The idea of a multi-family rental is becoming more appealing

[Jason Heard]

As I'm doing my Sunday REI studying, I find myself starting to sway more towards MFR.

The reason being is that the short-term goal is to pay off the mortgage on my primary residence by no later than 2020; stretch goal by 2019. I feel that would leave me with no debt and in a position of flexibility. 

From here is where there are several choices:

• Stay put in the primary residence, a single family home, and purchase another property (SFR) to rent
  • This is, slightly, my option of choice 
    • I will have a place to live free and clear, and wiggle room & safety in case anything should go wrong.
• Rent the primary residence, and finance another primary residence 
• Sell the primary residence and split the equity for down payments on both a rental and primary residence
  • My least favorite option
    • It incurs the most debt and risk. 
    • If something were to go wrong, could lose money with nowhere
• Rent the primary residence and use HELOC for the downpayment on an (MFR) which I live in a unit and rent the other units.
  • This option is slowly becoming my option of choice. 
    • I would have two rental properties and own one outright.
    • As long as the other unit(s) is/are occupied with paying tenants, the mortgage payment would be covered. 
    • Since the MFR would be my primary residence, I could leverage a 203K loan and lump the repairs into it; if the deal makes sense.

That's a short-list of options, as I could keep listing more and more. Has anyone else on here been in a similar situation? What are some pros and cons to these options from your experience?

[Karl B.]

MF is my favorite as well. I wish I would have bought a 4-unit on a FHA-loan with 3.5% down when I was fresh out of college.

I have a primary residence but am tired of L.A. and have been narrowing where I want to move. I'll be doing the above (3.5% down FHA-loan on a 4-unit) wherever I end up - it mostly depends on rental market, a good spot for hiking and weather.

And so look at getting a FHA-loan on a multi-family. With such a small down payment needed you could purchase it and if you still want to HELOC you could consider doing to purchase yet another property (and so you'd have your new HELOC property, your former primary residence that's now rented, and your FHA-loan multi-family you will be living in).

Just make certain your multis cashflow well so you're not spread thin.