Part of the American dream that’s been sold for generations is the idea of owning a home. Many personal finance gurus recommend buying a home as a way to build wealth. That advice won’t always work out. There were plenty of people during the Great Recession who found out that owning a home is not always what it’s cracked up to be.
Problems with Owning a House
There are actually problems with owning a house. A home sits in a fixed location. If a job calls for a move to another city, a homeowner is given the added stress of finding a buyer. If no one shows up to buy the house in short order, a family could wind up paying for two places. Renting provides more freedom in this regard.
While buying a house can build up equity, it’s not the best way to build wealth. A house comes with a monthly payment that’s made up mostly of interest payments in the early years of the mortgage. Robert Kiyosaki has argued that a family home is more a liability than an asset. He points out that assets should pay their owners, not take money from them. A house does not pay out money until its sold. It’s the least liquid of all assets around.
Why Multi-Family Homes Make Sense
Mutli-family housing brings cash flow each and every month as renters pay to stay in their condos or apartments. Multi-family homes bring automatic diversification. As the name suggests, there should be multiple families living in a property at a given time. If one breaks a lease or fails to pay, the others should continue paying their rent.
The rent owners of multi-family homes can receive should be able to pay off the mortgage and leave a little over each month. When the mortgage is paid off, these properties will return more cold, hard cash. Additionally, more people are comfortable with renting today than they were in previous generations because renting provides greater flexibility. If you don’t like the neighborhood, you can just leave. If a job comes up in another city, it’s possible to leave. Because more people are comfortable renting, the demand for multi-family housing stands to grow. Additionally, renters are not the only ones who have flexibility. Those who own multi-family housing can hire a property manager and go wherever they want while the cash flow continues to roll in each and every month.