Single family home or multifamily
I'm 20 years old. Should my first property be a single family home or a multifamily? Also what type of loan should I utilize? Lastly, is this the right time to buy given the market is expected to take a down turn?
@Michelle Yalovay
This is a easy for me! I would def go duplex or up to a 4 plex and house hack in! You can get a FHA loan with as little as 3.5% down plus closing costs. My son did this two times (technically he moved in for 7 months each time), and house hacked his way into sweet off market deals! FHA is NOT there to help you make investments, but he did this two times and both were 4 plexes. Although he did make the equivalent "rent" payments his other tenants did, so he created a huge reserve fund. He paid $415K and four years later just months ago, he sold it for $731,000 with no realtor or escrow fees! Yes, that story is 100% real on Merlo St, Portland, Or. There is less risk with a small multi if you have one unit down, you are still making the payment. I love good leverage and I really encourage you to do 2, 3 or 4 units. You will not be able to do 5 or more unless you get a commercial loan.
Yep, what @Todd Powell said. As far as being at the top of the market, I'm not too worried about that right now. As long as you have the cashflow to make your payments, thats all that matters. That way you can ride out any downturn. I think the worst we are going to see is rents take a 15% drop so make sure you have a cushion. Also, with a lower downpayment you are going to have a higher mortgage payment as well as PMI. But you'll manage it yourself so you will save 10% there.
My rentals tend to do better in a down market. Meaning I can rent them easier because there are more people looking for housing. As far as whether the market is up or down I would never let that get in the way of buying a property. As long as you can get a property that has nice cash flows then you should do well. I just bought a triplex last month. This was not a house hack. And this was the first rental I have ever purchased with a mortgage. Like my accountant told me never let anything get in the way of investing into something you know is going to make you money. The only time I would worry about the market is if you are not planning to hold on to the property long term. Personally I am a long term investor. You should buy multi-family in my opinion. I own both, and while I have done well with both multi-family has less risk. If you want to go SFH then always remember you can take on roommates to help pay the mortgage also.