Owner occupiers: how much did you compromise starting out?

Question

This is a sort-of repost. I noobed and accidentally posted it in my local forum.

I'm currently in the market for an owner-occupied multi-family. I'm weighing a couple of options, but there's one in particular that I think has potential as an investment. The problem is that as a home, it comes with some compromises. The place is only about 800 sq ft not including the unfinished basement), and it has no garage (I do my own vehicle maintenance). The pluses are the location, which is ideal at this price, it's turn-key (I'm not in a position to renovate), and it's an easy commute to my job. I'm assuming/hoping that as a beginner REI this is not my "forever" home. So I guess my question is, should I buy something where I have to make compromises, or should I hold out to see if something comes along that suits me better? What are your your first owner-occupied stories?

David Dachtera · Answer

@Carey Lilly,

Potential as an investment tends to be more about a property's ability to produce income than about a live-in owner's preferences.

This may sound a bit hard, but if the numbers don't work, move on. If they do, then your choice to live there or not should be based on other considerations first, especially as you're "not in a position to renovate".

As @Russell Brazil said, there's never a "perfect" home, and multi.'s tend to come with more compromises than single-family homes do when it comes to owner-occupants.

Also, don't let "compromise" become a "dirty" word: it's a key piece of any successful negotiation.

Russell Brazil · Answer

@Carey Lilly There is never a perfect home. You are always going to have to sacrifice something. So it is really just a matter of prioritization of what the most important features are to you. Is it the garage, the location, the finishes, the size, the schools, etc.

Jean Bolger · Answer

I don't know all the details of course, but I would say it's almost certainly worth making a short term compromise. I bought an owner occupied duplex as my first home, and several friends bought their first houses around the same time. They thought I was nuts for wanting to deal with tenants. But by ten years later my financial situation was much better than theirs, and it keeps improving. If this one looks like a good future money maker it's probably worth a year or two of minor inconvenience.

Carey Lilly · Answer

@Matt R. you are right about working on cars in winter. I've laid in the slush in February changing out an alternator. Fortunately, I should be able to use my in-laws' garage, assuming the car can get there. -_-

Rob Brautigam · Answer

Don't let your emotions make the decision. Look at the real numbers of how the property will perform when it will be rented out and buy into your investments on those facts. It is your choice to owner occupy your future rental and you really should not be letting the fact that you are going to be living in it change your thoughts about if its a good or bad deal. I have dealt with making a similar choice of slightly downgrading my living situation over the short term to benefit over the long term. Good luck!

Matt R. · Answer

I don't have any direct experience yet; I've only lived in my own single-family home so far.

The thing that sticks out to me in your post is that the idea of changing a starter outside in Connecticut in January sounds like about four different kinds of no fun whatsoever. :) If there is some workaround for this - like the numbers are so right that you can take the car to a shop instead, or your buddy across town is willing to let you use his garage if you refill his beer fridge - then you might be more able to live with the "no garage" compromise.

Wilson Churchill · Answer

I take it a bit to the extreme and live with roommates in a home that I bought cheaply. I won't upgrade my situation until I meet my real estate goals.

Carey Lilly · Answer

Thanks for your thoughts. The numbers work, but I guess the wife'll have to bear the small kitchen for a while.

Max T. · Answer

As long as it makes sense as a rental after you move out, I say go for it.

Owner occupiers: how much did you compromise starting out?

Owner occupiers: how much did you compromise starting out?

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