Small condo or 2 family as first investment?

Question

New to real estate in NJ close to NYC. Debating if my first investment should be in a small condo or small multifamily. Mainly nervous about what the future holds for rentals. Properties have been selling like crazy around the area Im looking in and people have been over paying by 20k, 30k, 40k and more for every type of property as a lot of people are leaving NYC. Taxes in this area are also very high (13k for 300k house as an example). I’ve lived here a long time, I have a good job, make a good income, have good credit and a good amount saved. Am doing this solo and am not afraid of work or being a landlord. Looking for the best mangeable long term return. Option A: small condo first then rent and buy more/ bigger after things “settle down”. Option B: small multifamily live in one unit, rent the other then rent both and buy own home. Interested in any insights anyone may have that i may not have considered. Thank you for you input. :)

Brock Mogensen · Answer

I'd go with the multifamily property. The more doors under one roof, the better. I like the house hacking model! House hacking will show you the basics of a deal and allow you to scale from there.

Tiago Ferreira · Answer

@Sylwia Leczycka If you will manage the property yourself, I would go for option B for a few reasons:

1) If you live on the property you can have access to mortgages that require less downpayment (FHA, USDA etc);

2) Living in the property should make your life easier as a landlord, since you would not have to drive for hours, at night, during winter (just to make things worst) in order to see a small plumbing issue they are having;

3) I also believe that tenants would tend to be more respectful to the rules if the landlord is next door;

4) As the saying goes: "the eye of the master fattens the horse", so another plus of living in the property;

5) If you have a condo you would have to deal with the HOA which, sometimes, do not make things easier to landlords (I've had some experience on this one).

Hope it helps you.

Just as curiosity, which areas of NJ are you looking at?

Small condo or 2 family as first investment?

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