most real estate experts say that buying and managing a multi-family unit building is akin to running a small business. That's why there are a number of things to consider when purchasing a multi-family building:

  • Location is critical. Where the building is located will dictate what type of rent you charge. Another consideration is how much cash do you have to buy a multi- family building? As with any real estate purchase, you'll need to cover a down payment and closing costs.

  • Costs increase. When you buy a big building, the costs and fees go up. A one- to four-unit building may require a 20 percent down payment while a building with five or more units may require 30 percent down. Keep in mind that buildings with five or more units are usually considered commercial properties. You may have to pay a higher interest rate than for a residential mortgage property and additional fees.

  • Management. Before you buy a large property, think about who will manage the building. If you plan to manage it, plan to spend at least 20 hours a week as you get things up and running.

  • Repair. If the building is in poor condition, you'll need cash to put it in better shape. Costs go up dramatically when upgrading a large building. A new heating system could set a landlord back tens of thousands of dollars. If you're handy, you can save money by doing your own minor repairs. Then again, you will be on call 24 hours per day.

Multi-family buildings have other costs, including hazard insurance, liability insurance, grounds keeping, landscaping, trash removal, snow removal, advertising, property taxes and maintenance. The rent you charge should cover all of these, plus utilities.

Copyright (c) 2008 Studio One Networks. All rights reserved.

*DISCLAIMER*: The information contained in or provided through this site section is intended for general consumer understanding and education only and is not intended to be and is not a substitute for professional advice. Use of this site section and any information contained on or provided through this site section is at your own risk and any information contained on or provided through this site section is provided on an "as is" basis without any representations or warranties.
Powered by WorldNow
3514 State St. Erie, PA 16508
Newsroom: (814)454-8812
Toll Free: 1(800)454-8812
Business offices: (814)454-5201
WICU FCC Filing
WSEE FCC Filing
Share:
Share Stories
Submit your stories to our site!
Share Photos
Share your photos in our community galleries
Mobile:
Mobile Site
Be sure to stay constantly updated with the power of WICU12 and WSEE at your fingertips
Free Android App
Free iPhone App
Free iPad App
Storm Tracker App
Droid
iPhone
iPad
All content © Copyright 2000 - 2014 WorldNow and WICU. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.
                   WICU/WSEE - 3514 State Street Erie, PA 16508 - (814) 454-5201 - info@wicu12.com