Is Buying a home for idiots?
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Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
8y@James G. That depends on a # of factors including where you live, your cost and tax structure, your future plans, purchase price, growth and inflation expectations, mortgage details, closing costs, etc.
NY Times has a great calculator: NY Times - Rent vs Buy Calculator
Essentially, there is no right or wrong answer because it all depends on your personal situation. The average person who considers their home an asset is wrong. No financial planner/advisor worth their salt, uses the value of an investor's house as part of their net worth (regardless of what posters on this forum believe). It is not considered acceptable, conservative practice. Owning your own home is considered a "shelter to substitute" i.e. if you don't own a home, you will rent. There is an imputed cost to both decisions (invisible as it seems to many individuals).
Nonetheless, the same house, if bought, say at 30-40% below market value can be a great investment. But the economics of owner-occupied house suck and do not make for a good long-term investment. Hence, most professional investors eventually either move up to multifamily or move into commercial assets.
Grant Cardone isn't wrong on this one. Remember, most people buy a house they can't afford with money they don't have to impress people they don't like (harsh but true).
P.S. There are many reasons to buy a house. They are emotional and valid. For instance, if you work hard, save money and dream of owning your own place. You should buy it! Many people with kids buy over priced houses in good school districts. But those aren't investment decisions (although, they are valid and should be given importance).
198 Replies
- Corona, CA · Member since 2017 · 99 posts · 42 votes8yWell, I bought a home for personal use 3 years ago for $380,000. It just appraised for $605,000. I'm such an IDIOT.
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes8y
Originally posted by @Matt K.:
Originally posted by @Brent Coombs:
@James G., simple: Rent money is dead money!
For more than half of the next 30 years, your mortgage would be less than rent anyway!
Would you really rather still be renting in 30 years? [And will your kids benefit?]
My contention is: Any initial savings that renting might show on paper, are short-lived.
And, why deliberately leave the house hacking strategy out of the argument?
But sure, if in your circumstances and investment wisdom, you can buy rentals much quicker (say, out-of-state), while still renting where you can't afford to buy? Fine.
But, most renters don't have that sort of acumen and discipline! Cheers...
Please.... I rent for cheaper than I could buy. There's PLENTY of options where I can rent that'd require me to literally put couple hundred thousand down.... to MATCH what I could go out and rent it for. Not mention, maintenance is no longer my problem... neither is moving. I'm out what like first, last, and 1 mo sec deposit.... free's up good chunk of money to invest.
Here's a lower priced generic example that took me 5 min to find.
2/1 for rent 2k mo
https://www.zillow.com/homes/for_sale/18413575_zpi...
1/1 for sale (same complex) 359,900
https://www.zillow.com/homes/for_sale/18413622_zpi...
You'd need like 90k down to match the rent rate of a BIGGER place.
So what? I already addressed all those points.
I know many people who bought / are buying the homes they're living in. Many of them (including myself) have become accidental millionaires, purely because of this!
And I reckon: none of us are idiots!
But as for those I know who never bought their own home...
- Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes8yOk...I’d almost like to make a separate thread about this but here’s my opinion on house hacking....it’s freaking dumb. Period. I can see where it’s fine in the beginning of your adult life but once you have a family there are enough other problems that putting yourself under the same roof as your tenants just isn’t worth the hassle. And let’s be real...I own 64 units....MY TENANTS MAKE MY HOUSE PAYMENT. What’s the difference between them paying for my SFR vs me jamming my family in half of a cramped duplex? The difference is I don’t have to jam my family in the duplex. Your housing cost is always there. You’re losing rent on the duplex unit if you’re living there. Keep your sanity....buy assets that will generate the income needed to finance your lifestyle. If you want to be an apt dweller then by all means, “house hack”. But don’t pretend that there isn’t a cost to you living in that “free apt”. To your original question. You have to live somewhere. I do not believe a primary residence is an asset. I will probably always own my own because I am the type of guy who likes control and that in my opinion is worth paying for.
