Advice on getting started

10 Replies

Im living at home with my dad right now but i want to get started in ivesting in RE. I want to get into buyung apartments in the near future. Im saving up to move out with some roomates soon and getting a morgage on a house and splitting rent then after a year taking a HELOC and buying an investment property. Would it be better to get a 4-plex (or similar) and waiting to get to buy a small apartment complex or going straight for it instead? Any advise would be GREATLY appreciated

@Brandon Weddle I’d start with a 2-4 unit first. You don’t need much money to get into one 3-5% down. With 5+ units you need 25% down. This isn’t a get rich quick scheme, build yourself up and move from the 2-4 unit.

Originally posted by @Brandon Weddle :

@Anthony Gjolaj i plan on just having my name on the house but my girlfriend and my buddys going to move in with me and were going to split the rent

 Just to make sure, to make things simple. You will be purchasing a multifamily. Do not think about friends/family moving in covering rent. Do the investment without thinking about them.  Friends/girlfriends change overtime 

Whats the market rent, can it easily cover your mortgage etc. Glad to help you out best i can, learn from my mistakes.

So you can buy up to a 4 unit building with 3.5% down as a first time home buyer who is planning to live there. If you buy a SF first you may still be able to buy a 4plex with a low downpayment if you plan to live there but probably not as low as 3.5% down. If you're not planning to live in the property you'll need to come up with 20-25% of for a downpayment regardless of size. Does that answer your question?

It sounds like you're committed to buying a SF house? When I bought my first house I house hacked a 3 family with the 3.5% down and sellers paid my closing costs. It was the best decision I ever made. If you can't see yourself living in a 3-4 family for even a couple years you could wait for one of the odd 2 properties on 1 lot listing to come along. It's rare but we see listings with a SF and 2-3 family house on 1 lot come up occasionally. You just have to be prepared to jump on it when it comes along.

@Jonathan Bombaci Thatnl you for the response and Id like to start with a SF house because the 2-4 plexs where im at (indianapolis) are iner-city and there in a kinda rough area or 2 hours away. Id love to start with a 4 - plex because i eventually want to apartment deals and i feel like that would be a great firat step.

@Brandon Weddle I'm not familiar with Indianapolis at all but in my experience every city has "multi-families" in more parts of the city than people think. One thing most People don't realize is FHA allows you to do the same 3.5% down program with a mix use property as long as the commercial part of the building makes up less than 50% of the square footage.

Think of all the coffee shops and hair salons with 2-3 floors with a couple apartments above them... these typically don't hit Zillow so you'll need an agent for MLS access and don't be surprised if 90% of agents don't know what you're talking about.

If you go this route just try to be mindful of the business below you, avoid having a high risk business (liquor, convenience store, check cashing, etc) or a restaurant in the building if you can. The insurance can be expensive and difficult to find. 

@Brandon Weddle keep looking. There are many duplex's in Indy that are not in rough areas. The problem you've got right now is that they are going for a premium. But I believe they are still a good option to get your foot in the door and start building equity.