All Forum Posts by: Daniel Juliano

I agree with what @Dion McNeeley is telling you.  That is a great route to go.  The only thing I want to point out is that the numbers may not look attractive if you aren't careful about how you are accounting for the fact that you are effectively living in the unit for free.

As an example, if you bought a duplex, lived on one side and rented out the other, then the property as a whole may not have positive cash flow.  But to fairly analyze the numbers, you should look at them as if you were charging rent for all the units.  So if you could charge $1000/month rent, but instead are living there for free, then the arrangement is instead allowing you to save $1000/month into your bank account, in addition to the equity you are building in the property.  So even if you aren't seeing positive cash flow from the property as a whole, due to occupying half of it yourself, that may be fine.  In a couple years you will have saved enough cash and built enough equity in the unit (and gotten enough experience) that it will put you in a position to get another property.

Thanks to Alan Brown for making the point more eloquently than I did.

Leslie, I have not bought anything in Bozeman other than the house I live in, because of the difficulty in finding something that cash flows from the start.  I am in the process of buying something outside of Bozeman that does cash flow, and am considering something in Bozeman, cash flowing or not, under the rationale Alan stated.

As a fellow resident of Bozeman, I've also been looking at the low cash flows available on properties in the area.  Cash flow is ideal because it is something you can calculate and understand as a tangible return on your investment.  I'm personally buying my first property outside of Bozeman, where I will have strong cash flow (but perhaps not much appreciation).

However, if you are confident in future appreciation, and aren't in immediate need of the cash flow, that is a return that should be factored into the investment, in addition to the equity you are building.  Although some would consider that approach speculative, I see it as similar to the difference between value stocks (that generally have a dividend yield) vs growth stocks (which generally have no or only a low dividend).

The property you describe (slightly positive cash flow in Bozeman) sounds like one I would consider investing in myself.