- 8yRyan IngramBusiness MemberRental Property Investor · Dayton, OH · Member since 2017 · 247 posts · 225 votesIs both, an option? What if....your business entity owns your residence and you treat yourself exactly like a tenant. Market rent, set aside capex, the whole 9. Happy medium, or more insanity?!?! That’s what I’ve done, and I can happily report that I am my best tenant. :) The home is consistent with my investment philosophies and other homes that I’d want to buy and hold.
- Philadelphia, PA · Member since 2017 · 364 posts · 109 votes8y
Originally posted by @Gualter Amarelo:
James Gleeson I am a licensed Real Estate Agent and a Fall River Real Estate Investor. I agree with Grant Cardone and many members of the one percent...
You should not “live” in anything that you own. To the same point I highly recommend buying real estate and renting that property out. The cashflow from a good rental property bought right should be able to pay for your rent relative to your standards of living and assuming you purchase a true cashflow property like a 3-6 unit building.
For example, I own 5 properties on my own and another 7 with my business partner. Neither of us live in any of our properties and we both rent from other landlords. This gives us the freedom to sell any one of our buildings at anytime as well as the ability to easily move to any other living situation. We have no maintenance to worry about where we live and generally live much more comfortably than if we lived in a building that we were responsible for.
Also there are numerous tax deductions available for rental property that ARE NOT available for owner occupied units.
Don’t wait to buy real estate. Buy real estate and wait!
Send me a private message and I will gladly setup a call to review your investment goals.
Cheers to your success!
Do you have a family ? In most cases such flexibility ends when you have kids, who doesn't realy want to switch schools every time you wish to move to your next opportunity .
- Member since 2016 · 13k+ posts · 12k+ votes8y
The underlying assumptions in this thread is that the value of real estate will always rise. For those that ended up under water after 2008 the assumption would of course be incorrect.
Those that purport buying a personal home as being a good investment or the right decision are only correct during up times and incorrect during down times. It is very easy to say home owner ship is the best option when times are good.
Bottom line is that anyone that views home ownership as anything other than a life style choice is probably looking at it through rose coloured glasses.
Home ownership is driven 90% by emotion and 10% by money. If in the end it turns out to be financially beneficial good for you but that is not the driving factor in purchasing a home for the majority of home owners. It is only a lucky happenstance.
Ask any one in foreclosure if owning is financially better than renting.
- Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes8y
It depends on your personal situation as well as lifestyle.
My wife and I started out with what we believe to be the American dream. We both had masters degrees, a professional income and believe for that we deserve a new SFR plus two cars, preferably new.
A friend of ours came by and wondered why we need all that room, with two bedrooms empty? Yes, we did this for several years, and we thought overspending our income by two to three hundred a month will take care of itself with good pay raises.
But we're city people, NYC to be exact, stuck in Central Jersey for employment reasons. All the things we do, friends we know are in NYC, so we wind up staying with friends and relatives over the weekends to do things. So we finally decided, lets move back.
What happened next made the biggest difference in our life style and careers. I was looking for a SFR for the relocation back. My mother in law believes a SFR makes no sense for financial reasons. She though a duplex or tri-plex makes more sense, especially when you retire, the rents pay the taxes and bills. Finally to entice me, says I'll even put the down payment for the duplex or triplex. That did it, I never turn down free money.
I thought my move to the triplex will only be temporary. When I sold my SFR, I'll buy my own and move from the triplex. As things turn out, living in the triplex, the rents covered the mortgage, after we ditched our cars, we so flushed with cash we bought another triplex a year later.
That was in the 80's. The real estate crash came, and in the 90's I invested in foreclosures. Picked up a almost new duplex for $200,000. For the owner, the 3/2 apartment, and finished basement felt like a SFR. There's a 2BR unit we could rent out. It was going to be an investment property but I moved in instead.
And I got the place with $20K from a HELOC from the triplex my mom in law insisted I get some years earlier. Aren't mom in laws over bearing?
Now, over 20 years later, I still live in it, mortgage paid off, and currently the rental unit rents for $1,700/month. Taxes, water heat for the building runs $1,000/month. So I live rent free with a $700 net income. The property is now worth $1.275 million.
