Which Option is better?

[Dylan NA]

Basic info about me:

22 years old

150,000 in bank to spend on real estate

4 year electrician in alberta oilfield(I hate my job, and am quitting after 3 months) will be working as a painter once I get my electrical ticket, and starting off with 20 dollars an hour

Option 1: Buy a 400,000 dollar new house, 2014-2015 in year. 5 bedroom, 2,100 sq ft, 3 bathroom, and put a 150,000 downpayment on it, if I spend all this money I still would have 15,000 in bank account, which is plenty.

I would have my friend rent it out with me and my gf. Friend is gonna pay 700 dollars and gf 350, since she is sharing room with me. If my friend gets a gf she would stay too for 350 dollars.

So that's 1,050 dollars in rent. My monthly mortgage would be 1250 dollars. I also have another friend who may live with me, that would be another 700 dollars, but not 100% sure if he will come, so im not banking on him. My gf and friend are for sure.

Now that leaves me basically living for free in my house. Keep in mind I have to pay all the bills too.  Which costs me-

Gas: 100, Water: 80, Power: 120, TV: 100, Internet: 50 Total: 450 dollars.
So I will be paying 600 dollars altogether a month, with bills. Also house insurance is 1,400 and house taxes is 2,500. So 3900 divide that by= 325 dollars/month. Altogether I pay 925 dollars a month.

Option 2: Live in an apartment with my friend and my gf, a 2 bedroom apartment is 1100 dollars. So I would pay 300 a month only since me and my gf are sharing a room. So my friend would pay 500, me 300 and my gf 300. We all talked about this and are okay with doing this.

Now for the apartment, gas and water is included, only thing we have to pay is power, tv, and internet. So im going to pay power, my gf internet, and my friend tv. Power in an apartment for my friend right now is 75 dollars. Also If you live in an apartment you don't have to pay house insurance or house taxes.

So my total costs would be 375 dollars a month only, as compared to the above which would cost me 925 dollars.

Now if I live in an apartment I still would have my 150,000 dollars so I was thinking of buying  a half a duplex. I would also use a property to manage my property while I work as a painter. Down payment on duplex would cost me 50,000 and I would still have 100,000 dollars left. Property manager would take 8% of gross income and if each level is rented out at 1200 a piece, than that is 2400 dollars a month. minus 900 for the mortgage payment a month and minus 400 for bills, minus 200 for property manger= should leave me with 900 dollars a month.

How does this sound? I have done my research and I have calculated all my expenses and everything. Some people on a previous post said I need to do more research, but to me I think I have everything covered.  If everything goes good on the first property, I buy a 2nd one for 50,000 again and I can because I still have 100,000 dollars, plus my monthly expenses for living in an apartment is only 375 dollars.

What are your guys opinion on my options? I know its better to own but I would rather have 2-3 rental incomes and make an income off of it, than to own and be losing money a month. Thx you

[Jaden Hafso]

It is true that Zoning for secondary suites in Edmonton is only allowed for detached homes, although; in the past it was allowed. I own a bilevel duplex in King Edward Park (1965) that has two lower suites and is a registered legal 4-plex that has been grandfathered into the new Zoning laws. So it is possible, but be sure to check this prior to purchase. If they are non-conforming and you still want to buy it, then at least you could use that as negotiating leverage with the seller.