Live in duplex when starting out

[Zach Covey]

Hey guys!

I have decided I am going to learn all I can about real estate and take the plunge into a duplex (if I can find the right deal) in my local area of Madison, WI by Q3 2018.  I have seen many say a great way to start out is living in a multifamily home, however, I am confused when reading forum posts and checking out articles about the cashflow of this situation.

When you live in your rental home, should you accept having to pay some of the mortgage yourself hoping that when you purchase the next place you will get a tenant to take your current place to start cash flowing?

From a consumer standpoint, it makes sense to be paying your own mortgage, but I am honestly sick of being just a consumer and am ready to do what I need to become an investor. In the Madison market it seems impossible (to a newbie)  for the cashflow to be positive when renting out only one side of the duplex. What do you guys think?

[Account Closed]

Zach Covey it's hard to cashflow in most of the U.S. right now. Keep in mind I bought 5 years ago. Back then finding a cash flowing property was easy, even in Seattle. I could never find the same deal in that area now.

It could still be worth it just in terms of saving money and having a tenant help you pay the loan down. It depends on how mobile you need to be. If you are positive that you will live in Madison for the next ten years it could be worth it. If you will have to move then maybe not.

If I was in your shoes I would look for something that needs a lot of cosmetic work. The structure is sound, but it's real ugly. Kitchen, bathroom, floors, paint etc. Slowly rehab it yourself while you live in it. Buying properties that need work is how you have to do it now, because the market is just too hot. If you buy a turn key property off the MLS most likely the numbers aren't going to work.

I'm not an expert, I only own one property. But this is exactly what I did so I'm sharing my experience. I knew nothing about anything when it comes to renovating. Google and YouTube will teach you anything. I just took it real slow and didn't stress. I was able to cover the mortgage myself so I wasn't like I had to get a tenant asap. Took me a month to rehab each unit. A contractor could have done it in 3 days lol. But I saved a TON of money. Maybe if you find a deal like this you'll come out with some equity on the back end.