If you’re interested in purchasing a new property, but you don’t want a single-family home, a multifamily house or a condo might be a better option. Understanding key differences can help you figure out which is right for you.
What Is a Multifamily House?
A multifamily house contains two or more units with shared walls. Properties with up to four units are classified as residential, while those with five or more units are considered commercial. That distinction affects mortgage requirements.
Buying a multifamily house might be a good option if you’re looking for an investment property. You can live in one unit and rent out the others, or you can live somewhere else and rent out all the apartments.
If you buy a multifamily house, you’ll be responsible for the mortgage, insurance, taxes, maintenance and other expenses. If all the units are occupied, you might collect enough rent money to cover those costs and still earn a healthy profit each month.
A multifamily home can be an ideal solution for a large, multigenerational family. Perhaps you have an elderly parent who needs some help, but doesn’t require assisted living or nursing home care. If you buy a multifamily house, your parents can live in one unit, and you, your spouse and your kids can live in another. You’ll be able to spend time together and help your parents as needed, and you’ll all have privacy.
Buying a multifamily house can also be a good option if you have an adult child who wants to live nearby, but not under the same roof with the rest of your family. Your child can live in one unit, and you can live in another. If the property has more than two units, you can rent out the others to generate additional income.
What Is a Condo?
Condominiums are similar to apartment buildings. They’re often found in urban areas and might include dozens, or even hundreds, of units.
Condos typically offer amenities such as pools and gyms. Residents own their units and pay dues to a homeowners association, which uses the money to maintain common areas, provide amenities and pay for services such as trash collection and snow removal.
Buying a condo might make sense if you want to live in a multi-unit property and have other people around, but you’re not interested in being a real estate investor or having other family members live close by. You’ll have plenty of opportunities to spend time with your neighbors, but you won’t have to worry about maintaining a large property, screening tenants, or collecting rent. When you factor in HOA fees, owning a condo can be expensive, but many people find that the benefits outweigh the additional financial cost.
What’s Important to You?
Multifamily houses and condos have distinct advantages, as well as potential downsides. Think about your goals, your family’s circumstances and your finances to find the property that’s right for you.
