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Updated almost 7 years ago on . Most recent reply

To buy a 3plex or nah?
Hello BP members! I need your advice. I am a home owner and trying to transition into part time investor. I am thinking of purchasing a 3plex for $300k (market value $380k) in the Central Valley in California. 2 units are 3 bd/2ba and 1 unit is a 2bd/2ba. The current total monthly rents are $2950 which is low for the area and can be increased to $3200-3400.
I plan to use a traditional 30yr fixed owner occupant loan. If I can go in at 5% down my COC return will be 17.3% (if self managed).
My current home has $50-60k in equity that’s not doing anything. I’m considering selling my home to fund the deal.
With just the info provided does this sound like a good investment?
Any advice will be greatly appreciated.
Most Popular Reply

Personally, I would look into two different routes.
1. Consider seller finances. This way you do not need the 20% down ($3000,000 x .2 = $60,000) in order to purchase a non-owner-occupied triplex.
2. Don't sell your home, just get a Home Equity Line of Credit (HELOC). If you really have $60,000 in equity then you may be able to get a HELOC to cover a dow payment for the proper. This would come at 5-6% and only cost you the price of an appraisal (far better than paying real estate agents to sell/but your current home. Not to mention moving costs).
Hope this helps.