Residential Loans Cover 2-4 Unit Buildings

Fact: The majority of buyers in the U.S. purchase single-family homes, and condo loans are about 10% of the market.

Fiction: Many buyers think they have two options when it comes to home buying: condos or singles family homes. Great news—this isn’t true! There is a third option that can be a great way to grow your wealth: purchasing a 2-4 unit apartment building. In cities like Chicago, we have a larger inventory of 2-4 unit buildings that qualify for residential loans. This means buyers have the option of purchasing an investment property with as little as 3.5% down (FHA) or 5% down (conventional).

Living in one unit and renting out the other units is known as either owner-occupying or house hacking, and it’s a really great way for new buyers to build equity. Multi-unit properties can provide a path to home ownership that keeps your out-of-pocket monthly payment lower, because tenants’ rents help to supplement your mortgage. There are also more opportunities to force appreciation through updates and renovation because each unit that is improved will then be able to command higher rents (and lower your portion of the mortgage payment). This means there is a clear path to eliminating any PMI early.

Owning a home will always come with maintenance expenses, but buyers of multi-unit properties will need to plan more proactively, as they will have 2-4 times as many appliances that could break and vacancies to fill from time to time. Taking on the responsibilities of a landlord is not for everyone, but having the option to purchase a 2-4 unit building for a low down payment is enticing many new buyers. If you’re interested in learning more about your buying options, get in touch! I have significant experience helping buyers purchase multi-units, and I can help you run the numbers to figure out the right path for you.