Florida offers many lucrative real estate investment opportunities in both single family homes and multifamily properties. Before investing in either, it is helpful to understand the similarities and differences between the two with respect to financing.
If you want to purchase a single unit, you can do so using a conventional mortgage, a jumbo loan, a government-backed loan like FHA or VA, or you can use a hard money loan.
The down payment requirement is typically 20-25%, but for some types of loans, it is lower. For example, FHA loans can have down payments as low as 3.5%. VA mortgages have no down payment requirements. There is no PMI if you buy using a VA mortgage. Keep in mind that you must live in the home to purchase it with a VA or FHA mortgage. You can have a tenant, but it must also be your primary residence.
Why choose a single family home rather than a multifamily property? There are a variety of reasons to consider it. For some people, it is the more affordable option. Others may choose it because managing it is simple and straightforward.
The downside is that you cannot rent out to a lot of tenants if you have a single-family home. Ideally, you would rent out to just one. In practice, however, single-family homes often get divided up between multiple tenants. This even sometimes happens when the owner is residing in the home as well.
If you want to buy a multifamily property, you can either do it with a Fannie Mae or Freddie Mac loan, or you can take out a HUD multifamily loan. Bank loans, bridge loans, CMBS loans, and hard money loans are all additional options. There are some other types of loans that also can be used to purchase these types of properties.
Unsurprisingly, down payment requirements typically are a bit higher for multifamily properties, ranging between 25% and 35%.
If you purchase a multifamily property, you can place a tenant in each unit. This diversifies your income streams, and gives you the chance to bring in more revenue. They also tend to fare better in volatile market conditions than single family homes, which can be especially beneficial during times of uncertainty.
The disadvantage of a multifamily property is that you have more units and more tenants to manage. That can get to be complicated. These properties can also cost more to maintain. So, make sure you have accounted for these complexities.
Whether you are in the market to purchase a single unit or multifamily property, Lending Bankers Mortgage can quickly connect you with a suitable loan. To get started, please give us a call at (786) 220-1100 to schedule your consultation. We can help you invest in real estate in Miami or anywhere in Florida.
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