First Property?

[Jerry Skeens]

I'm fresh out of college, about to start my first job. I will be moving and do not believe in renting. I'm not the type to buy myself a "starter home" either. However im not financially set to buy my "dream" home as of now. However i would take in consideration of investing in a Duplex/Triplex and living there while renting out the other units. Is this a good idea? Or should i take another route? Please help?

[Jon Holdman]

Originally posted by Jerry Skeens:

I will be moving and do not believe in renting

Do you have money to pay cash for a property? Otherwise, you're still renting. You're renting the money to buy the place and paying interest. It truly is six of one, half dozen of another. There are plenty of places where renting makes MUCH more sense than buying. A house you live in is not an investment. Its an expensive doodad. Financially, you may be better off renting that doodad than buying it. Do the math, don't let your feelings that "renting is bad, owning is good" blind you to the better alternative.

Further, renting gives you much more flexibility. You said you're fresh out of college. Sometimes first jobs work out, sometimes not. If you end up changing jobs and you own something where you started, you may be stuck with paying the exorbitant selling costs (assume 10% of the selling price will go to these costs) or stuck being a long distance landlord.

This I applaud. Don't buy a house unless you intend to die of old age living in the house. The "starter house", "move up house", "mini-mansion", "downsize condo" idea is a plot by realtors and home builders to extract as much money as possible from you on transaction costs. I'm totally serious. You just have to watch ads by the NAR with a skeptical eye to see their agenda.

IMHO, I would not really want to live next to my tenants. I have my life, they have theirs. They intersect when they pay the rent or need something fixed.

Further, when I buy a rental, the goal is to turn a profit. When I buy a place to live, the choice is more complex. A bunch of my personal needs and wants and the limits of my pocketbook come into play. I'll repeat I think a residence is just an expensive doodad, so doodad criteria come into play. You can cut a sandwich just as well on a formica countertop, but I want granite. A Ford Focus will get you down the road just fine, but my Mustang is a lot more fun to drive. Its not always easy to find a multi that both meets my personal needs and desires and meets the required profit criteria for a rental. So, something has to give. If my intention was to make it a full rental, I would sacrifice my personal wants and desires and focus purely on the property as a rental. Perhaps that works for you. Some folks do start that way.