Feedback Appreciated- Plan to begin in Buffalo

[David Longhini]

So the rundown is I'm 23 Years Old and looking to be a Buy and Hold Investor until I have enough passive income to pursue Flipping Houses. I am in downtown Buffalo, NY with a 70k job, no debt of any kind, 720 Credit Score, and roughly $12,000 available for initial downpayment and closing costs and am pre-qualified for houses up to $350,000. 

I'm considering a couple of different options, some that could most likely be answered in general, while others pertain only to Buffalo is. 

1. Given that I plan this to be a live-in property in order to utilize an FHA Loan,

A. First of all is an FHA Loan a good idea to start off with for my situation.

B. Bouncing back and forth in between whether I should search for multi-family homes in the $200-350K range (where the rental income works out of course) while I have the opportunity to use only 3.5% down, or to search for homes in the 50-200k range and then move forward from there. My current plan was to use an FHA Loan for a larger property because I'd be able to build up a larger equity and income base and be able to purchase my next property more quickly.

C. In general as to only having roughly $12,000 available at the moment. I have the ability to save between $1500-$2200 a month would it make more sense to wait several months to have a certain amount of cushion available after a D+CL. My contrasting point here is that if I do manage to find a good deal, all but the most expensive homes (320-350k) I would be able to handle the mortgage without finding a single renter. 

Buffalo Specific: 

1. As it's Owner Live-In I'm partial to remain in the Elmwood/Allen/Chippewa neighborhoods, but since I work at Rich Products anyway looking for personal thoughts on areas around the West Side in terms of:

A. I know it's been a pretty high market for the Elmwood/Allen/Chippewa area and whether you would think that there will be any good deals, and any major risk of depreciation. I know can't predict the future etc. or bet on depreciation, but it seems like I'd be buying into a high point in the market which of course is never good. 

B. Anyone with experience owning/renting houses further West than Baynes St. or in the area around D'Youville how difficult is it to find good renters and any thoughts for how the neighborhoods are trending. 

C. Just any neighborhood specific advice for positioning in the area most likely to improve in the next 5 years. Balancing out potential rental income and growth vs. would I be able to live there right now. 

[Tye Brooks]

Hi David! Welcome to BP and congrats on starting out! I am new myself so take my input with a grain of salt, lol. I think FHA with a multifamily is a great way to start. Your mortgage would be partially (if not all the way) paid for and that will allow you to free up your income from your job to work on other projects. I would, however, suggest that you save up more than the $12k you have if you choose to go with the more more expensive multifamily ($200k+). Since you will be a landlord you'd be responsible for anything that happens....it's always best to have a good bit of money in reserves for expenses. Although you'd be able to cover the mortgage with your salary, if a water heater or HVAC unit needs to be replaced two months in, you'd be screwed if you don't have the money to take care of it.

Hope this helps!

Good luck!