First, I been reading around for a while and I love this site! Great people with great information.
I'm looking to move from renter to owner. My question is should I buy a two family detached home or buy a single family attached townhome. I have two properties I'm looking at but not limited to.
The two family home is 2 x 2 bed single bath property with full basement and two car detached garage for $309K. Possible rent for the smaller apt is approximately $1100/month. The tax assessment for 2014 was $186K. Zillow estimate is $243K
The townhome is 3 bed 1.5 bath with a garage for $199K. The tax assessment for 2014 was $155K. Zillow estimate is $190K.
What I'd like to do is to stay at either for 2 years (maybe) and then maintain the property as a rental. All opinions are welcomed.
The duplex style seems preferably to me, that's just my opinion. Stay away from Zillow zestimates they have been so grossly inaccurate in many cases. Do your numbers and figure out what you need to purchase a property for in order to match those numbers. Then look for properties that are near that price or maybe already at that price. Do your numbers first then find houses that fit that criteria. Don't look for a house first and then try to make it fit the numbers. It's easy to let emotions dictate what you're willing to pay but if it's a rental it's a rental and needs to be looked at as an investment that either works or doesn't.
First of all, Zillow and tax assessments aren't good indicators of value (tax assessments are usually way low, and Zillow can be all over the place - sometimes it's right on the money, other times it's WAY off). So make sure your value estimates are accurate.
If these are MLS listings, chances are a realtor has priced them somewhere close to the high end of retail value, and there might be some wiggle room (or properties may be going for above asking in your market - it just depends).
Otherwise, it depends on your finances and goals. If you can afford the duplex, you lower your risk by being able to rent out the other unit, and as a rental property, two units are always better than one.
At a glance, it sounds like neither one is going to give you much equity going in, unless there is an opportunity for forced appreciation (by renovating or updating). So again, it all depends on your situation, finances, and objectives.
Also, check out http://www.biggerpockets.com/renewsblog/wp-content/uploads/2015/05/7-Years-to-7-Figure-Wealth.pdf for some ideas about multi-family investing.
Thank you Matt and Jeff. I'll get started with my math homework. Just wanted to here some general opinions on what is the better way to move forward.
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