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Updated almost 9 years ago, 01/24/2016
Buying and holding multi family units
My wife and I are in the market for a duplex. We live in the Minneapolis area where rent prices are very high. If you can afford a down payment, ownership can often be cheaper.
We are looking at buying a duplex and renting out the other side. We know plenty of people who are looking for places to rent.
We do not want to accumulate a ton of debt but would have no problem borrowing if we are able to cash flow all of the properties.
Any other suggestions for buying and holding properties?
I think this is a great idea. I would look for a duplex deal that would potentially pay for your side of the duplex and be able to live for free. If you could cash flow beyond that point, that's an added bonus. This will give you some experience in real estate investing and is a great way to learn. With the experience gained, you could then move on and start investing in more real estate and start cash flowing more! Good luck!
Shoot me an email, and I can give you some more information on how to get into rental property for little money out of pocket.
Sean
@Luke Nelson That is a strategy that me and my wife personally used to get into a duplex. We moved on one side and the tenant on the other side covered our mortgage. We were able to use a low down payment using a FHA loan product. There is also a conventional loan product called the "American Dream" loan which only requires a 3% down payment and has a DP assistance arm which allows you to get into the property with nothing down if you meet certain thresholds.
Reach out to me if you are interested in learning more about that and locating a duplex deal.
@Luke Nelson "House Hacking" is a great way to jump into the real estate investing world with relatively low money down while learning a ton. I currently own a duplex and rent out one unit while living in the other. Cheers, Sawyer
I am looking to do the same thing in Connecticut, and agree with the previous posts.
FHA or 203k loans both require a 3.5% down payment. Perhaps this will allow you to afford a 3 or 4 unit multifamily (4 being the upper limit for this financing).
The neat part about the 203k loan is that you can buy a property that needs some work and use part of your loan to rehab the property. This will allow you to buy a discounted property, and increase its overall value and rental income by fixing it up.
The interest rate is slightly higher on the 203K loan, but I was pre approved at below a 4% interest rate! The less money you put down, the greater your return on investment, and the more money you keep in your pocket for future deals.
Good luck, and feel free to reach out if you have any questions for me.
-Jacob
Also, congratulations to you and your wife on your first child or expected child depending on timing!
Originally posted by @Luke Nelson:
My wife and I are in the market for a duplex. We live in the Minneapolis area where rent prices are very high. If you can afford a down payment, ownership can often be cheaper.
We are looking at buying a duplex and renting out the other side. We know plenty of people who are looking for places to rent.
We do not want to accumulate a ton of debt but would have no problem borrowing if we are able to cash flow all of the properties.
Any other suggestions for buying and holding properties?
Luke, keep it simple, if you have the ability and desire to live in a multi and rent the other (1-3) units out, go for the 203k, find a home that needs a little attention and have no fear. It was built by man can be renovated by man! You stand the opportunity to possibly not only live for free or nearly for free, but your asset will be paid down over time and the money you save on the rent you can invest into more homes. With a simple renovator loan such as a 203k, it requires little down and little but of your time - as an occupant of a multi-family you can rent the other (1-3) until and stand to make a little bit of cash flow above and beyond living for free.
Luke you should consider purchssing a multi fanily home so that the rent collected from each unit can off set the majority your expenses