New investor: single family or house hack near Charlotte

3 Replies

Hey everyone,

My wife and I are ready to buy and have found a great single family home that will cash flow between 8-22% depending on what we negotiate it for and how much we can rent it out for but should we buy it or wait until we find a multi family?

Originally, we were dead set on a multi family since we would actually save money and double our profits once we get the units filled. We found a great turn key single family 15 minutes from Charlotte city center, nee HVAC and updated interior (floors, paint, appliances, carpet, new bath, etc).

Like I said, this property will cash flow and seems to be a great investment BUT here's the thing..

I have a full time job (making over $60k), my wife just lost her job due to covid but is pursuing wedding/event photography full time and we don't have too much in the bank for reserves. We are planning on buying our first property with an FHA loan and planning to save money.

Unfortunately, we won't be able to save a dime while living in the single family home.. so now we are questioning if buying a SFH is worth it since we will be in the same position we are now in about a year.

Now, this property is USDA eligible so we MIGHT save money on the initial down payment but it would be very difficult to save any money for our next property..

Finding a multi family home would be ideal but the ones we have found are in not so great areas. I wouldn't mind buying a property in a crappy neighborhood if it made sense but I don't want to put my family there, even if it's for a year.

Thank you for taking the time in reading this long post, it's much appreciate 🙌🏻

I always ask how is the decision going to get you closer to your goals.  Are you planning to house hack? You will not be cash flowing this year because you will be living in it and then a year from now it will be harder to get a loan because your debt to income will be worse.  When you are starting to invest you need cash flow or to decrease your living expenses so you can save for an investment. I would say you should keep looking to find a house hack that works for your family for the year. 

Hey Eugene. By "house-hacking" do you mean renting by the rooms? I just helped a client purchase a home (he closes today actually) and it's SFH and he's had overwhelming interest in renting out rooms. He actually bought the house because it had multiple masters and a large basement that he was going to convert into a shared office and target students and work-from home tenants.

If you're wanting small multi-family, just keep in mind that they're the most desirable competitive real estate commodity on the market, and they're very rare. They way to get one is to reach out directly to the owners on the tax record for ones that are not for sale, and make them a written offer (they get verbal offers 10x week from investors and will not take them seriously). If you're going to live in one of the units and use a loan, I would offer FULL retail price, and maybe a little more, and you'll get one. It may take some time, but I've talked to many owners of these types of properties, and they're not ignorant to what they're worth, most just don't want to go through the hassle of selling it and getting lowballed 10x/week, so you have to make it as easy as possible. It may be tricky doing this if you've never done it, I would suggest working with a broker experienced in small MF and who has experience writing offers for off-market deals (most brokers don't/won't do this). 

Feel free to reach out if you have any questions about this.