Multifamily or single family as first investment?
New to Real Estate · Philadelphia PA · Member since 2022 · 11 posts · 5 votes
In my current property I pay $840 mortgage. I wanted to purchase a Multifamily for 425k and house hack. I was thinking, if I get the Multifamily in that price range I will be paying a mortgage of at least 1500+ for one side of the units which would have me way over what I pay in my current property. I know that I won’t be staying in that multifamily forever, because I will be building my portfolio, but that’s double what I pay now. I don’t mind paying close to what I pay currently on my mortgage. But going from 840 to 1500+ doesn’t seem like a smart move. How can I analyze a multifamily and make sure I’m cash flowing with me living in one of the units? Or how can I ensure that the property will cash flow once I move out? Should I invest in a single family to start with? Please help.
I think analyzing a house hack is more subjective since you'll actually be living there. I've only lived in house hacks for the last 10 years and currently pay $1,250 to live in an apartment that would rent for $4K. Point being that a lot of people say you should live for free, but if that's not possible just aim for the best value based on the mortgage payment vs. rent value. You can then look at it as saving that difference (ex. in my case saving 2,750/month). Add to those savings the equity you build by having your mortgage partially paid down by someone else and you'll be way ahead of any renter or single family owner.
You should look for properties that will cash flow well without you living there. If you don't cash flow while living there, does it really matter if you're living rent free or very cheaply? Then when you move out you'll have a lot more cash flow, all the while building equity and paying down principal.
Now, if you're saying it's a duplex for that price, I find it hard to believe each side will rent for enough to cash flow. If the mortgage is 3K a month, plus expenses, that would be a pretty hefty rental price required.
In my current property I pay $840 mortgage. I wanted to purchase a Multifamily for 425k and house hack. I was thinking, if I get the Multifamily in that price range I will be paying a mortgage of at least 1500+ for one side of the units which would have me way over what I pay in my current property. I know that I won’t be staying in that multifamily forever, because I will be building my portfolio, but that’s double what I pay now. I don’t mind paying close to what I pay currently on my mortgage. But going from 840 to 1500+ doesn’t seem like a smart move. How can I analyze a multifamily and make sure I’m cash flowing with me living in one of the units? Or how can I ensure that the property will cash flow once I move out? Should I invest in a single family to start with? Please help.
In my current property I pay $840 mortgage. I wanted to purchase a Multifamily for 425k and house hack. I was thinking, if I get the Multifamily in that price range I will be paying a mortgage of at least 1500+ for one side of the units which would have me way over what I pay in my current property. I know that I won’t be staying in that multifamily forever, because I will be building my portfolio, but that’s double what I pay now. I don’t mind paying close to what I pay currently on my mortgage. But going from 840 to 1500+ doesn’t seem like a smart move. How can I analyze a multifamily and make sure I’m cash flowing with me living in one of the units? Or how can I ensure that the property will cash flow once I move out? Should I invest in a single family to start with? Please help.
In my current property I pay $840 mortgage. I wanted to purchase a Multifamily for 425k and house hack. I was thinking, if I get the Multifamily in that price range I will be paying a mortgage of at least 1500+ for one side of the units which would have me way over what I pay in my current property. I know that I won’t be staying in that multifamily forever, because I will be building my portfolio, but that’s double what I pay now. I don’t mind paying close to what I pay currently on my mortgage. But going from 840 to 1500+ doesn’t seem like a smart move. How can I analyze a multifamily and make sure I’m cash flowing with me living in one of the units? Or how can I ensure that the property will cash flow once I move out? Should I invest in a single family to start with? Please help.
You should look for properties that will cash flow well without you living there. If you don't cash flow while living there, does it really matter if you're living rent free or very cheaply? Then when you move out you'll have a lot more cash flow, all the while building equity and paying down principal.
Now, if you're saying it's a duplex for that price, I find it hard to believe each side will rent for enough to cash flow. If the mortgage is 3K a month, plus expenses, that would be a pretty hefty rental price required.
Thanks for the feed back.
In my current property I pay $840 mortgage. I wanted to purchase a Multifamily for 425k and house hack. I was thinking, if I get the Multifamily in that price range I will be paying a mortgage of at least 1500+ for one side of the units which would have me way over what I pay in my current property. I know that I won’t be staying in that multifamily forever, because I will be building my portfolio, but that’s double what I pay now. I don’t mind paying close to what I pay currently on my mortgage. But going from 840 to 1500+ doesn’t seem like a smart move. How can I analyze a multifamily and make sure I’m cash flowing with me living in one of the units? Or how can I ensure that the property will cash flow once I move out? Should I invest in a single family to start with? Please help.
I think analyzing a house hack is more subjective since you'll actually be living there. I've only lived in house hacks for the last 10 years and currently pay $1,250 to live in an apartment that would rent for $4K. Point being that a lot of people say you should live for free, but if that's not possible just aim for the best value based on the mortgage payment vs. rent value. You can then look at it as saving that difference (ex. in my case saving 2,750/month). Add to those savings the equity you build by having your mortgage partially paid down by someone else and you'll be way ahead of any renter or single family owner.
I would start in the single-family space to get familiar with investing and then move up into the multifamily arena after you get some experience