Am I making a mistake...
So I just put a SFR under contract. It's not the worlds best deal, but it should trickle in some cash flow, and the neighborhood it is in is going through some very big transitions, so appreciation is almost a given (yes, I know, don't gamble on appreciation). When I look at the numbers, it's almost a better flip than it is a buy and hold deal. So here lies the rub: this is actually my first deal. I did house hack my living situation - my girlfriend and I bought a cheapo house under her name around the corner from this home and turned it into a nice place for not much money to get our cost of living down.
As this is my first personal purchase, I'm planning to use an FHA rehab loan to get this property up to the neighborhoods new standards, but I'm already second guessing myself.
Is it a waste of the FHA loan to get a SFR at a low cost, when I could buy much, much more property and value with this one chance to use a government backed low interest loan to cover purchase (3.5% down) and rehab costs. Should I instead be buying something bigger like a 4-plex.
When I compare the two options this is what I see:
Option 1. SFR under contract. Gets me in the game now. Easily meets 70% ARV rule for rehab/flip purposes. Gets me a 1.25% value to rent for rental purposes. In a few months I can extract some equity (I expect around 50-60k) to cover costs of getting into my next deal by refinancing with a conventional loan. Removing PMI will also help.
Option 2. Keep looking for a good 4-plex. Delays my entry to the game, but could get me something that is of much greater value. Equity from improving and refinancing the 4-plex will also likely be greater, enabling me to get into another property much more quickly after this one.
Has anyone else struggled to decide between a small multi and a single family? If so, is either one a better choice?
Thanks for help. Taking he plunge is both fun and daunting.