So, is this home of ours doesn't count for anything in our finances because after all, we all need a place to live? All right then, if we look at it that way, we got a place to live in for free and get paid besides, and a hidden million because you can't count it.
So, looking back, it's our desire to live like the Jone's, in a too large SFR, two cars to get around from the middle of no where that was the cause of our financial problems. When we finally lined up our lifestyle with our finances, things went great. Whether having a house I own to live in is smart or idiotic or not, YOU be the judge.
And yes, not all mother in laws are all that bad. Oh, in answer to the original question, If I paid rent for the last 30 years, I'll be paying for the next 30.
- Lender · Granite Bay, CA · Member since 2014 · 456 posts · 454 votes8y
@James G. I really like Grant Cardone, but he is giving people terrible advice to not buy a home. I will start with my home. I bought my home in 1996 for $200K. I financed it at 7.5% on a 30-year fixed rate, because that's where rates were at the time. My payment was $1,498 PITI. At the time, I could rent the same house for about $1,300 (I realize this varies on area and price). I later did a no-fee refi down to 4.5%, dropping my PITI payment to $1,118. I paid that payment and added to it periodically and paid it off 2 years ago.
Fast-Forward- I have no rent and no house payment. The home has appreciated from $200K to $575K and it's owned free and clear. However, the REAL awesome part of this, is what we did 2 years ago. Once we paid off the home, we did a line of credit for $200K on the home. I have been loaning that money to other flippers on low loan-to-value deals, with people I know and trust and putting 1st mortgages on those homes. I charge 10% and 3 points, making me over $20K per year on my home. So, instead of making a mortgage payment, my home is paying me $20K + per year!
Let's say that I had taken Grant's advice and 20 years ago I would have decided to rent my home and not buy it. Today, I would be paying $2,700 per month in rent, and I would have already paid over $300K in rent. I would have zero equity and would be receiving zero income per month. I would also deal with yearly increases to my rent, and would have ever-higher debt and payments, as I get older and retire.
Again, I like Grant, but he is wrong. I have given this advice to many people over the years, and many of them are well on there way to paying off their homes and being in the same situation I am in. Even if you buy a home and it never goes up in value, you still pay it off, have no rent, and can use the equity for whatever you want. Just my opinion...
- Member since 2016 · 13k+ posts · 12k+ votes8y
"The property is now worth $1.275 million."
You are overlooking the fact that $1.275 in dead equity is costing you $10,625/month in lost income due to the opportunity value of equity. You are not living rent free you are deep into negative cash flow. If you pulled the equity and reinvested, any vehicle of your choice, you would increase your income well above the cost of a mortgage and still enjoy continued appreciation.
Paying off a home or benefiting from appreciation is worthless unless it is put to work. The problem with the vast majority of home owners is that they never benefit from their effort to actually save money in their homes. Dead equity is almost worthless and actually does not exist except as a idea until it is pulled and put to work. Assuming those that rent save money and invest that money they in theory should be farther ahead financially than those sitting in a home with dead equity.
Dead equity is not a logical investment choice it is simply hoarding.
- Grand Rapids, MI · Member since 2016 · 19 posts · 20 votes8y
My thought on the matter has been that a primary residence is a luxury and something I don't 'expect' to profit from. Currently I house hack, but eventually my wife and I will buy a home for ourselves. House hacking forever would very likely be better financially than a primary residence, but the whole point of having money is to be able to design and live the life you want. For my family that eventually includes a nice place to call home.
- Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes8y
That is a personal choice. I have seen in high cost housing getting calls telling me they got on a spreadsheet of both and one comes out ahead. Mark Zukerburg was a renter for years. He bought his first home not long ago.
The same on car lease vs buy.
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes8y
Like all others have said, it is a personal preference and market specific. It is just like the college debate. I did not go to college and I am still successful without it. I don't think going to college would have added anything that could have helped me in my current life path (full time investor) But take my brother for example, He has his masters and PhD from one of the best engineering schools and works at a top research company. He needed that schooling to be successful in his current life path. Did one of us make a bad decision? I don't think so, we each made the decision that was right for what we wanted in life based on our own personal situation.
