Multifamily properties: Bust or must?

If you are thinking about buying an investment property, there are several options to consider. You can buy a property, fix it up, and sell it for a profit; you can buy a place and rent it out for the monthly income; or you can buy multifamily properties.

Multifamily properties are not to be confused with multi-unit buildings. A multi-unit building is one building with several rentable units - a common example of this is an apartment building. Multifamily properties are rental units assigned for low-income families through The Housing Choice Voucher Program (HCV), commonly referred to as Section 8 Housing.

What you need to know about multifamily properties

According to RealEstate.com, HCV are properties designated as low income housing by landlords. This gives tenants the option to afford housing by taking advantage of rental subsidies through housing vouchers from the federal government. HCV is available to low-income families, people with disabilities, and the elderly.

Single-family homes, apartment buildings, and townhouses are all available to be designated by landlords as rental units for tenants through HCV. As a landlord, you still have the option to screen tenants under HCV and accept or decline a rental application.

Why multifamily properties can be a good investment

First off, let's clear up a common misconception: you won't lose money. HCV offers subsidized housing to low-income tenants; it doesn't mean the landlord offers cheaper rent or free housing. Tenants who qualify for housing vouchers through HCV are allowed to choose where they want to live, as long as the property is available under the program. Tenants pay as little as 30 percent of their monthly income in rent under HCV. The amount tenants are required to pay each month varies from case to case. It depends on the tenant's income, employment, and personal situation. The difference in rent is paid to the landlord by the government, and it's a safe bet the government always pays their rent on time.

What you can do if you already own a property

Properties don't always have to be designated under HCV when they are purchased; existing properties can be converted under the program. This is a great option for landlords and investors who are having trouble finding tenants. Converting an existing property opens the doors to an entire new pool of potential applicants.

If you want to start investing in real estate and are thinking about designating the property under HCV, it's important to learn all about the program to help decide if it's the right investment for you.