Looking for some advice before jumping in

4 Replies

Hello all, First I would like to give you a rundown on my situation. I'm interested in investing in multi family, have been for a while just haven't taken first step quite yet. I've been spitballing ideas a little and not sure which route Would be best to take. I'm definitely set on multi family properties but not sure if I should jump right into it. I also might get into flipping eventually due to construction background. I currently pay rent living in an apartment with my wife and kids, but I plan on buying first property in the near future. So my question is, should I either; 1-start off by buying a home for my family, move into and renovate, build equity, refinance/sell, reinvest. 2- buy multi family and continue renting to tenants, collect and stash away the cash flow from property, reinvest or 3- buy multi family property and live in one of the units, renovate and build equity. Plus I can save money due to low balance on remainder of mortgage after collecting from tenants, and reinvest. Any and all suggestions welcome Thanks.

@Joshua A. Lenninger

Personally, I like option #3, but everyone's situation is different. Multis tend to require a higher up-front investment. Also, good multis are sought by many investors, so the market is crowded with people who run the numbers.

It appears you definitely want to do a flip. So why not go with the lower bar for entry? If you can manage that, you know you can do it again with a multi.

I like #3 as well.

My wife and I did option #1 back in 2006, except we held onto the home and now rent it out. That worked out well enough. But, if I could do it all over again, I would have bought a duplex or even a fourplex, lived in one unit and rent out the others. By living in the property, you can get an FHA loan. Today, it is possible to get 30 year mortgages at 3-4%. A mortgage like that on a duplex or fourplex would be sweet.

@Joshua A. Lenninger

I also vote for #3. If you can find a nice multi-family that will work for your family, go for it. It is low-risk and a good first step into Real Estate.  You get the benefit of a low down payment and a great rate because you are going to occupy one of the units. That being said, a typical duplex or 4-plex has 2 bed, 1 bath units that aren't suitable for a family usually. So you might look at older houses that have been broken up into a number units or a situation like a house and cottage in the backyard that you could rent out.

If you wife doesn't agree to that strategy, I have been able to get started by buying "cheap" run-down houses, renovating, refinancing and turning them over to a property manager. By the end of the process you have very little or no money left in the property and you can go and do the next one.

Mike

Medium oak tree real estate logo jpgMichael Wentzel, Oak Tree Real Estate, LLC | [email protected] | 719 338 2786 | http://www.oaktree-realestate.com

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