CityRealty Insider > Buy a Home, Become a Landlord

Buy a Home, Become a Landlord

DECEMBER 17, 2009

Buying a small building can be a good business option for urban homeowners.

Purchasing an income-generating property in a 2-4 unit building is a classic way of lowering the cost of ownership. The idea is to live in one of the units and rent out the rest.

You can avoid regrets by knowing the caveats going into the deal. Like any business, rental properties are susceptible to market volatility among other unexpected occurrances.

The usual must-do list for property ownership applies even more so here. Hire a licensed home inspector. Get an engineering report and general inspection on the property. Check the property on the city register. Consult a real estate lawyer. To determine how much income you can expect to generate, talk to current tenants about a host of issues including how much their rents are, whether apartments are rent stabilized or not and more.

Buying with friends brings additional reasons to use caution. Not all lenders will give loans if more than two people are sharing. It’s a good idea to enter into a Deed of Trust at the beginning, specifying the share of the property, major costs and what will happen if circumstances change, and agreeing on a minimum period during which you can’t sell.

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