Build single family or buy second rental?

Question

Hi, need advice...

Currently own a three unit multi family home in the Boston area which I live in one of the units and rent out the other two. I also own a vacant lot of land that I would like to build a single family home on. If you could only do one first, would you buy a second rental property to live in and rent out or build your dream home and possibly take out some equity in a couple years to get the second rental??

Jason Turgeon · Answer

Are you talking about selling the 3F and doing one or the other? Or keeping the 3F as a rental?

If you are keeping the 3F and can afford to build your dream house and still have the 3 units as rental income, there is no shame in doing that. It is not the fastest path to complete financial freedom, but it gives you immediate gratification and as you said it gives you the opportunity to tap into equity down the line.

From a pure financial standpoint, you are definitely better off not building a single family dream home right now, but there is more to life than just money. It really is a question of how many more years you want to scrimp and save before enjoying some of the fruits of your labor, and only you can answer that.

Account Closed · Answer

@Jason Turgeon  the plan would be to keep the 3 fam and use one rental unit to support the mortgage of the single family dream home. I agree with you as buying a second rental property first will put us on a path to financial freedom. And that’s what I want. Now convincing my wife is going to the difficult part..

Thomas S. · Answer

A personal home is a lifestyle choice not a investment. Build your dream home when your income is so high that you have no more use for the money. Preferably when the kids are gone and you are  retire.

Dream homes are highly over rated, wasteful luxury, way more home than anyone needs and a waste of good money.

Keep investing, view this time as your working years.