First buy, should I buy a multi-family home?

Question

Hello all, a little bit about me. I’m a 26 y/o traveller spending most of the year in Charleston and the rest in Summit County, CO. When I get back to Charleston I plan on buying a home. I have two questions. As a first time buyer should I buy a multi-family home to try and turn a profit? I’d like to make real estate a solid form of passive income I just don’t know where to start.

My next question, I owe quite a bit of money to the IRS from being young and dumb. Will this effect my ability to get a loan? If so, what can I do to change that.

Thanks !

P

My next question, I owe quite a bit of money to the IRS from being young and dumb. Will this effect my ability to get a loan? If so, what can I do to change that.

Thanks !

P

Ola Dantis · Answer

@Preston Davie

Lol! Don't worry the IRS always finds a way to make every single one of us owe them money regardless!

The lenders will certainly pay attention to your credit profile and if that IRS loan is on there, the lenders will see it. That said, lenders also look at a variety of factors to assess your creditworthiness.

If you are able to HouseHack a Multifamily property for your first buy, then that will be great. So, you shouldn't let the debt be a stopping block or anything else, frankly. Just read a lot about how to buy a multifamily property and listen to podcasts.

Pace yourself and it will happen! BiggerPockets is definitely a great place to start learning!

Conner Johnson · Answer

I did the same thing. Found a 3 bed 2 bath with an in-law suite above the detached garage in the back that I live in and rent out the front. My realtor knew what I was looking for and fount it for me off market. I suggest you look him up. Tradd Bastien at Bastien and Associates!

Dennis Wayne · Answer

Maybe it has a dog house too out back and you can get 6 beds and put everybody on section 8 including Fido

Preston Davie · Answer

@Dennis Wayne

Before I start I think it’s important to consider every step, and to ask questions.

Preston Davie · Answer

@Carl C.

I work in both places, and I believe I have enough proof of income for them to at least consider me. I do realize that they may reject me that’s why I’m asking, I want to know how big of a deal it really is. I know that if you have an payment installment it makes your chances of a loan a lot better. I would like to buy a house because if Charleston is going to be my home base I’d rather be paying of a mortgage then paying rent. I’ve been doing my research on the area. What other homes are selling for, what the average rent per room is, tax’s, etc. With the amount of people I know and the growing size of Charleston I’m not too concerned about finding tenets, but I also don’t want to bite off more than I can chew.

Dennis Wayne · Answer

@Preston Davie

Your looking at step 6 when you should be looking at step 1 and that’s paying the IRS , geez man

Carl C. · Answer

What @Colten Powell said. Pay off your IRS debt first. Second be prepared for banks to reject your loan application unless you are making money as a "traveler". It sounds like you need to start researching what kind of property you want, what the costs of ownership will be and what kind of income you'll be able to generate from this property. You're  along way off from someone here telling you if you should pursue it or not. What is the reason you want to do this? How much do you need to generate to make it worth your while? Does your planned purchase fit your goals? You have a lot to figure out before looking for advice.

Preston Davie · Answer

@Colten Powell Thanks for the tips.

Goal #1 right now is to buy a property for myself while still making some on top. I’ve found a few good leads for 3-4 bdr in the area but the inventory is just so low! Like you said something with a duplex or in law extension would be great but I just need to find it. I’m slowly paying back the money I owe, but also want to be able to buy the right home when I see it.

I think park circle was a good call, it’s growing fast. I’d like to find something close to downtown (wouldn’t we all) or James island. Fingers crossed there’s a drop in the market soon!

Colten Powell · Answer

@Preston Davie Hey Preston.

I would first say pay off what you owe to the IRS. As far as purchasing a multi family you may find some difficulties doing so in the Charleston market due to their high demand. I purchased my first property last year and also live in the property to offset my expenses. I’m sure you have heard or seen somewhere on here that this is a good way to learn and get your feet wet while saving $ at the same time. For example try finding a duplex or even a home with an in-law, etc. I would try your best to get a great agent, do lots of looking and be ready to put in an offer once you see something you want bc they go fast. For now I would lay down debts and learn as much as possible.

First buy, should I buy a multi-family home?

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