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mugrim posted:Who in the middle class is trying to buy an apartment building as an investment? Or do you mean a business? Even then, who are these people and how on Earth can they afford it? Most smaller buildings (2-4 units) aren't much more expensive than a single family house, and the rent from the unit(s) you don't live offsets most/all of your monthly P&I payment. If a member of the middle class can afford a nice single family house, they can typically afford a 2-4 unit apartment building, if they can live in the smaller space and deal with living next to the tenants. Example from SE DC: $270k buys a building with 2x3bd apartments, which rent for ~$1400 (not rent controlled due to the size of the building). It's not as nice as a house, but with most houses in that section of the city going for $200k or so, it's about as affordable. Now, that's a pretty bad area of the city, in a nicer area, the prices rise significantly but the rents don't. With the rent from the other unit (calling it $1300, since there will be some vacancy), someone putting 5% down on an FHA mortgage would end up paying ~$400/mo in mortgage/taxes/insurance plus maintenance for both units. Cheaper than renting, if you can come up with the 5% down. Popular Thug Drink posted:We do that in America with Section 8 vouchers. It works in theory, but in practice there is a stigma associated with Section 8 tenants meaning that most landlords refuse to accept the vouchers, creating a sort of slumlord effect as landlords with awful properties accept the vouchers to rent at higher than market rate for substandard residences. Again, this is because most low-income housing is just hand-me-down falling apart rat traps that nobody else wants to live in, because nobody builds new housing for the lower or lower middle class. In most areas with rent control, landlords have to accept S8 vouchers (DC, SF, and NYC, at least). The vouchers are always kinda weird; sometimes they're so far under market that no sane landlord would consider taking them, sometimes they're so high above it that landlords pack buildings full of S8 tenants. This brings up another question re: rent control. Every rent controlled building I've been inside has been in the absolutely shittiest shape that could stand a chance of passing inspection (and a few significantly worse). How do we create an incentive for an owner to do more than the bare minimum with rent control in place? Ytlaya posted:The middle class (if you're actually talking about it in terms of "people who have the median amount of wealth" can't afford to make significant investments of this nature. I'm pretty sure my family is above the 50th percentile, and there's no way in hell we could ever afford to buy another condo/home as an investment. He's talking about living in the building, not buying it strictly as an investment. If you can afford a house (a big if, at 50th percentile), you can usually afford a 2-unit building.
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Oct 18, 2014 04:04
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LemonDrizzle posted:Does that gross income include the expected income from renting out the other units in the four-plex or is it just income at the time of making the mortgage application that's considered? If they're currently occupied, you can count 75% of the rent income IIRC.
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Oct 18, 2014 17:06
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