Real Estate Agent · Realtor - Dallas, TX · Member since 2013 · 342 posts · 55 votes
Soooo…here is my dilemma…should I stay living in an apartment while I accumulate rental properties so that I free up my debt ratio…for even more income properties?…or should I buy a home to live in and just accumulate properties as I can?…or maybe live there for 2 years with the ultimate goal of using it as an income property?…I have debated this for over 1 year…any help would be great…thanks !!!!
I take a contrarian view on this. I have thought about this extensively and have chosen to rent while I accumulate investment properties. I have a 4-plex and have debated living in one unit, but ultimately decided against it. First of all, it's not in a great area (not warzone, just not a great place to live imo). 2nd and most importantly is that I rented that unit out for 595. It costs me less to rent right now (I am living with a roommate). However, even if I decided to get a 1 bedroom or something, I'd only pay maybe 1-200 more than what it'd cost to rent that unit out. Plus you don't have to live in a less desirable area, don't have to live next to your tenants, and can live closer to work. Are those intangible benefits worth 1-200 per month? Only you can answer that.
Of course if you don't have the cash to put 20% down and FHA is your only option, then none of the above applies. (I am anti-FHA since they changed the PMI restrictions) I just believe that the benefits of home ownership are grossly overrated. I'll buy a home when I'm ready to live in it for at least 10-15 years.
This is not entirely correct. Since you are occupying one side you will not have vacancy, management, and repairs/maintenance will be minimal since you are presumably not going to trash your own place or have to evict yourself. So it brings it closer to a wash. But I do agree with the premise of your argument. The biggest factor imo wasn't mentioned. A house that makes a good rental (ie 2% rule) in most cases will not be the most desirable place to live.
Bryce, I completely agree! It probably is a wash. Some things will still have to be replaced, roof, heaters, etc. For the most part you are going to take care of it better than most renters. Vacancy will be lower and etc. If you actually can only rent an apartment at 1200$ then you will want to live in the duplex! On the other hand if you can get a 500$ apartment then you might want to live off site! Again, it really depends on his particular property and situation. The "rules" only provide the initial stepping stone.
I was just offering a different way to think it through.
Thanks Adam…It might be nice to live away from my renters…and I am not finding many multi-family units in a desirable location…they look pretty depressing…I've only done online searches, so may need to find another resource…or go driving.
@Adam Brandt, in addition, you are comparing a $750 rental to a place you are renting for 1k, so I assume you are suggesting leaving somewhere cheaper, which is a whole separate argument. Also, you mentioned the numbers- but didnt include the benefits of owner occupied financing, tax benefits, future equity, etc. @James Mudd if you are looking to aquire properties- this can start you on this process right now. @Ali Boone - I agree w/ your general premise about your house not being an investment, but if your house is a 2-4 unit, that is a whole different story.
Many assume buying a home for yourself is not an investment. I remember, however, reading a Fed study that asserts buying a home is a better investment as the implicit income, being equivalent to the rent of the same property, is tax free. If you rent a place to live, the rent is after tax.