Buying a multi unit for me and family to live in

Multi-Family and Apartment Investing
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Buying a multi unit for me and family to live in

Taunesha Butler
Phoenix, AZ · Member since 2018 · 2 posts · 0 votes

Hello! I am very new to this site and real estate investing. I live in Phoenix. I have an adult son who has pets and lives on his own. I have a mom on fixed income, who lives on her own. However, rent and other bills are eating up her money. I live on my own with a teenage daughter (soon to be 18 in 2 years). We all love our independence and don't want to live in the same house. However, I thought purchasing a 3 or 4 unit might be the best solution for us. My son and I can partner and purchase the property. Because we plan to live in it, we can go FHA or even the NACA program for owner occupied financing. Then, my mom could move into a unit and pay less rent than she is now. If we purchase a 4 unit, we can have a tenant in one unit and the rent can be used towards the mortgage, which brings our expenses down. This allows us to save more money for future investments. It just seems like a win win situation for us.

I am still learning how to find a good deal. One of my concerns is finding an affordable 3 or 4 unit that is a great deal, but also somewhere my family and I want to live. I need to feel safe and I wouldn't want to live in something that I wouldn't rent myself or be a landlord of. I am concerned if there are properties that fit this criteria.

Any advise would be appreciated. 

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  • Nate Burgher
    Olympia, WA · Member since 2017 · 91 posts · 80 votes
    8y

    Hey @Taunesha Butler, it sounds like you've answered one of your questions, and that is it sounds like it's a great idea for everyone in your family financially. You also mentioned that everyone likes their independence, which a MFH reduces that level of independence you'd see from everyone living on their own. 

    Ultimately, it sounds like you need to do some research on prices and neighborhoods. Maybe a realtor can help you find neighborhoods that fit your needs, and at the very least get you some prices for places. That way you can see if this is truly feasible.

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  • Yader Gomez
    Phoenix, AZ · Member since 2017 · 37 posts · 7 votes
    8y
    Welcome @Taunesha Butler ! I'm also in Phoenix and currently under contract for a property with two houses on it. If you don't already have one, get an agent. @Chris Tran has been helpful for advice to me on here but is also an agent with experience in multifamily. You said you're new so I'm not sure how much you've read on here but Brandon Turner's book on real estate investing is a great start. One important chapter shows you how to calculate all your costs to see what a property cash flows if at all. It also depends on your price range. Some of the multifamilies in town aren't in the best areas. But the higher you go in price, you'll find some nicer ones. Just remember that in some cases the sale price of a MFH jumps a lot higher than what the units rent out for so it won't be a good deal. I've seen decent ones around $400k and up. Since you'll owner occupy, you can use an FHA loan and put as low as 3.5% down. You just have to live there a year, the property has to be 4 units or less, and I think there are a few other loan requirements that a lender would be able to explain. Good luck and feel free to ask for some help if you want a second set of eyes on an analysis of a prospective buy.
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  • Chris Tran
    Real Estate Agent · Scottsdale, AZ · Member since 2017 · 57 posts · 20 votes
    8y

    @Taunesha Butler Using a FHA loan with 3.5% down on a 2-4 unit property is one of the best ways to start your real estate investing journey especially if you're low on capital. You just need to occupy one of the units which you already know. I'm a Multifamily agent in the area and very familiar with the 2-4 unit market here in the valley. I'll PM you and we can discuss further.

    @Yader Gomez Thanks for the mention Yader!

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  • Wes Blackwell
    Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
    8y

    @Taunesha Butler

    Hey Taunesha! That's awesome news! Way to make a great start in securing your family's financial future!

    What you're experiencing is one of the most common things investors go through when they make the switch from single family homes to multifamily.

    In theory, by purchasing a fourplex you're buying four times the amount of building that you would be buying if you bought a single family home. You're at least buying four times the units.

    Therefore, either the quality of the neighborhood goes down, or the quality of the building. Generally speaking, a $500k single family home and a $500k fourplex are going to be in two completely different neighborhoods. And that goes for any price range. 

    Based off the description of your family, the most important thing to consider are the crime ratings for your area. Your daughter only has two years of school left and so school rating aren't too much of a factor.

    The thing is a C neighborhood and a D neighborhood look exactly the same, but the D neighborhood has multiple instances of violent crime. Assault with a deadly weapon, shooting on an occupied dwelling, etc.

    Stolen license plates and burglarized homes happens in every neighborhood. Violent crime only happens in the worst.

    If you go to the Police Department's website for the area you're looking in, usually they'll have a link to the site they use for crime mapping police reports. Set the date range back several months to get an idea of how the neighborhood is over time. That should help you avoid the worse off areas.

    Let us know how much you qualify for on a loan, and we'll see if we can point you in the right direction and help you find something great in a safe neighborhood :-)

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  • Taunesha Butler
    OP
    Phoenix, AZ · Member since 2018 · 2 posts · 0 votes
    8y

    @Chris Tran, @Nate Burgher, @Yader Gomez and @Wes Blackwell, thanks for your comments and insights. This has been truly enlightening. 

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