I am going to use an example of a $500k house in my area, which will get you a decent 2000 sq foot SFH in good condition and a good school district
Buy
Down payment 5% = $25,000
PITI / mo = $3,462
Repairs/Maintenance over 30 years = $100,000
Appreciation 1% YOY over 30 years = $308,709
Total Cost = $1,371,310 (DP + 30 years PITI + Upkeep)
Total Value = $808,709
Actual Cost = $562,611
Rent
Down Payment = $0
Rent / mo = $3,150
Repairs/Maintenance over 30 years = $0
Appreciation 1% YOY over 30 years = $0
Total Cost = $1,134,000 (30 years rent)
Total Value = $0
Actual Cost = $1,134,000
Second City Real Estate4.821 Reviews - 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Brandon Hicks:
Ok...I’d almost like to make a separate thread about this but here’s my opinion on house hacking....it’s freaking dumb. Period. I can see where it’s fine in the beginning of your adult life but once you have a family there are enough other problems that putting yourself under the same roof as your tenants just isn’t worth the hassle.
And let's be real...I own 64 units....MY TENANTS MAKE MY HOUSE PAYMENT. What's the difference between them paying for my SFR vs me jamming my family in half of a cramped duplex? The difference is I don't have to jam my family in the duplex. Your housing cost is always there. You're losing rent on the duplex unit if you're living there.
Keep your sanity....buy assets that will generate the income needed to finance your lifestyle. If you want to be an apt dweller then by all means, “house hack”. But don’t pretend that there isn’t a cost to you living in that “free apt”.
To your original question. You have to live somewhere. I do not believe a primary residence is an asset. I will probably always own my own because I am the type of guy who likes control and that in my opinion is worth paying for.
Brandon I think one can buy any business that's successful be it landlording business or what have you and produce positive cash flow that pays for your home... you can buy a few subways and make money on those and they will pay for you home.. Or you can buy notes and the income off of those will pay for your home or expenses
I wonder why folks think that owing rentals is not a huge investment of time and money to create money and that if you do that successfully ( as many mom and pops do like you are ) that this is some magic that says look here I did this all for free.. when in fact for you to be where your at I am sure you worked hard.. you worked smart you have ability to take on serious debt etc etc.. its a business its a job.. so does not matter how you make it.. just go make it .. and spend it how you like is my thought..
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brie Schmidt the other thing people dont' factor in is the tax free when you sell a personal resi compared to owning rentals.. once your in the rental game and start taking depreciation if you ever want to cash out and go to Fiji your going to pay the tax man.. whereas with a personal rental when you stack up this nice equity you make up to 500k TAX free no depreciation recapture.. and you can use the money anyway you like..
rentals are great but for those that go into it exiting can be a BEOTCH tax wise.. so either have some serious loss carry forward to offset.. or plan on never getting out of the game or like me who is retiring form rentals and sold most of them this year without replacing I have to pay recapture.. I am fine just want to be done with that 30 years.. but its real.. and you don't see one thread on BP about hey I am going to sell my rental I owned for 10 years it never really went up but I depreciated it and now with sales cost and recapture its going to cost me 25k to sell my 80k rental.. this is why the note business is going through the roof once people understand that notes even though no depreciation you are not tied to the asset you CAN cash out ( get paid off and move on without a tax hit). plus no 3 T's that we all love .... but I get the rental house program and its what keeps many of these cities going is the mom and pops that want to stack these up and its easy.. its easy to understand if they are local and they are cash flowing they are easy to finance and if you get enough of them they become your job..
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Ghazey Aleck:
My thought on the matter has been that a primary residence is a luxury and something I don't 'expect' to profit from. Currently I house hack, but eventually my wife and I will buy a home for ourselves. House hacking forever would very likely be better financially than a primary residence, but the whole point of having money is to be able to design and live the life you want. For my family that eventually includes a nice place to call home.
this thread is polarized by region.. in non or low appreciating markets.. home ownership is optional for many.
in areas with historic appreciation that is meaningful homeowner ship for most is the single best thing they can do.
- Investor · Middle River, MD · Member since 2017 · 191 posts · 127 votes8y
To me purchasing is first about CONTROL. I want control of where I live, what I can do to it, and when I leave. Renting can always F off for those reasons, at least for me.
