If you own real estate, particularly a multifamily dwelling, within the Fall River, Massachusetts area or anywhere in the South Coast region, it is important that you have commercial business insurance to cover your investment. While some people might think that residential insurance is what is required here, the truth is, if you are renting out your multifamily dwelling, you will need commercial coverage because of the type of property that it is, even if it is not truly considered to be a “commercial” property by definition.
What is a Multifamily Dwelling?
In the world of real estate and business, a multifamily dwelling is a property that have more than one, but less than five, units that can be rented out as separate dwellings. So a duplex, triplex or any other type of building that has five units or less, would be considered a multifamily dwelling. A property that has more than five units would be considered a commercial rental property.
Multifamily dwellings are usually a very attractive investment for people who are new to the world of real estate investments, in part because the upkeep and costs to maintain the property are very similar to taking care of a single family dwelling, yet with five times the renters and opportunity to make a profit all in one place. You also have the option of living in one of the units while you rent out the rest of the dwellings so you can keep an eye on things and stay on top of the maintenance issues as they arise.
The Truth About Multifamily Dwellings
The real truth about maintaining a multifamily dwelling is that while you do get five times the opportunity to rent and make a profit, you also get five times the number of renters who will all have their own problems, maintenance issues and complaints. So when it comes right down to it, maintaining a multifamily dwelling may be more work and cost more time and money than you might initially assume. It is important to sit down with professional advisers before investing in such a property.
Contact consultants that can help you to better understand property management. You might even want to consider hiring a management company to take care of all the maintenance, complaints, mortgage payments, rent collection and other issues for you. You should also consult with your Fall River insurance agency to find out about your responsibilities for insurance with regard to residential insurance or commercial business insurance for your property, depending on your unique situation.
Get an Inspection Before Purchasing
Before you purchase a multifamily dwelling in Fall River or anywhere in the local area, make sure to get a proper inspection. While an inspection will be part of the purchasing process, it can really pay to hire your own inspector who works for you and will tell you if there are any issues that will end up costing you a lot of money to fix or replace. A property that requires a lot of upgrading or repair work can usually be purchased at a lower rate than the asking price, but you must be prepared to do the work before you can start renting out the multifamily dwelling to any renters.
On the other hand, issues that are discovered after you have already purchased the multifamily dwelling will hurt your potential profit and start immediately hacking away at your bottom line. With a large mortgage and no residents to off-set the monthly bill, you could quickly find yourself swimming in debt that you weren’t prepared to deal with as things begin to break down and go wrong. It really is in your best interest to have the home inspected prior to purchasing. Consider also consulting with your Fall River insurance agency about residential insurance or commercial business insurance on the property as well before purchasing so you’ll have a ballpark figure of your financial obligations.
Do Some Investigation Work Too
In addition to having the multifamily dwelling inspected, make sure to check with the city or county offices to determine whether or not the property has been properly zoned for a multifamily dwelling. Some property owners will modify a structure to make room for additional families without going the proper channels with the zoning commission or building inspectors so they can avoid paying additional property taxes. You could get stuck having to remodel the structure back into a single family dwelling to avoid getting fined.
Another thing you should check before purchasing a multifamily dwelling is the average rents within the local neighborhood. If you put the units up for rent at a lower rate, you might end up getting a lower quality rental experience and will definitely make less of a profit. However, if you put the units up for rent at a higher rate, you might end up with the property sitting vacant for too long, which cuts into your profits as well. It is important to have financial resources available before making such a purchase, that will allow you to cover the mortgage, property tax and commercial business insurance or residential insurance, while the units are sitting vacant.
Where to Get Multifamily Dwelling Insurance in Fall River
Contact Paul Sullivan Insurance, your local Fall River insurance agency. Sullivan Insurance can help you learn more about insuring a multifamily dwelling in Southeastern Massachusetts and can help you decide whether you need commercial business insurance or residential insurance for this type of property. It pays to work with professionals that you can trust and with nearly 60 years of experience providing a wide range of insurance policies and services to residential, commercial, marine and industrial clients in the South Coast region, Paul Sullivan Insurance is a local name that you can count on for your multifamily dwelling insurance needs.