I am looking to purchase my first real estate investment property. I am looking at duplexes so I can get income at the same time pay off the mortgage and live in the other unit. Is this a wise way to get my foot in the door in REI or would it be more beneficial if I purchased a single family home and hope to make a decent profit off it and then have a bigger chunk of money to buy other properties? I am looking to invest in the South Jersey area.
@Kyle Brown - If you can handle living next to your tenant than this is an awesome way to get started. The tenant will pay all (or most) of your PMI payments and then you can bank the rest to start putting money away to acquire more investment properties. This strategy can rapidly increase how you can utilize your capital and equity. I can only say I wish I was smart enough to do this when I bought my first property (single family foreclsoure)
James Masotti, Quelle Capital LLC | [email protected] | 856.481.2981
I think that it is a great idea but there are a couple of things to look out for.
1. Avoid renting to your friends unless you are absolutely positive that they are responsible and your relationship won't get in the way.
2. I can't remember how the taxes benefits work if you are living in the investment property. Typically if you live in a property for 2 out of 5 years you not have to pay taxes on the profit from the sale of the property. Ask your accountant they will know.
3. I would suggest that if the rented portion covers all of the expenses that you take your income and put that towards another property.
Great thank you for the feedback, it is always helpful. I am looking to purchase my first property in the next month or so. I am really anxious to buy a property, but I want to make sure it will put me in a good position for the next property.
Thats what I did for my first property while I was in college and instead of paying rent I collected over 1000 a month. I highly recommend it for a first investment. When I graduated and sold it I was able to pocket the equity and appreciation.
If you have any questions feel free to ask!
Congrats on being willing to get started and taking action. You're off to a good start. It's really good sign that you were in fact wise enough to stop, take a deep breathe and ask for advice before jumping off the cliff.
That said, you sound like you're on a terrific track already. The idea of buying a duplex, rent one unit and living in the other is a well supported idea. This is exactly what @Brandon Turner did for his first investment. He calls this "House Hacking". In fact I would shamelessly contact Brandon directly for tips and advice. He's a very sharp cookie!
I would also take to heart the points that Adam B. offered you. House hacking is a great way for many people to get started, but it is not free of pitfalls and it is only a start to investing, not an end in itself.
Take a look at the Find Members section to find other BP members in your area. You may be able to get localized advice and tip on resources. Who couldn't use a tip on reliable plumber or electrician in your area. Perhaps some of those contacts will be partners on one of your next deals.
Good on you for going for it. You on a great track. Keep us in the loop and let's know how it's going from time to time. If I ever get around to the South Jersey market, I'm gonna keep your name in mind.
Luck is for rabbits. May you have great success!
Tom Mole | [email protected]
@Kyle Brown congrats on your decision! I'm from NJ as well and decided to do the same as you! Gold luck!
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