Multi-family of Single Family in Boise or Spokane?

Question

Originally I was considering starting with a few single family purchases. I'm wondering now if I might be better off doing a multi-family deal first. I know the cashflow can be a bit less overall, and tenant problems a bit more, but it means only one loan. I would like to get out of my current job, and am thinking that I could secure the loan for a four-plex, or maybe two duplex deals, then quit.

Also considering finding a real-estate position that could teach me more about the industry, and provide income for future loans, until the rental income can be considered.

Could this idea work, or am I better off sticking it out at my current job until I have a few homes secured? I'm not even sure if multi units are good in Boise, ID or Spokane, WA at the moment. I've heard mixed info from realtors. Any insight or opinions are much appreciated.

Jay DeCima · Answer

Joe

I have been teaching this kind of investing to my student for 35 years. Many of them are newbies.

8 RULES FOR CAREER CHANGERS

• 1.  Learn your local market. Know what properties should cost and what they can reasonably sell for. Learn how much rent you can get. Do these steps before you buy, not afterwards.
• 2.  Learn to spot or identify hidden bargains quickly, then act fast to acquire them. Remember, competition is keen. You must develop a sixth sense for sniffing out hidden money-makers.
• 3.  Develop a business sense...think like a retailer. This will help you to pay wholesale prices when you buy. Buying at retail prices and selling for retail prices simply won't work. Don't do it!
• 4.  Invest...don't speculate. Investing is a plan to make money. You must be able to identify exactly how you will do it. That's why step one is necessary. Specu­lators are guessing without a plan.
• 5.  Learn how-to do deals where you have 100 per­cent control or nearly so. Basically, this means owner financing with you doing the management. Avoid short payback notes and variable rate mortgages offered by the institutional lenders.
• 6.  Learn how to live on tax-free or tax-sheltered income. Rents you collect are normally tax sheltered. Rehab loans, like Title Ones, are tax-free same as bor­rowing on equity or refinancing. When you collect $100 rent you get to keep $100. When you earn $100 in wages, you keep only $70. Taxes eat up the money you can easily keep to benefit yourself.
• 7.  Learn landlording first hand from doing it. Manage your own customers (tenants). Many inexpe­rienced investors farm this function out to professional property managers. I consider this a serious mistake for new investors. Maybe it's okay later on, but owners should know the job inside and out first.

8.  Once you have developed a plan that works well and consistently makes you money, stick with it until it quits working. Most investors suffer this common weakness. We're all suckers for a better mousetrap. Avoid the "too good to be true" temptation-it generally is.

Good luck

Fixer Jay DeCima

Shawn Peden · Answer

@Joe Buchmann Just my 2 cents here, I have found that more doors equals more cash flow. I think you can get great cash flow with enough work in either type of investing, but thats just what I have found. Also in a SFR when the renter moves out the cash flow stops, in a multi-family, the other renter/renters take up some of the slack. I think it also depends on what your goals are and what type of rentals you want to get into. I think the market is great here in Spokane right now, been looking at several duplexs/triplexs/quads hoping to pick another up soon. Some have been great others not so good. Run the numbers and find the good ones and things should work out.

StacyA McBain · Answer

Cash flow tends to be greater in mutlifamily properties here in Boise. True that number of tenants/tenant concerns are greater, but you also have less of a hit during vacancies, which are spread out.

Being on payroll absolutely helps with loans - I recommend buying when employed so you can take advantage of the leverage that financing offers.

Best of luck to you Joe!

Multi-family of Single Family in Boise or Spokane?

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