Multi-family - My Thoughts and Expections.

[Michel M.]

My goal is pretty simple, if you can call your first real estate investment 'simple', to owner occupy a 4-plex. A cash flow, even if very small or breaking even is my current goal.

While I would love to buy and rent out a multi-family without living on the property itself, the barrier for me is the same as many of those that wish to get into such dealings; base funds. Along with the fact that I'd sooner save enough to afford a FHA/203k loan on a decent property that isn't right center in a 'war zone' sooner then I'd be able to afford one via a conventional loan. I've made pace with that fact and I see it as a way to learn how to manage a property, along with it's tenants. It'll be an enlightening and possibly mildly traumatizing experience as I learn if I'm willing to expend in the years following.

Now I have no idea when I'll be able to get the ball rolling on this. In a perfect world I'd have enough for a FHA/203k down-payment, the costs associated with it, the costs associated with the property, the closing costs associated with the property, the cost with screening tenants, and several months of rent fees before vacancies are filled; within 2-3 years. Yet just like how people should brace themselves with surprise expenses while dealing in real estate, I can never be sure if that. So I'm working on learning as much as I possible can, since the type of real estate I'm looking to get into takes a lot of patience in the first place.

Now, I have some questions I want to ask, even through I'm going to look deeper into them myself soon. I've read and listened to many things, time to see if I've understood them or if they went through the void that's between my ears. Legal matters will come later in some other discussion.

1. Should I avoid FHA 203K loans as a first time buyer? Mainly because of my sure to be lacking knack for figuring out what I need to do most to the property to confirm to my current market without scaring away those I can draw in. If it IS something I can get into while double and triple checking everything, how much should I be willing to put into a property to rehab it?

2. I understand not to apply the 50% rule to every deal, since not every deal is the same. What I'm wondering about is... 

A) The rent being 1% of total loan still applies? Or has it become 0.85% or lower as of late?

B) Was it 10% for a PM, 5% each for maintenance/CapEx/Vacancy of rental income? Even though I have no plans to use a PM, getting used to such an expense will give me a more realistic view of owning real estate properties in the long run.

I'm not even going to get onto the overall expenses when you add in mortgage, the extra hurricane/flood insurance because of living in...well...Florida, and utilities.

C) Finally, should I calculate how low I can get by on rent, just so I'm not to stubborn on a rental price and end up chasing away those that are likely/able to rent in the area I'm in?

Sorry for the read everyone and if my musings come off pretty jumbled.