Case Study - Single Family or Multi-Family with Low Capital
Keynote: My goal is cash-flow from renting part of a house I live in, however Multi-family units in my area aren't very positive for my current price range. Dilemma is, I am currently renting so I need to decide if I should build the capital while renting, or live in a Single Family home and get into Multi-Family when I can refinance and support a better down payment.
Long Form:
Hello all!
If you're reading this you want details.
A little about my situation. I am a recent graduate who has been looking into owning rental properties as a side project to generate cash flow. I feel I am in a good position to start snowballing rental properties because I am 22, debt-free, work a full time job and have enough capital to entertain the idea of owning a property. I have been interested in pursuing the BRRR method for multi-family homes in London ON and feel knowledgeable enough to start looking at making offers.
My goal. Ideally I would like a multi-family dwelling priced around $250k CAN with a sizable cash-flow at 5% down - though wouldn't we all. I've looked at mainly MLS, public deals and in less savory areas to hopefully find a diamond in the rough that with a little reno could fetch a good rent. I've had little luck, which is expected but I can't help but feel trying to swim in a bigger pond than I should financially.
My barrier. A few things could make my goal more acheivable would be a more fair house price or a higher down payment (to improve monthly cash-flow). In time I can get the capital to support this - that I am not worried about - but during that time I will be renting my living space. That being said, I wonder if I should settle into a starter home first, pay into it as I save money for "My goal", and refinance that property in 2-3 years time to help cover the down payment on the Multi-family.
This case boils down to 3 questions:
1. Is it unreasonable to wait for a $250K CAN Multi-Family unit in London ON, that has sizable monthly cash-flow at an initial 5% down, living in one unit of it?
2. If it is unreasonable, would it be better to get a starter home now, save, and refinance it in 2 years for a better down payment on a Multi-Family dwelling for higher cash-flow later? Or better to keep renting, and wait patiently for this goal scenario house to come up?
3. Wild card: is there a middle path I am missing that would generate good cash-flow at low starting capital that works either while i still rent or takes me out of having to rent?
I appreciate any help you can offer. I intend to monitor this post to provide more information as you ask for it.
Thank you!
Ryan