What’s the most expensive home to buy? What costs you, the buyer, the most? Is it a single family home, a condominium/ townhouse, or a multifamily home? This is an often misunderstood question with an equally counter-intuitive answer.

Buyers often defer to condominiums because the sticker price is simply lower than a single family home. Multifamily homes are likewise often a turn off because the sticker price is even higher than many single family homes, and seriously who wants to deal with tenants?

Well… here’s the thing. If you look at your actual monthly costs… the most expensive purchase price of a multifamily home is in fact the lowest cost to the buyer. How is that possible?

1. Condominiums tend to have the lowest purchase price of the three but they have a condo fee added to your mortgage payment for the maintenance and convenience.

2. Single family homes are essentially the most expensive form of home ownership. All maintenance is on you. All municipal expenses are on you. You are master of your domain and master of all expenses.

3. Multifamily homes have generally the highest sticker price of the three BUT you have a rental unit which on average pays for HALF your mortgage and that’s just the average! Imagine those condo fees gone. Maintenance expenses covered. When you calculate the actual monthly costs to a homeowner, the multifamily regardless of being the largest purchase price of the three common categories of home purchase is the lowest out-of-pocket cost because of the income they generate. AND multifamily properties become investments the day you move out of them because they almost universally earn in rent more than they cost in mortgage (all expenses included) even the day you buy them… but much more so by the time you move out later when you owe less.

I know, I know.. it sounds ridiculous. The most expensive of the three typical categories of home purchase is dramatically less expensive to you, the buyer. How would I know this? Why would I say this? My parents bought their first 2-family home in 1978 which I grew up in. My mother still owns it and others, and retired on the income from them. My father started buying multifamily homes after the parents split, building a small portfolio of them to supplement his actual career. I bought my first multifamily nearly a decade ago with the lowest possible money down and it’s rental value is conservatively 45% above the mortgage, taxes, insurance and municipal costs combined. I say this because it’s true. Consider multifamily properties in your home search.

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