Wich is the best option for first time home buyer?

Question

Me and my wife are 26 looking to move to a new home. Instead of moving to a single family, as first time home buyers I was thinking more multi-family unit up to four. I am wanting to be a landlord so I figured this is the best way to get a head start. We are debt free with $16,000 and currently do not live in a home now, but are willing to do a live-in rental property. We are currently still saving till mid-March early April and I'm torn between the two. Which is the best option for first time home buyers married with a 1 year old.

Will Barnard · Answer

Only you can answer what is best for you and your family but many investors start out buying a multi and living in one of the units. You can more easily manage the property (you are on site so you see and hear it all first hand) - which can also be a negative too. You get the opportunity to buy a multi with an owner occupied loan (saves some interest rate), and you basically get to house hack your multi, subsidising your mortgage. It is certainly a popular strategy but not for everyone. Ball in your court now!

Cameron Tope · Answer

Hey Larry,

I agree with @Will Barnard - it's a personal decision but house hacking has an extremely high ROI. It's one of the best ways to get started and it's how I cut my teeth in real estate.

Discuss it with your wife and if you believe it works for your family then start looking!

Ray Steffen · Answer

100% without a doubt buy a multi-family.

I was you…

My wife and I married young and had a child just like you. I was 25 and my wife was 23 when we had our first baby.

We fell for the “American Dream” and bought a single family home.

Oops.

Terrible mistake.

Yes we have equity in the home but we could have equity AND cash flow.

We should have bought a multi and then used our cash flow to buy ANOTHER multi.

From there generate enough cash flow to pay for the LUXURY of a single family.

Supplemental income is a very beautiful thing.

Is it pretty and attractive in the beginning years of marriage and children to live in a multi?… nope. Will people judge you? Yup…

Yes it’s hard but I promise… you, your wife and your children will be better off and much more appreciative.

By the time you’re 35 you’ll have the knowledge and experience to spoil the heck out of your whole family.

Enjoy!

Ray

Ryan Thomson · Answer

I agree ^^^^. House hacking has an incredible ROI when you only have to put 3-5% down. Also allows you to get into the property MUCH sooner and the benefits of that are huge (appreciation, loan paydown, scaling and getting the second home, etc).

As a friend of mine says: "No house is perfect, just get started".

@Bradley Dosch has some good ideas about being creative with SFH. I've converted and furnished garages for 17k and 26k. Walkout basements are also a creative way to split two units. Where I am from I like to airbnb the separate unit as it does REALLY well and ofter covers the mortgage.

Alecia Loveless · Answer

@Larry Elbert I had the opportunity to buy a duplex to house hack even though I had the money for a SFH. I chose the duplex to pay for my cost of living. My wife and I chose the larger side for ourselves, 3/3 and my tenant who was with me at a previous property is in the 2/1 side.

I then used the rest of my money as a down payment on a 4 plex and a 3 plex.

Smartest moves ever. Now I’ve got a cash flow of about $2000 a month and 10 units as I already had one SFH rented elsewhere.

If I were younger I would definitely go with a 3 or 4 plex to house hack first.

The duplex made more sense at my stage in life as I am close to 50 and spent my first 25 years of adulthood running Bed and Breakfasts with guests sharing my living space every day. I decided one or two people living next to me was enough at my age.

Charlsi Kelley · Answer

What @Ray Steffen said ^^^^^^.

Will Barnard · Answer

To add to that, no time is perfect either, just start, buy and wait.

Bradley Dosch · Answer

Definitely agree with what Will and Cameron have said. It is definitely a personal decision. In many markets, I have noticed 2-4 units to be scarce, competitive and expensive. If you can find a fourplex where the numbers work, then go for it. This would also offer more separation from other tenants for your family. Creativity in single family can be very lucrative as well. Split level, basements, converted garages are all ways to create more income and separation. Good luck Larry!

Wich is the best option for first time home buyer?

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