First purchase: buy and live in 4 Plex?

Question

First Investment: 4 plex financed as a primary residence?

Hello,

I've always wanted to buy real estate and give it a try.  I've been looking at RE for 6 years now (doh! Should have bought then).

[https://homes.ksl.com/listing/40441038](https://homes.ksl.com/listing/40441038)

This is a for sale by owner, 4 plex (2 bed, 1 bath) in a nice city (Farmington Utah, lots of nice mormons).  I would consider this to be in a great/safe location. Most 4 plex's I see in utah are in sketchy areas. Not this one. Nearby other houses, not multi units.

unit 1: $940 (1 year lease)

unit 2: $940 (6 month lease)

unit 3: $890 (mtm)

unit 4: $750 (mtm).

total: $3520.

Using a redfin calculator: $710k @ 5% is $3550 a month.  At 20% down, $2,696.

Curious what your thoughts are on this property as a first rental.  In this market, I'll probably never get a "killer" deal, but I do want to start getting involved.

Searching for nearby rent prices: I see a basement apartment going for $1045 (same sq. ft @ 900, built in 60s) in Bountiful. I'd say both are good cities/locations../

[https://www.rentler.com/places-for-rent/ut/bountiful/816-w-4100-s/5723114](https://www.rentler.com/places-for-rent/ut/bountiful/816-w-4100-s/5723114)

Duplex unit going for $950 in clearfield.  Clearfield isn't the best area.

[https://www.rentler.com/places-for-rent/ut/clearfield/810-w-300-n/4774261](https://www.rentler.com/places-for-rent/ut/clearfield/810-w-300-n/4774261)

$1k in clearfield as well.

[https://www.rentler.com/places-for-rent/ut/clearfield/17-s-1450-w/5925964](https://www.rentler.com/places-for-rent/ut/clearfield/17-s-1450-w/5925964)

$1.2k in clearfield. It looks recently remodeled.

[https://www.rentler.com/places-for-rent/ut/clearfield/31-w-1600-n/4991398](https://www.rentler.com/places-for-rent/ut/clearfield/31-w-1600-n/4991398)

I feel like the units could go for $1100-$1200.  I might be a tad optimistic... 3 of 4 units are remodeled in the last 3 years.

Not the best deal in the world... But a good enough one for me to swing?

If you threw an offer at this house, what would you do?

Any tips of advice is appreciated.

Would you do 5% or 20% for your first 4 plex? I have the cash to do either...?

Alecia Loveless · Answer

@Thomas Bailey The first property I bought was a SFH which has turned into a flip due to price increases. Then I bought a 4-unit. With mortgage rates considerably lower for owner occupied that’s what I’d do. The rate I just locked in for non-owner occupied was 3.675. Still not bad but you can still get 3% or perhaps lower if you live there.

Now I’ve got a duplex, a 4-plex, and soon the new 3-plex. Also working on another duplex.

In my area SFH doesn’t work out. The cheapest you can find one needing major repairs is $170,000 and the rent is about $1,400 so you don’t come close to breaking even. In my opinion multi-family is the way to go unless you’re in a market where you can pick up homes for under $100,000 and rent them out for a lot and make your numbers work.

Brian Black · Answer

I would run all the numbers with insurance and taxes into a calculator (or a pad of paper). If you can cash flow it at the present values (and feel you could get more in time) then it could be a go.

A quad would be a great option for the first buy in my view. Wish we had done it! Recommend putting down as much as you can! Make your first venture cash flow well and take off the pressure. 20% min. 15 year fixed term.

Good luck!