Why You Should Be Marketing Multi-Unit Properties to Millennials
It’s clear that millennials face significant challenges when it comes to buying their first home. Currently, 44.7 million former students are burdened by debt as a result of their efforts to attain a degree. With 11.4% delinquent by 90 days or more and another 5.1 million borrowers 360 days delinquent, finding the cash for a down payment, closing fees, and monthly mortgage payments can’t be easy — even if they’re able to get a mortgage. All this, not to mention the inevitable credit ramifications associated with carrying so much debt…
Of course, not all millennials are defaulting. For those whose careers are on the rise and are starting families, the multi-unit property is an excellent way to get a foot in the door of the current housing market.
According to a recent update from CoreLogic on two-to-four unit properties, 43 million people are renting in the US with 7.7 million currently occupying two-to-four family homes. In fact, 2018 saw 74,000 purchase transactions of two-to-four unit properties — a 2.2% increase year-over-year with a median sales price of $299,000, an increase of 1.3%. And, with eight out of 10 two-to-four unit properties occupied, all indications are this is a viable strategy for prospective first-time homebuyers who may not qualify for a mortgage on a single family home.
Before putting a multi-family property on the market
Working with the seller, you’ll want to be sure that all units’ leases are up-to-date and include the current rent for each, whether or not security deposits have been collected and who, if any of the tenants are currently having their rents subsidized but the government. If you don’t have experience selling multi-family homes, there are questions you are bound to be asked by the seller. Can you provide references from previous multi-family unit sales? What difficulties have you encountered with tenants and how were they resolved? When planning to show the property, how much notice can the tenants expect and how do you handle a showing when the unit is occupied?
The sale of a two-to-four unit property is not so very different than selling a single family home, provided you’re properly prepared. Curb appeal makes a big difference. Be sure all common areas are well lit as well as neat and clean. Parking accommodations should be in good condition and all locks and doors need to be in good working order. You’ll want to have all documentation pertaining to maintenance of the property readily available regarding HVAC, appliances, and any significant upgrades like a new roof, recent painting, etc. Potential buyers will also want to see financial documentation including net earnings and all operating costs including insurance, utilities, trash collection, repairs, and any other expenses.
Certificate of inspection
A complete inspection conducted prior to listing the property is an important difference when selling a multi-family unit as opposed to a single family home. A certificate of occupancy is generally a requirement in most cities and towns. A more general home inspection is also highly recommended prior to putting the property on the market. In both cases, failure to do so could result in a delayed closing or even a lost sale.
Target your audience
All marketing tools should be used to promote the property. A descriptive listing with high quality photos that highlight the features of the building are a must. You’ll also need a website and social media posts targeted to millennials, emphasizing the benefits of owning a multi-family unit and a strong call to action indicating the fact that such opportunities are going fast.
There are challenges when it come to selling a two-to-four unit building. It’s easier to sell an empty building than one with tenants — particularly when the owner plans on occupying a unit. And, since they require the property be owner-occupied, a full house means more affordable FHA and VA loans are out of the picture. With a careful review of leases and proper planning with the seller, these obstacles can be avoided.
The Bottom Line
Moderate to low income families are greatly in need of affordable rentals and millennials are looking for a place to start building their nest egg. What better way to jumpstart that process than purchasing a multi-family home and letting the rent pay the mortgage.