First property question

[Jessica Prak]

Hello Everyone! New member here! I am just wondering if anyone had some advice about buying a first property. I am hoping to have it become an income property. I am lucky to live with my parents at the moment and will stay and save for my down payment but I am not sure if the best option would be to buy a condo/preconstruction or a house and have the renters help pay for the mortgage. Thank you!!

[Daniel A.]

Hello there and welcome to the world of real estate investing. You've made a wise choice and I want to congratulate you. While I can't advise you on what route might work best for you (there are entirely too many factors), I can toss out some ideas for you to ponder.

But first, I'd like to ask you some questions. You may answer them if you'd like, or you may consider them rhetorical. 

     How long ago did you decide to get into real estate? 

     What steps have you taken to reach your goal?

     Are you actively educating yourself?

I will say this: condos can be a bad idea because there is so much oversight. You have associations to deal with, blah blah blah. But then again, people make a lot of money in the condo business. I personally prefer multifamily dwellings. If you get yourself, say, a duplex, you get the privacy of your own residence while someone else pays either all of or most of the associated costs. If you go with a single family house and opt to rent out a room, for one, you can't really expect to charge someone the same amount to rent out a bedroom as you could to let them rent out a side on a duplex, and two, you have diminished privacy. Some people are okay with that. I mean, if you have a 4 bedroom house and you can rent out 3 rooms at $550 a piece, you're looking at $1,650 a month. Depending on the duplex, you might make that much, you might not. All depends.

Do what works for you. Sometimes it's not the best idea to overanalyze something to the point where you don't do anything. And the way I see it, if you're going to live in it, then it's not going to be a bad investment. I would suggest to make sure that you calculate the numbers to ensure that were you to move out that it would cash flow. But even if you end up getting a duplex and you have to spend $30  a month because the other tenant doesn't cover all the costs, you're still up because you're not paying to live in an apartment at $600 a month.  While it might not seem like it, you're still putting $570 per month in your pocket. And you're building equity.