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The pros and cons of living in a multi-unit building you own involve how much distance you want between your private life and your property investment. If you enjoy being involved in your rental property’s day-to-day operations and don’t mind having neighbors in close proximity, then a multi-unit building you own may be a suitable investment. However, if you’re looking for a more hands-off investment or prefer more privacy in your personal life, you may want to consider other rental property investments.
Let’s start with the basics of owning a multi-unit building. Firstly, the building you buy should be well-maintained and in good condition with amenities both you and your tenants will appreciate. Secondly, the building should be located in a desirable and convenient neighborhood where you and your tenants feel comfortable and safe.
Legal ConsiderationsLegal Considerations
On top of the basics, there are also legal considerations for owning multi-unit buildings, which can be found (or passed on to your lawyer) here in New York State’s “Multiple Dwelling Law.”
This details ensuring your building provides a safe living environment for you and your tenants, provisions for proper ventilation, fire safety accommodations, and adequate sanitation standards. But you wouldn’t want to live in any building that doesn’t meet those standards, right?
You will also need to comply with the federal government’s “Fair Housing Act,” which “protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.”
Are you Comfortable Living with Your Tenants?Are you Comfortable Living with Your Tenants?
There are several benefits of being a live-in landlord (also known as an owner-occupied landlord), but the main one is keeping a close eye on the property. And that’s a big one. If there is a significant problem in your building – say, a fire or something equally catastrophic – you will be among the first to know about it, and you will be able to respond immediately. That is not a small thing. Nobody will care more about your property than you, so getting emergency help to your building as quickly as possible could be critical in protecting your investment.
However, there are also several challenges to being a live-in landlord, including a potential loss of privacy and having to deal with potential conflict. Your tenants will be all around you all the time, which means they may ask you to fix things when you are (in your mind) trying to enjoy some free time. Your building will not likely provide enough income for you to be your only full-time job, so you may be (no, you will almost certainly be) asked to resolve issues for your tenants when you are not up for it.
For this reason, there are several systems you can put in place to mitigate these disruptions in your personal life.
Operation Systems and StructureOperation Systems and Structure
You can set up a communication system for filing complaints, or to-dos, from your tenants. This can be a simple email address where they log their issues. This can be a voicemail or texting service where they call or text issues that need to be addressed. This allows the tenants to reach you without disrupting your day-to-day activities and priorities.
For regular, day-to-day issues, you can promise your tenants they will be addressed within a certain timeframe and during certain times within the day and/or days of the week. You can also set specific hours when you will respond to those complaints or issues. If there is an emergency, you can have a separate protocol, but be careful: some tenants may consider even the smallest issue an “emergency.”
Final ThoughtsFinal Thoughts
And finally, you may consider NOT renting units to friends or family and as with most investments, keeping your personal life separate from them is generally a good practice. With real estate, it can get tricky, as everybody needs a place to live, but friends and family will be tempted to take advantage of your relationship and thus may take advantage of you.
These are the “softer” considerations when purchasing a multi-unit property you want to live in yourself. For more information on how to buy a multi-unit building and whether or not these are good investments, we recommend this excellent article on “How to buy a multi-family property in New York City.”