Looking for my 1st deal

4 Replies

I just moved to the Huntsville, Al area and I am looking to start investing in Real Estate.

I only have 15k in cash to invest at the moment. This number is growing at 2k per month.

Do you recommend buying a multi-family and living in one unit?

Do you recommend buying a single family house with some work then renting it after a year or 2?

Is there something else you recommend?

Buying a multi family property will probably be a little bit challenging. I would look at a SFH that needs some work, fix it up and live in one room while renting out the other rooms. This will help you to faster accumulate the necessary cash for a down payment on another property. In 1-2 years you can probably look to purchase your 2nd property....and so on. This is the more conservative approach.

What @Bastian Kneuse described is exactly what I would suggest. I'm in a different market, but I was in an almost exact situation to you before I purchased a SFH to rent out spare rooms (seriously, within $1-2k of your cash is what I had saved for a down payment and pretty much the same accumulation rate per month).

While it's not what I did, I would point out that there are plenty of ways you can creatively finance a multi even with only $15k on hand.

Here are some things I considered in making my choice to go SFH; hopefully you can dissect and figure what does/doesn't apply to your case:

- SFH required less cash upfront (between DP and closing) than a multi, this way I wasn't having to deplete all of my cash just to aquire this first home.

- Repairs and improvements I wanted to do for a SFH were much more cost effective than any multi I would have been able to afford. This means I could try to do some myself (learn along the way) and hire out for some others without putting all my cash into this deal.

- Lastly, the worst case scenario in purchasing a SFH is I have x rooms vacant. Accounting for the total mortgage payment, equity increase (i.e. principal paydown), and what I would pay for a similar room (or what I paid for rent before purchasing), in this worst case scenario, I am only paying slightly more than if I were paying rent. From there I worked backward and considered slightly better scenarios (I can rent 1 room; I can rent 2 rooms; ... ; I can rent all x rooms) and just watched the numbers work out, really.

As a fellow newcomer I can say just getting started was far more important for me than finding the best deal to maximize all these different metrics we can use. If it's a fit and the numbers work, you'll be better off than waiting for the perfect deal.

    Welcome to the neighborhood! I live here in Huntsville and I've been living here for the last nine years. I would definitely agree with most of the comments above. Multi units here on MLS are not working as far as any of the calculators that are used in bigger pockets. The numbers just don't seem to gel and I'm only looking at four-plexes. In the interim, definitely look at going the SFH route as an option and build up cash or look at generating multiunit leads outside of the MLS with your marketing.