First Time Home Buyer: Apartment vs Single Family Home

[Cristian Garibay]

Greetings BP Community!

I am looking for advice on my first home purchase. I am 26 years of age, living with my parents in California's Central Valley. I am currently employed and have been working with this company for 3 years and have built my credit near excellent. I decided to live with my parents so I could save as much money to buy a home, and I feel that I am ready to make some moves! My plan is to purchase property to live in for a couple of years, move out and purchase another home with my future wife, while using the first property as a rental. I've been intrigued by the real estate community and have gained interest in investing further into the future, but I will be taking baby steps to get toward that goal. Question for you all: I am looking at buying either an apartment/townhome or a single family house. The apartments/townhomes that I am looking at are roughly 1,200-1600 sqft, 2bd 2bth and range from $175-$200K. The single family homes are roughly 5,000-6,000 sqft, 3bd 2bth and range from $250-$300K. Monthly payments would be ~$1,250 (~$350 HOA fees) and ~$1,300, respectively. For this first purchase, I would be living on my own, so I am looking to rent out a bedroom. Which home type would make a better investment as a rental in the future? Pros and cons to both? Do you recommend a different approach? Let me know if more information is needed.

I appreciate any help or advice you may provide and thank you for reading :)

[Jeff Zimmerman]

Hey @Cristian Garibay , congrats on getting started. The answer to your questions are like most RE questions, "it depends". in Fresno I typically steer people away from townhomes for investments, the reason is that most renters and future buyers (when you choose to sell) prefer an SFH rather than a townhome and since you have more demand to rent/buy SFH's you will do better financially. Plus, you want to stay away from HOA's if you can help it, they are usually pretty expensive and can cause problems for you as an investor. additionally a 3bd sfh in a decent area of town will give you more rent since there are 2 other bedrooms to rent out.

another idea you could try is buying an MFH with a residential loan (just like a home loan) and living in one and charging rent in the others, that's a really good way to get started.  I hope this helps.

are you in fresno or somewhere else in the CV?