21 year old, who wants to buy his first Duplex/Triplex/Quads

12 Replies

I want to buy my very first property, which would be duplex/triplex/quads, however I live in Colorado, which makes it really hard to buy anything these days. If so, what would be a good price to buy Duplex/Triplex/Quads, since everything is so high. I want to buy something either in the Denver area or something at least 1 hour away, but a range between that would be great. I will be using a FHA load to get started, and I think investing in a duplex/triplex/quads would be awesome to kick-start my real estate career. 

@Aaron Vigil sounds like you are on the right track! Link up with a good agent. They can give you the rundown on market numbers like rents, CAP rates, GRM...and since you are looking at residential properties, most importantly comparable sales.

Good luck!

Aaron, the pricing really depends on how close to Denver you're looking. since you're from Evans the price point up there is much different than closer to the metro area. Do you need to centralize around Denver for a particular reason?

Well the main reason why I want a place in Denver is me wanting to get a job down in Denver, so I don't have to commute for an hour, however something even potentially close to Denver such as: Longmont, Fort Lupton, Thornton, Arvada, and Aurora. I guess really not Denver, but places closer to Denver. Any ideas...if any of those are a good place to buy? 

Once you fully understand income investment properties you will know yourself what is a good price and area. Asking is not going to get what you want you need to study and learn. Investing is very complicated and highly risky. Do not start unless you are prepared to lose everything.

Hey Aaron,

I would recommend, as someone else mentioned, getting a good agent, talking to them about what you want to do, and looking at multi families in different areas. In parallel, run the numbers on each property to determine which deals make sense. As you do this, you will start to get a picture for what areas generally make more sense to you as an investor. Pick up the book here on bigger pockets about rental property investing and study it well. Also do some reading on managing properties. once you feel comfortable with running numbers and feel comfortable with what it takes to manage a property, pull the trigger on the the deal that makes sense to you and aligns itself with your overall strategy. 

Originally posted by @Aaron Vigil :

Well the main reason why I want a place in Denver is me wanting to get a job down in Denver, so I don't have to commute for an hour, however something even potentially close to Denver such as: Longmont, Fort Lupton, Thornton, Arvada, and Aurora. 

Those places can easily have an hour long commute into Denver. I'd recommend the rent by the room approach. That will have more options. 

You mention you are looking for a job; are you currently employed? You'll need 2 years of employment in the same industry to qualify for a loan. 

Originally posted by @Aaron Vigil :

I want to buy my very first property, which would be duplex/triplex/quads, however I live in Colorado, which makes it really hard to buy anything these days. If so, what would be a good price to buy Duplex/Triplex/Quads, since everything is so high. I want to buy something either in the Denver area or something at least 1 hour away, but a range between that would be great. I will be using a FHA load to get started, and I think investing in a duplex/triplex/quads would be awesome to kick-start my real estate career. 

Why? Why are you planning to buy a duplex/triplex, or quad?

They are usually not only developed in duplex/triplex/quad communities full of renters...but you generally will pay a premium over SFR and you WILL NOT achieve economies of scale. The property management with these small MF is also problematic...Plan to live in it and manage it yourself?

The "awesome" kick-start to your real estate career, depending on your investment goal, should be to maximize your investment return.  If that's the case, you should spend some more time deciding on a very specific investment goal, educating yourself, and researching what market, property type, and specific location will have property you can buy that will help you meet that goal... And it may not be in Denver.

why not buy a duplex/triplex, or quad?Isn't that a good investment for someone who is starting out? What do mean by "spend some more time deciding on a very specific investment goal"? Okay....so I want to invest in a duplex somewhere near the Denver area? I plan to live in property and manage it myself. Why is it problematic? Because I will pay a premium over SFR and I will not achieve economies of scale?

@Aaron Hill the strategy that makes sense to you, makes sense to you. If you are going to buy your first home/property, then buying something that also produces income makes great sense. Why pay 100% of your mortgage when you can pay less than that.  In terms of deciding what a "good price" is, this is also somewhat subjective.  If you can lower your monthly payments by buying vs renting then that's more cash you have to save for your next investment.  If you can buy a 2-4 unit where your monthly costs are $0 or close, then even better.  Also, by buying a property with rental income you should be able to qualify for a higher purchase price which could be helpful in this market. Multi-units in the Denver area are in high demand but that doesn't mean it's a bad idea, houses and condos are also in high demand.  

If you are thinking about switching jobs, but you want to buy soon, you should keep your current job. You will need to consider whether you're willing to commute while you look for a new job, and whether you want to live in a multi-unit that may be in a transitioning neighborhood or surrounded by other rentals creating a different vibe. But if you're flexible and serious about your REI career, those aren't huge sacrifices to make in the short term. I recommend talking to a lender asap so you have an accurate picture of your buying power and can start planning.

keep an open mind and keep looking. since you dont care where you live youve got that going for you. 

@Aaron Vigil Using your FHA 3.5% down loan at the low rates we are experiencing today is a great way to start investing. I have several clients here in CT that have started this way and I think it is a good beginner strategy.

Here are some things I would recommend

  • find an agent that has worked with what you are looking for and be sure that agent has CLOSED deals.  Saying you are "investor friendly" as an agent really won't do you any good unless they have closed deals and have the experience that comes with it.
  • get out an look at properties.  There is only so much you can learn from sitting behind a computer
  • Go through the process of getting pre-qualified for financing.  Everyone and most importantly the sellers of properties you are interested in will take you seriously.

I'm in nyc , where would you suggest looking for properties?

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