My first property - advice needed

[Adam Miller]

Greetings everyone. First of all, I only found this site a few months ago, but I absolutely love it. This is a wonderful site, and reading the posts has motivated me to get off the sideline and get into the action. I have spent the last 5+ years "waiting" on the right circumstances, but now I realize that the perfect deal wont fall in my lap unless I take control and start acting.

With that said, I need some advice on my first purchase. Right now I currently rent, but in reading "2 Years to a Million in Real Estate" by Matthew Martinez, he mentioned if he had it to do all over again, he would purchase a multi family unit and live in one. I think that may be the way to go for me. My question to the board: Does living in the unit affect how I should value the property? Should I place any value in the fact I may be saving $200+ a month in rent by making this move?

I have so many more questions, but I guess I should start there and not turn my first post into a book.

Thanks in advance.

- Adam

[J Scott]

Unless you plan to live in the unit forever, eventually the property will become a pure investment and not your "home." So, you must analyze the deal based on that eventual scenario.

In fact, I would go so far as to say you should treat yourself like a tenant. You should pay market rent to yourself (or better yet, your company that is holding the property), make maintenance and capital repairs on your unit from the business, treat yourself like tenant when keep books, etc.

This will allow you to evaluate the P&L and balance sheet of your investment as it would be if your unit was occupied by a renter instead of yourself.

Btw, here is a primer I put together on financial analysis of multi-family property:

http://www.biggerpockets.com/renewsblog/2010/06/30/introduction-to-real-estate-analysis-investing/