For many, it's also a forced savings program, since so many people can't seem to force themselves to save enough. Any person with a J-O-B should be doing the max 401(k) from day one, and even that isn't enough. Especially if there is a match. Insane to not take that money.
- Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Thomas S.:
"The property is now worth $1.275 million."
You are overlooking the fact that $1.275 in dead equity is costing you $10,625/month in lost income due to the opportunity value of equity. You are not living rent free you are deep into negative cash flow. If you pulled the equity and reinvested, any vehicle of your choice, you would increase your income well above the cost of a mortgage and still enjoy continued appreciation.
Paying off a home or benefiting from appreciation is worthless unless it is put to work. The problem with the vast majority of home owners is that they never benefit from their effort to actually save money in their homes. Dead equity is almost worthless and actually does not exist except as a idea until it is pulled and put to work. Assuming those that rent save money and invest that money they in theory should be farther ahead financially than those sitting in a home with dead equity.
Dead equity is not a logical investment choice it is simply hoarding.
As I said, it's a question of lifestyle and maximizing leverage is not the be all and end all.
Takes this house, my home, that we're talking about. The appreciation of it is all in the land value alone. Back in 1993, the build or rebuild value the duplex, cost around $200K, and now it's estimated to be under $300K. But the FMV (not the auction price) back in 1993 was $300K compared to $1.275 million now.
Now there's an empty lot a block from me, lot size four times mine, owned by the Mercedes dealer across the street. He owned the land for over 30 years, no liens from what I could ascertain, so in the same period, while the value under my home increase $1 million in value, his increased by $4 million.
Could he and I done better maximizing our leverage? Maybe yes, maybe no. For him, he seems to be busy running his dealership and he owns several others. As for me I'm in retirement, semi retirement for a few years, and still suffering from the after affect of the stroke I had. I have other paid off rentals which has it's own dead equity, quite a bit. But for our lifestyle, or what ever else you want to call it, you sit around, relax, and the equity just builds up.
Having said all of this, even with dead equity, in my case, rental income twice the expenses, we're way ahead with owning rather than renting. That's what's wonderful about REI, there's several styles of doing it, and you can do it nice and slow.
- Member since 2016 · 13k+ posts · 12k+ votes8y
Something else that is often over looked, with home purchase, is that in many cases the home owner will die without ever personally benefiting from the build up of equity. They die before they sell. They will pay a mortgage all their life and never reap the reward financially. This would be the same case for a investor that rolls all their cash flow back into paying down their mortgages or a investor that has millions based on appreciation. What value does any money have if it has no personal use. Telling others you are a million air on paper is of little value.
If a renter does not invest their additional cash flow, invests without benefiting from their cash flow or a home owner does not take advantage of their growing equity there are no benefits regardless of your chosen path. Each is happily living with a roof over their heads with no financial benefits.
Use it or lose it. If your goal in life is to leave behind money for others that is about as sad as it gets.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes8y
This is just like taxes in that everyone's situation is different.
I could look at someone's life and how they live and go ( you couldn't pay me enough to live that way! )
Someone could look at my life that I love and is perfect for me and say the same.
People need to stop chasing some ideal that is a culmination of what everyone thinks it should be. Instead work to define how you want your life to be.
I know some people that move every 2 years to take the equity increases exclusion ( 250,000 single,500k married). I am not interested in such a strategy. Personally I like owning a home and planting roots. I go on vacations and see the world but I have a home base I enjoy. I do not like my life to be in a constant state of flux. I like to have consistency and stability as a base.
I do have friends that constantly travel the world and it is fun to follow them and see what they are up to lately. It's just not something I would want to be doing all the time but I am in my 40's.
Some people mentally are okay running high LTV's on their residence where they live to invest and others want to own the property so worse case they know they have a place to live that is paid for.
I don't think others should be telling others how to live or which way is right or wrong.
- Philadelphia, PA · Member since 2017 · 364 posts · 109 votes8y
Originally posted by @Ryan Ingram:
Is both, an option? What if....your business entity owns your residence and you treat yourself exactly like a tenant. Market rent, set aside capex, the whole 9. Happy medium, or more insanity?!?!
