From Mississippi to Chicago: How a Multifamily Property Built Generational Wealth
Did you know you can purchase a 2-4 unit property with a residential loan? If it will be your primary home you can use a FHA loan, VA loan or one of my favorites, a Conventional Loan with 3% down.
Owning a multifamily family property that is 2-4 units can benefit you today and your family tomorrow. Let me take a moment to share how I have benefited personally from a 2-4 unit multifamily building in the city of Chicago.
In November of 1984, my grandmother, Doris Marie Pennington (March 06, 1938 – December 27, 2016) purchased a 2-flat in the Washington Heights community in Chicago, IL. This 2-flat was on a double wide lot and included 3 apartments and a detached in-law house at the back of the property (4 units total). I had the pleasure and benefit of living in this building from 1985 until I graduated from high school in 2002. I remember the pride I felt when I learned the mortgage had been paid off (circa 1997). This property also benefited many family members during various stages of their lives and served as a constant refugee for my family during times of need. As an adult with a family of my own, I realized this Chicago property served as transitional housing for my grandmother’s siblings, her children, and grandchildren, including myself.
After graduating college and teaching in a small rural town in Illinois, I returned to the city of Chicago with my 5 year old daughter to become a Chicago Public School teacher and to figure out life in general. I gutted and rehabbed the garden apartment using $25,000 from a combination of sources: savings, a personal bank loan, and a line of credit from a home improvement store. I lived in the garden apartment rent-free from 2008 – 2012. The renovation added value to the property and allowed me and my daughter a safe place to live without the concern of the high cost of rent in a major city. This multigenerational family building served as transitional housing for me. It allowed me to quit full-time work and focus on taking care of my daughter, completing graduate school, and developing a new career path. When I left Chicago in 2012, I left with savings in the bank, a Master of Science in Public Service Management from DePaul University, and a full-time position in my new career field of higher education.
I have benefited immensely from the decision my grandmother made to purchase a multiunit building in the city of Chicago. Today, the building remains in my family. The Chicago property was and is the gift that keeps on giving! It was a gift to my grandmother who went from sharecropping in Mississippi with a 6th grade education to being the owner of a multiunit property in one of the largest cities in America. It was a gift to my mother and her sister to be able to have their own private spaces as they navigated their 20s. It was a gift to countless family members as they transitioned through relationships, jobs, and life. It was a gift to ME as I figured out transitioning careers, being able to easily balance school and motherhood without the stress of a full-time job. Returning to this home as an adult helped me understand the power and benefits of home ownership for generations. A multiunit building can be a gift to you and to your family for generations to come.
The gift that keeps giving to you:
Live mortgage free. The right purchase in the right location will allow you to live mortgage free, commonly referred to as house hacking. Your tenants’ monthly rent could cover your mortgage and even allow you to have additional income. Not interested in being a landlord?! No worries, I can walk you through the property management process that still allows the mortgage to be covered.
Earn money while you wait to purchase your dream home. There are qualified buyers who decide to wait 3-5 years to purchase their dream home instead of settling. Since more than likely you are renting an apartment the purchase of a 2-4 unit building will allow you to increase your income, save more money, and put you in a better position to purchase your dream home even faster. Even after you purchase your dream home you can still continue to collect income on this property. You can develop a plan with myself and an accountant to help guide you.
Maximize your budget with a purchase with a family member. You both will have your own separate place to live. The addition of 1-2 tenants will cover the mortgage and allow the two owners to split profits. It is less stressful having a co-owner when navigating homeowner responsibilities. When you decide to upgrade your home this is another apartment to rent allowing greater profits.
Mixed-use building benefits small business owners. Some residential loans can be used for the purchase of a 2-4 unit mixed-use building. You can finally have space to run your business that you own and a space to live. Your commercial and/or residential tenants will cover the mortgage and you can use the profits from your small business to directly benefit the business without the overhead of space rental or mortgage costs.
Build generational wealth. A 2-4 unit building can be the first of many in your real estate portfolio. Just like my grandmother’s purchase in 1984, it has built wealth in my family and can continue to benefit generations with steady income via rent or a free place to live.
A 2-4 unit property that is your primary residence qualifies for residential loans, first time home-buyer perks, and all other benefits you receive when purchasing a single family home. A single family home is a great purchase for many; however, a multiunit resident (multi-family home) is also a great alternative. It is the gift that keeps giving for yourself and generations to come. If you are considering this purchase we can schedule a time to talk about your options and I can connect you with a real estate agent anywhere in the world to guide you through the process.
