Considering a Multi-family to start with

[Paula Poblete]

Hi, my name is Paula and I have been playing with the idea of real estate for a few years now. I have taken some classes, read a few books, listen to podcasts. But have been too chicken to take any action. Meanwhile I have done some things right, I am saving 20% my income,  I am sending 14% to my employer's 401k, Became credit card debt free. I am currently a tenant and paying $1000 for a one bedroom apartment. My only debt is my car payment for $325

I do not have the stamina or the social skills for flipping or wholesalling, so I want to buy and hold for cash flow, and sparingly sell for  capital gain (I think that is the right term)

I am thinking of the following, let me know if  am being naive, ... with compassion, I am a newbie after all

A triplex, right in my current neighborhood, and me moving to one of the units. Rents are about $1200 for a two bedroom

With a mortgage I can pay on my own, even if I lose both tenants, so up to $2000 per month in total expenses

I want to ideally find the ugly duck in a cluster of nicer complexes, so, a property that is livable, but where I can add value with some light of medium remodeling and beautification/upgrades. If it has space to build a new studio, even better.

I plan to talk to my CU about financing. A problem is my credit score at 650. 

I am very concerned with finding good inspectors and handymen. I am very handy myself, but I am not planning on doing repairs myself.

I need to learn how to calculate my return, right now if I dont have to pay my own rent, I figure that is a $1000 gain, I know it is not that simple, I need to learn about this. Any advice or resources?

I am doing all this because I have an awesome 9 year old in the autism spectrum and I need to minimize my work hours so I can homeschool him (with the help of the homeschooling community, no socialization concerns)

Thank you very much for your time, and looking forward making this happen this year; if the numbers  and the timing make cents ;)

[Jeff Dulla]

@Paula Poblete I commend you for looking into this and I think if you are looking to live in the property, it is a great idea. 

The plan sounds great but I know nothing about the market there. What is the average price of a three unit? Do you have a trustworthy realtor you are working with? If not, you need to find one and start a search. 

You won't know the numbers until you start looking at specific properties. Once you do, any lender can put together payment options for you. The realtor can comp out rent for the other units as well. Together they can help you come up with the basic financials. You can also use the many calculators on there to help figure in other expenses.

I am not sure why so much love for CU's on this site. A good residential mortgage banker can do the same things and probably at better prices. If you would like to talk further just let me know.

With your credit, I think FHA would be a good option potentially. But don't know for sure without more detail.

Ultimately, you need to start with a loan application. Once you have a lender and have this piece worked out, you will know for sure if you qualify. After that, if you can come up with a few potential properties, the lender can work out loan program options and full payment/cash to close options for each. From there you can work out net income figures.