That’s what I’ve done, and I can happily report that I am my best tenant. :) The home is consistent with my investment philosophies and other homes that I’d want to buy and hold.
Could you please tell a little more about that. What business entity owns your primary residence. Did you set it up before buying your home or transferred the ownership after purchasing primary residence? And do you have an actual rental lease with your entity?
Thank you
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Lana Lee:
Originally posted by @Ryan Ingram:
Is both, an option? What if....your business entity owns your residence and you treat yourself exactly like a tenant. Market rent, set aside capex, the whole 9. Happy medium, or more insanity?!?!
That’s what I’ve done, and I can happily report that I am my best tenant. :) The home is consistent with my investment philosophies and other homes that I’d want to buy and hold.
Could you please tell a little more about that. What business entity owns your primary residence. Did you set it up before buying your home or transferred the ownership after purchasing primary residence? And do you have an actual rental lease with your entity?
Thank you
you lose the tax free exclusion.. and are subject to depreciation recapture .. .not sure why you would do that.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Joel Owens my ship comes in ( or my big land plays go ka ching) I am buying a condo on the World ( cruise ship) and will live in that .. talk about floating base :)
this is always a spirited thread... Love to hear others perspectives.
@Thomas S. I get the refi till you die sentiment.. just have to make sure the market does not move against you in some significant manner.. this can wipe you out completely.. always nice to have some liquidity or nest egg.. and in my mind nothing wrong with having your home were you live paid for and set up for the rest of your life.. and if your kids kid it OK.. there is a fine balance here.
Everyone has priorities in life... but I can tell you most of the folks and colleagues I have and I bet Joel as well.. that we would consider pretty to very wealthy have their debt well under control.. and or have a lot of paid for assets... they don't need debt.. My goal as I get older is to be like that.. I want zero debt. Is it smart maybe not.. but I don't need rentals or fixed assets for my income either so makes no matter to me.. cash in the bank is fine.
- Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes8y
If you plan on staying in the city or area you live, BUY. If you're still open to living in other areas, RENT. Even Warren Buffet says that a 30 year mortgage with as low as the rates are, is one of the best tools out there, as long as you plan to stay there long-term.
- Philadelphia, PA · Member since 2017 · 364 posts · 109 votes8y
Originally posted by @Jay Hinrichs:
Originally posted by @Lana Lee:
Originally posted by @Ryan Ingram:
Is both, an option? What if....your business entity owns your residence and you treat yourself exactly like a tenant. Market rent, set aside capex, the whole 9. Happy medium, or more insanity?!?!
That’s what I’ve done, and I can happily report that I am my best tenant. :) The home is consistent with my investment philosophies and other homes that I’d want to buy and hold.
Could you please tell a little more about that. What business entity owns your primary residence. Did you set it up before buying your home or transferred the ownership after purchasing primary residence? And do you have an actual rental lease with your entity?
Thank you
you lose the tax free exclusion.. and are subject to depreciation recapture .. .not sure why you would do that.
Sorry , I very new and don't understand what is depreciation recapture?
- Vancouver, WA · Member since 2014 · 127 posts · 60 votes8y
Hi @James G.
I have formulated a couple rules I follow:
1. If I am going to live in a house, buy it with an investor mentality. Buy it at a cap rate that gives at least a 1% (hopefully 2%) spread between the fixed mortgage rate and the calculated cap rate (if you were to rent it to someone). This will allow the individual buying the house mobility in case they need to move. Factor in all your costs including maintenance, vacancy, and property management.
2. Double check that you can't rent for significantly less in the market you are buying in
3. Don't sacrifice on location when it comes to school districts, proximity to jobs, and crime rates
If someone can find something that meets that criteria I would have a hard time telling them not to buy the house. I think for someone getting started single family houses make perfect investments if they are bought at the right price. I also agree that if you want to scale as a professional investor that buying larger apartments will offer better returns. Also, the commercial lending aspects make it easier to grow since the property should finance itself after the down payment.
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