Learn from our property management experts!
Low interest rates have broken headlines for more than nine months through late 2020 and early 2021. However, the high cost of lumber and building have also been covered by national news outlets. But what does this mean for you as a potential real estate owner?
It means that now is an excellent time to purchase a pre-existing home, especially if you intend to rent the property. One of the best ways to maximize the return on your investment is to purchase a multi-family property, such as a duplex or large home that has been subdivided into independent apartments or condominiums. Below, we outline three benefits to purchasing a multi-family in the current early 2021 market.
In 2020, the Federal Reserve cut interest rates to the lowest percentage since the 2007 recession. This dropped the average lending for real estate to about 3-4%, compared to an average of 5% before the pandemic. If you are choosing to invest in real estate now, you will most likely be able to borrow at a low rate, therefore also receiving a lower monthly mortgage payment. Consider the price you plan to charge to tenants when determining what you would like to spend on your mortgage payment as well.
Even prior to the pandemic, there was a shortage of affordable housing options. On a national average, there was only 33% of the need being met – leaving 67% of those in need of rental housing without options. The high cost of lumber also meant that those who may normally be able to afford to build simply cannot afford a custom home due to increased building expenses. As a side-effect of the pandemic, many households saw a significant reduction in their income and savings, whether they were laid off, furloughed, or simply did not receive an annual bonus that they were expecting. These factors combined have led to many families seeking to rent a townhome or condo that has more space, similar to a traditional house, but does not require a large down payment.
One benefit to investing in a multi-family home is that it can require very little time on your part, if you choose to use a property management company. After making your purchase and completing any necessary renovations or updates, you can utilize the expertise of a management company to handle the day-to-day needs of your tenants. This can involve anything from marketing the property and conducting tours with potential residents to resolving maintenance requests and charging rent payments. The real estate professionals at MMC Properties have decades of expert experience and are fully equipped to meet the needs of your residents. If you are considering a multi-family home as an investment property, call (615) 849-9006 to speak with MMC Properties about the management services they can offer your residents.