I am in the process of purchasing a two family house in upstate NY. The purchase price is $85k and I am putting 10% down with a no PMI mortgage (Total monthly payment with taxes, insurance and mortgage payment will be $719). I plan on putting in about $4000 to get the second unit "rental ready". (New carpet, appliances, paint etc.- It has a brand new roof)
We will live in one unit and expect to get $700 for the spruced up unit. The plan is to live there two years and then purchase a SFH for us and rent out both units.
My questions are:
1- Do I need a property management company for something like this?
2- Should I be putting more down? (I can afford it, but would prefer to keep the cash)
3- When renting out an owner occupy, are there different rules for who I can rent this out to?
Thanks in advance for the response.
1.You do not need a property manager unless you don't want to deal with it.
2.You can ask the seller if you put more down then would they give you better financing?
otherwise no, just keep the cash and invest it somewhere else.
3.No, the same rules apply
Hi @Jon T.
First of all, welcome to BP! There is lots of great information and characters to learn from.
On to your questions.
You do not need to hire a property manager for the rental. You can hire one if you want to be hands off but since you are living there, you will likely be able to handle things that come up. You might want to consider using a PM for tenant placement since that is a critical part of the rental profit. If you want to tackle it yourself there is lots of information in the BP Free How To Guides.
Regarding the down payment, typically investors put as little money down as necessary to still provide the cash flow desired from the property. If the 10% gets you good financing terms and the resulting cash flow is acceptable, save the rest of your savings for reserve funds or another investment. If you could use some information on analyzing deals there is a BP Free How To Guide for that too.
Lastly, as an owner occupied, some states do allow you to put additional limits on who you rent to but it is best practice to be consistent and always follow Fair Housing regulations.