@Julius Robinson do the math and if you err on the conservative side things should turn out just fine, if you are stretching to make it work it won't especially if you do not have adequate reserves.
@Julius Robinson if that is your strategy just be sure to pick a property that you want to live in for multiple years otherwise you will be unhappy and it won't be worth it.
@Julius Robinson , it is absolutely NORMAL to get second guessing yourself and have cold feet! SHAKE IT OFF! Don't get paralysis by analysis. Do buy a duplex and live on one side. It is the best way to start and has the least risk!!!! Do the numbers, strive for the 1% rule and you will be fine. Soon Mr. Doubt will shrink and Mr. Optimistic will prevail.
@Aaron K. if that is your strategy just be sure to pick a property that you want to live in for multiple years otherwise you will be unhappy and it won't be worth it.
I'm sorry, the strategy matters little of where you want to live and more at the profitability of the deal, especially your first deal. Yeah don't buy in a slum but buying a duplex over a single family home will require tradeoffs, but if the goal is to build wealth then it is worth the trade off. Living in a duplex is no sacrifice, being deployed for a year to the desert away from your family is a sacrifice. Unless you have school age children and location may dictate school choice, buy a duplex.
Happiness will be achieved by being successful. Buying in Florida should provide many opportunities to find a suitable duplex. Focus on the numbers, worst case you buy and decide to move in two years......no problem get up and move and rent out your side for a nice monthly positive cash flow. Bounce into another owner occupied duplex for another two years and then if you want find that SFH. You'll have Mr. Doubt defeated and be on your way!!
@Joe Scaparra I agree with you, a duplex is not going to be a dream home, but also don't buy somewhere that you would be scared to walk outside at night. Doing so just because it fits the budget might attract the wrong kind of tenant and make the experience so undesireable that it would discourage future investment. Buying somewhere that is at least semi desirable tends to attract better tenants over the long term.
My first property was a commercial bldg in San Francisco. I sold that and bought a 10 unit bldg in Oregon.
If you buy a good property that is newer, in a good location (a town with a big university works well) then charge market rent you almost cant go wrong. Be a good landlord.. make sure your units are clean for tenants when they move in, make sure everything works. Respond promtly to repair requests. Its pretty simple really.
The biggest thing is to buy the most units you can. If you can, buy a 5-10 unit bldg. in a decent area
There is nothing to be afraid of. It is a job like any other after all :)
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@Aaron K. Yes indeed buy somewhere you are not going to die. I just wanted to send the idea that investing for cash flow might involve areas where you would not live for the long term. As long as your reason for not living there is that you might be harmed then yes I agree don't buy there. I own 8 investment properties and I would not live in any of them if I was looking for a place to live long term. However, I would live in any of them if that would be needed to build wealth in the short term.
For a newbie investor, I'm trying to send the message to kill Mr. Doubt and eliminate as many distractions as possible when getting started. Your initial comment focused on being happy not necessary being worried about being in harms way. I say if your focus on building wealth, happiness can take a back seat in the short term. No harm, no foul. Cheers.
@Julius Robinson rented to friends of mine. Two words: Never again.
@Julius Robinson my first rental property was a sfh, 3 bedroom 1.5 baths that I had 2 roommates in. Their rent covered my mortgage and all other expenses. I took what my rent would have been and saved it until I had a down payment for number two.
We bought two side by side four units on the outskirts of student housing. The neighborhood is C-; My husband and handyman say i'm a generous neighborhood grader so maybe C-- or D+ . I've never felt unsafe or been harmed in anyway and the city is evicting the homeless tent city nearby so maybe it will improve, I don't know.
In any event, I've enjoyed learning to "landlord." We have great tenants and the buildings cashflow nicely (we gross 3500/month in rent). We have renovated the 6 of the 8 apartments-- refinishing the great hardwood floors, refinishing the cabinets, replacing worn out appliances, and repairing the windows&storms. We applied and got the city to tear down the old carriage house garages and then graded and added a nice offstreet parking lot. The last time I had a vacancy, I had multiple acceptable tenants, before the other girl moved out. These stay rented.
Good luck to you as you start your business.
@Julius Robinson - Great thread, thanks for asking for others' experience. If I were to buy my own home again, I would buy either a duplex or at least a single-family home with an in-law unit. I own 3 single-family homes in San Francisco. I bought homes that needed significant cosmetic work, but by spending $30K-$100K on each I gained twice that in value. Each home has appreciated significantly. The downside in an expensive market like the Bay Area or New York is that often the cash flow on SFR's isn't there. But to balance the great long-term investment with cash flow, I've built a business renting homes from other landlords, then doing cosmetic repairs and renting them out to business travelers. It's been a nice balance so I can gain cash flow without needing to sell a property or refinance out of a low-interest mortgage.
Good luck to you!
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