Better deal or better neighborhood? First buy owner occupy multi

[Augustin G.]

Just hoping for some input on this. I plan on making my first purchase within 12-18 months, going multi family route with a FHA loan, with my fiancee and I occupying one of the units. My question is, would it be smarter to go for a cheaper home (lower mortgage) in a neighborhood which would bring in lower rents and most likely a lower quality tenant... or would it be wiser to spend a little more in a nicer neighborhood where I can attract a higher quality tenant with higher rents? In the end I suppose the quality of the neighborhood is irrelevant as to if it's a "good" deal or not, this would be based on the numbers.

Anyone with experience going this route for their first buy who may have had the same thought process?

[Susan Gillespie]

Hi Augustin, if you're planning to buy and hold for a longer term, I would think longer term. Meaning: how will the neighborhood or location do over time? Is it generally holding its value? Is it mostly residential or rental? What is the neighborhood's demographic, who is living and renting there, how is the local economy?

I have only invested in stable neighborhoods and have been happy with the result. I go for quality over quantity. My most successful formula is to buy discounted/distressed properties and add value through improvements. I wouldn't want to make improvements in a neighborhood that I don't consider "improvable."

You'll have a huge advantage as an owner-occupant with finance options, taxes and possibly first time buyer incentives. Watch for positive cash flow no matter where or when you invest.

Best of luck with your search. I wish I had bought an income property when I was starting out.