With housing prices going up for single-family residences, many people are looking into multifamily insurance options.
Living in a part of the house or building and renting or leasing the other parts out can be a great option. You get a place to live and the rental income can count toward the payment.
However, you want to think through all the realities of going multifamily. There are different financial considerations and most importantly, multifamily home insurance considerations, as well. Keep reading to find out more.
What Counts as a Multifamily Home?
A multifamily home is anything greater than a single-family home. This means a building that has multiple bathrooms, bedrooms, and kitchens.
The key is that there is some sort of separate wall between the residences.
This can apply to places as small as duplexes, or multi-unit townhomes.
Remember that as the owner of the whole unit, you would be responsible for all multifamily home maintenance. This is something to consider as you weigh all your options.
As with any investment, you want to look at the pros and cons. That way you can make an informed decision.
The Finances of Multifamily
If you purchase a multifamily rental home that has no more than four units you qualify for single-family type loans. If you live in the property, you would qualify for FHA or VA loans also.
Living on the property would also help you count the rental income toward your qualifying for the loan.
If you don’t live in the property, it would count as an investment property and would change your loan options.
Units larger than four would move into the commercial category and you would seek commercial financing.
Multifamily Insurance Facts
Multifamily home insurance brings additional considerations from regular individual home insurance.
General liability challenges come in the form of weather and renter damage but there are other considerations.
Theft and the security of your building are something that general liability covers. In fact, many insurance companies offer help in securing your property.
Liability is another consideration when you think of when you become a landlord. Many owners get Lessor’s Risk Insurance which protects them and their assets from people who have accidents or damage on their property.
These insurance challenges should be considered when you think of your multifamily home insurance.
Finding agents and companies that are experts in these fields is very important. They can provide the experience you may lack especially if you are a brand new landlord.
The Multifamily Choices
There are many choices when it comes to the multifamily that you will want to consider.
How you finance the property and what multifamily insurance you get for the property are the key decisions to start with.
Think through your options and seek out experienced people to help you make the right decisions.
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