Starting out Single or Multi fam????

Question

Hi im trying to start my real estate investing career and my first house all in one. Have been studying and looking at the mls. Would love everyones insight and advice. I live in central ct looking most likely in New Britain for my first house and trying to figure out single vs multi fam (leaning towards multi so i can start investing as well.) 2 units or 3 units? Fha loan or other type. Putting minimum down payment etc. Figured i can move from this in a few years to my next prop. Please as a new investor looking for the seasoned vets to share their experiences and knowledge. Thank you!

Michael Noto · Answer

@Mark Bascetta Always great seeing others from the local market here in Connecticut on the forums. Starting out with a live in (house hack) 2-3 family purchase as your first home makes a lot of sense to me and here is why:- You only get that 3.5%-5% loan down once and it will be the lowest amount you will likely come out of pocket for a down payment in your investing career buying something with a traditional 30-year loan. It will be the quickest you will make your money back from a cash on cash perspective as a result. If you buy your first multi after you buy a single family using FHA you will have to put 25% down and a lot of people never get started because they can't wrap their heads around putting that much money down with no experience - You can see if you like being a landlord. This is a big one for me. Yes it is sort of baptism by fire, but you will see right away if this business is for you when you are living with your tenants. You will also get experience managing the day to day which will help you later in your investing career. There are more reasons why I like this strategy and to be honest I could go on and on all day about this. If you do not mind living in the same building as your tenants and there is no other life situation that makes in non-practical then I think this strategy is a no brainer for someone who has done some research and thinks real estate investing is a fit for them.

Ryan Latella · Answer

Hi Mark -I agree 100% with what Mike is saying. I purchased my first 3-family home about a year ago using an FHA loan and I am very glad I did. This was the easiest way to get into real estate investing and the most logical. I did not have to put a lot of money down, I have a free place to live and make a few hundred a month, and I have learned A LOT about being a landlord and doing basic home maintenance. This is the best way to learn! Now I am working with some partners to find our first flip/BRRR property, and @Michael Noto has been a great help in that so far.Feel free to reach out with questions. I was in your shoes only a year ago.-Ryan

Craig Bellot · Answer

Definitely go for a 4 family, live in one unit and rent out the others. Be confident, friendly but firm with your tenants and screen well. The number one non negotiable is stable job for more than 5 years. Read as much as you can about property management and implement one idea at a time. There are some months you'll feel like a real estate millionaire, I urge you, please save that money as a reserve for the rainy days!

Jason Arcuri · Answer

House hacking is the best way to go in my opinion. You only really get that opportunity once to buy a house for such a low down payment. Then you can live there for near free to possibly making money while you live there. Plus tenants always behave better when the landlord is around. You can get to know them and build a lasting relationship. The house I hacked 11 years ago still has 2 of the same tenants. One literally takes care of the whole property for me. It's pretty amazing.This is also one of the only times I recommend maxing out your budget. If you're approved for 250k loan look for 250k houses. You get a bigger tax right off and your renters are paying off a bigger mortgage. I also recommend pushing for a 4 family. As rents go up your income will go up more drastically and you're also limited your risk. 1 tenant doesn't pay you'll have 3 others that still can.There's plenty of good spots in Connecticut to find the right home.

Mark Bascetta · Answer

Ps Ryan i tried adding you as a colleague but couldn't figure out how.

Mark Bascetta · Answer

Its very cool to see CT investors responding! Thank you guys for your input. Ryan Latella where is your prop located? You got an FHa on a short sale just to confirm? Im still researching fha and all the rules that comes with it.

Mark Bascetta · Answer

thank you for your input it makes a lot of sense.