I am looking to make my first splash in real estate. I am a recent grad working right now to build up some capital. Would like to purchase/acquire a multi unit (2-4) and I would likely occupy one of the units. Basically I would just like to start a discussion here regarding people's experience in this area, share creative ideas in terms of financing or about properties in foreclosure, REOs and short sales. Any and all advice is welcome and appreciated.
Thanks for reading!
There are so many ways to go about this and not enough space to type everything
I suggest you check out the how to guide under the learn tab on top.
Next start listening to the podcasts. They pretty much cover every question you have asked.
Hi Andrew. There are pros and cons of living in one of the units. The advantage is that you can get an FHA loan which is only 3% down. And you can do a lot of the work yourself if the units need them. The disadvantage is that your tenants will most likely become more of a friend than a renter. And they could take advantage of you. Owning income property is a business, so you must treat it that way.
It all comes down to what your investing goals are. Personally, I don't like to manage or mess with that stuff. But some people feel they need to do it.
Brent- Thanks for the advice. I just joined here and have been all over the how to guides. Starting the podcasts today
Aristotle- Thats a good point about allowing the tenants to become friends. It absolutely is a business and I would make that point clear to them. Since you dont like multi-units, what do you prefer to deal with?
I just bought a 3-unit in February and owner-occupy. The tenants love that I'm next door because they see me out and around working on the property and just generally being accessible. We are friendly, but not friends if that makes sense.
Using the FHA loan, I put down 3% (somewhere around $12k) and my rents cover the payment and mortgage insurance. I only pay utilities and home insurance. Basically, that's $2000/month I save from moving out of the rental I was in (it was a nice place). That's a HUGE profit per year.
The other major benefit is that as a newbie, you are literally right there and it makes doing showings, collecting rents, and maintaining the property very easy. I am trying to force as much equity and profit as I can, so doing my own maintenance and management in the early years will allow me to expand my door count much more quickly.
Best of luck. Search for "house hacking" as that is one of the favored terms for what you are talking about. There are many posts related to it with lots of good info.
Go for it Andrew. A high percentage of posts in 'what would you do if you started over' threads that I have read on BP have been about starting with an FHA loan on a 2-4 unit. I actually considered selling my personal single family in order to get back to this point, but am living in a home that too well suits me for now. Head over to the multi family forums and spend a few hours going through the archives and you will answer many of your questions.
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