First Home, First Rental, or both?

[Jordan Roberts]

So basically I am wondering what the best strategy is for the order of my purchases and also looking for some insight on general investment topics.  I currently own no real estate and am looking to purchase with my fiancee in the coming months.  I have always wanted to own investment property and am leaning toward the rental side.  

First question: Does it make sense to purchase my own personal home first, and then begin purchasing investment properties, or should the rental properties come first and get my own home after that?  Or should I purchase my own home with the thought of renting it down the line?

Second question: We are currently looking at some duplexes (as in buying both units) in our area, but are not against buying a home, living there, and then renting it out/selling in like 3-5 years.  My question is, what is the best strategy here? Duplex, Single family, other?  The duplex seems to be the better option for future cash flow and fits our budget better than a bigger multi-family, but right now we are personally leaning toward a modest single family home.  Also, in regards to the duplex situation, I believe if tenants are currently living there with a signed lease, we would need that lease to expire if we would want to move in to one side of the of the duplex.  That could cause problems for us as we would need a place at or before our current apartment lease runs out.  We could look into a month-by-month lease option but we don't think our current complex would allow us to do that.

Third question:  My brother wants to be included in the deal if we purchase the duplex units or a multi-family property, and even though I trust him, my fiancee isn't 100% on board.  She has always been told not to mix family and business, but my family has grown up doing business together, and my brother and I have spoken about starting an investment business of our own someday.  So my question would be, is this a bad or a good idea?  Is it situation dependent? He is more handy than I am and could help with fixes and maintenance, but he is a "dreamer" type which sometimes leads to him getting in over his head with certain things.  I am the analytical one that thinks things out before acting and he is the one that will act and think of the consequences later.  I wonder if our styles would clash or if they would mellow each other out and make for a good fit as partners?  The biggest issue here is that my fiancee currently makes more money than I do and would be bringing in the larger portion of the down payment on any place we would be buying.  

Thanks for reading.  Any and all advice is much appreciated.

[JD Martin]

1. Don't buy anything with your fiance unless you first get married or hammer out a good, legal, written asset clause that will discuss things like maintenance costs, exit strategies, etc. As soon as you do, you will break up and be in a world of hurt figuring this stuff out.

2. Financially, the best thing to do is buy a rental house and live in your van for free. How much of a variation you want on that is up to you. A primary home is first and foremost a place to live. It can become an investment, or it can be an albatross. If you can buy a house that provides $1000 cash flow as a rental, and rent a house for yourself for $500, you're making $500 clear on something you need anyway. That's a great deal. Play with the numbers to see what you should do. It's one reason a lot of people do like getting duplexes at the beginning, because you get a place to live and a rental property.

3. Same deal with your brother. In my opinion, not a good idea, but if you are going to do it make sure you have a good written contract governing everything.