What route/path to take when I don't like the duplexes in my area?

Question

Hello everyone, my name is Gabriela. I am a newbie to this page and to real estate investing. My plan to get my foot into investing is to buy a duplex or even a triplex and live in one of the units. However I have not found a muti-amily home that I would personally live in. Its either I don't like the area or its too far of a commute from mine and my husbands job.

With that said, what other route is there to investing if that path (buying and living in the unit) doesn't work. I know there are many routes to investing and I would like to know yours. Thank you in advance for your time.

Gabriela Gomez · Answer

Thank you all very much for your response. I appreciate all of you guys advice especially coming from experienced investors.

Now I want to explain myself a little more. The area where I live is fairly new and very family oriented its beautiful its not very expensive either. However when it comes to purchasing duplexes there are not many for sale around my area. They sell those more on the areas I would not move into due to them being more rural. Not that I don't afford it but i wouldn't want to live there.

With that said I find it somewhat useless to purchase a duplex and rent out both units only to pay "cash-flow" to my landlord.

Jean Bolger · Answer

Well, there are some obvious paths... like save up enough money for your 20% downpayment that you'll need for a non-owner occupied property and just buy it while you still rent (nothing wrong with that if you really want to live in a particular area but can't afford to buy there.) Or buy a house or condo for yourself first, then save up for the investment. Or be a "serial owner occupant"; buy a place, live in it for a year or two, then rent it out when you buy another.

If money is tight, and the only way you can afford to invest is to buy an owner occupied plex, then you need to sit down and think about how much you really want to be an investor. If you really want it, and can see the financial advantages it will give you in the future, you may be willing to make some sacrifices in your immediate quality of life. Or, it may just be too much pain for too little gain. There's no one right answer. The majority of folks on this site will tell you to make that sacrifice, but hey -- we're all investors here, what else would we say? Only you know if it's right for you.

I started with an owner occ duplex and am very glad I did. It worked out very well. But there are no guarantees, you could buy the wrong thing at the wrong time and end up losing money. A lot of your success may depend on your area's market and your timing .

good luck!

Scott Pigman · Answer

All things being equal, why not?

For the sake of argument say that the rents are all $500. If you live in the duplex and rent half out out you're collecting $500/month. If you rent out both side of the duplex and rent an apartment you're collecting $1000 and paying $500. You're still up $500 and you get to live where YOU want to live. Plus you can depreciate the whole duplex, not just half.

Disclaimer - I'm just starting out myself.

Elizabeth Colegrove · Answer

@Gabriela Gomez

You might enjoy my website/blog that's in my signature. We couldn't find any duplex + that worked in our area to date. So we invest in single family homes. We have done very well for ourself. We than rent it out when we leave. Another option that we and other friends have done is rent out the rooms in the houses.

I like single family because they are in nice areas and appreciate more in rent and price.

Shelly Swanzy · Answer

Have you thought about apartment buildings?  You could still live in one and collect rent on the others.  I searched Surpise AZ on realtor dot com and focused on multi family and there were quite a few within 20 miles.  The prices seemed really low compared to here but I don't know anything about the different areas there.  I think I even saw one that was a group of condos.  I started out buying a 2 for 1 mobile home deal and live in one and rent out other and am getting ready to buy a 3 for 1 deal (SFR, DW mobile, and RV space).  It's just about your preference.  Heard AZ has crazy prices on older mobiles on their own land?

Gabriela Gomez · Answer

Thanks Shelly. I would love to rent the entire duplex since most I've seen are 100% tenant occupied but I am renting at the moment too so I don't want to be making money from the duplexes only to be paying it for rent to our landlord. How else can I start investing if its not through that route?

Shelly Swanzy · Answer

@Gabriela Gomez have you considered looking for an apartment building that is in an area of your preference?  If you could get a good deal on one of the duplexes and the numbers made sense then you could rent out both sides instead of living in one.  Just a few thoughts since it sounds like your interested in investing in multi-family.