Higher end Real estate investing

[Bob McCaigue]

I am just getting started in the process of making my first real estate purchase. Right now the focus is buy and hold small multifamily (2-4). My initial strategy is to invest in higher end properties with the hopes to avoid problem tenants, bad neighborhoods, and really strive for as close to "passive investing" as I can. The first property I will be living in as well as renting the other unit(s). I am finding that the list prices are very high in respect to the rents for the area (Madison, WI). A few questions I'm having: 1. Is there any "forgiveness" in the numbers if the property has the potential to be a long term home for myself? Ie. Considering a reduced rent for myself in the analysis. Rather than trying to reach cash flow with just the tenants rent. Should the analysis be as if I were getting full rents from both sides to determine whether or not it's a good buy? 2. I understand investing for appreciation can be speculative, but are there any other particular investment strategies for higher end investments that can reap financial gain aside from cash flow? With the list prices coming nowhere near the 2% because they are in nicer areas (Ik that's just a rule of thumb). Right now the only way I see cash flow being an option is to come in $75k under asking price (not realistic I don't think, please let me know if maybe that needs to be my strategy) 3. Lastly because I am young (26) and have limited purchasing power how realistic is it to purchase a modest house first and then pursue other multifamily investments that I would not owner occupy? We were pre-approved for around $350k for a conventional loan so my thoughts were if higher end investments properties didn't have the yield I was looking for then I might buy a $220k home and look for the distressed properties to start my investing. I know that's a little all over the place for one post but I have been waiting over a year for my first post. Thought I would make it count. Thanks for all the help & direction! -Bob