Single-Family or Multi-Family?

[Lawrence Gentry Thompson]

Hi, my name is Gentry Thompson and I'm trying to decide if my first property should be a single-family rental or a multi-family rental. I've read elsewhere and agree that one's circumstances are the deciding factor so here are mine: I'm starting with basically nothing (I have a little under $37,000 in student loan debt that I'm going to pay back with the income I generate from the rental), I have huge goals, such as being a millionaire, retiring at around age forty, being able to live life on my own terms and having plenty to give away to worthy causes. I've been advised elsewhere to househack, so multi-family rentals are really conducive to doing so. I signed a lease last month to stay in my apartment until January 2021 so I won't be able to live in the multi-family rental until then. If all units in the multi-family are occupied, I can't just kick a tenant out when I want to move in. Should this steer me toward a SFR? I believe also that SFR's are less expensive to acquire.

Do I househack with a multi-family, say anything from a duplex to a quadplex, even though I won't be able to live in it for nearly a year? Or do I start with a SFR? Thank you for all input.

[Jacob Sampson]

A small multi (2-4 units) that you live in one and repair/rent the others may be your best option with having so little cash. This will allow you to get an FHA loan. I wouldn't limit yourself be deciding that you are going to do single or multi, unless you have an unending supply of good deals in both categories and you are trying to filter through all the great deals you have available. I would say look around for deals and if the first good one you find is a SFH then move on it. If the first one is a multi then move on it.

[Karl B.]

Hello. Whether you buy a SFR or a MF depends on your market. There are a lot of MF properties that are partially vacant and so there's no need to worry about being dissuaded by MF just because you think you will need to kick someone out.

I recently bought a duplex on a FHA loan - the owner kept one unit vacant because he wanted to sell and he knew a FHA loan buyer would potentially buy his property which I did.

If you're locked into a lease now I would spend the next nine or so months improving your credit score (if it's already good keep it up), analyzing deals and learn everything you can about real estate. 

The nice thing about a multi-family (VS a SFH) is you can potentially cash flow. I bought a duplex and although I'm not cash flowing the renters on the other side are paying 75% of my mortgage.

I don't know your market or the returns/prices but in some areas a 4-unit will cash flow (the three units will cover your mortgage/insurance/taxes and you'll be pocketing cash after all those expenses). 

[Shemroy Mccarthy]

@Lawrence Gentry Thompson I'm in a similar situation. Just starting out. I got preapproved and found out how much I had to work with. I'm searching for a deal now. Doubt I can get a duplex with my puny preapproval but I'll try and if not then I'll take a sfr deal. Whichever comes my way first