Triplex/Quad Investment

[Will Russell]

Hello everyone. I am working on purchasing a triplex or a quad and have two questions that are preventing me from making any forward progress, and I would really appreciate any input.

1. Currently I am living rent free and need to decide if I should live in the rental property, or stay where I am (rent free) and use the property solely as an investment. I can live in the house and get an FHA loan (3.25% down), or stay where I am rent free and put down 25% for a traditional loan. I am looking to invest in 3 or 4 unit houses in the range of $400k to $600k, so 25% is a relatively large amount of cash to put down, but I can come up with the money if that is the best choice. So – live in the house and get an FHA loan, or live rent free and get the traditional loan?

2. What do you personally use as search criteria when looking at rental properties? This is the biggest thing holding me back from searching for properties. I know how to evaluate properties and determine:

a. NOI
b. Cashflow
c. Cash-on-cash ROI
d. Total ROI (including appreciation and accrued equity)
e. Cap rate
f. GRM
g. BP 50% Rule

But since there are so many different ways to analyze and judge a rental property I'm not sure what my requirements should be. Once I understand this I can begin searching for properties. So - how do I determine my investment requirements?

[William Bannister]

These are the posts that make me glad I pay less then 20k a unit for my apts. I know maybe not glamorous like a 500k building but 1600 in rents on a 40k building will almost always make up for it. Some day I might decide I need some beach front rentals but not yet. Im always a little shocked when people starting out are looking at so much debt on there 1st building. When I was 25 years old a 1/2 mil on a building with 3 units would have scared the heck out of me. I would be ok with a 1/2 million in debt but I probably would have been looking for a 24 unit building with a 10k monthly rent roll, Even if I had to drive 600 miles to get it.