First Rental Investment Strategy

[Phillip Ballard]

Hello, 

I am a new member to BiggerPockets. However, I was drawn to this forum as I am currently reading "The Book on Rental Property Investing." My current situation is that I am renting an apartment with a friend/roommate in Downtown Chicago (Lakeview) and have been debating on jumping into real estate. Our current landlord has mentioned that our lease will be ending in 4 months and I see this as an opportunity to make my initial move into real estate. My thought is to acquire a property to eventually rent for a decent cash flow. My two strategies I am debating on (would love your input on) are buying a single-family home an having my current roommate pay rent or house hack with a triplex. 

In my mind it seems that an easier and much more smooth transition into real estate would be to purchase the single-family home and rent out the extra room to my current friend/roommate. Inevitably, he would be paying me enough rent to either be living for free or very close to free. All income from my 9-5 would then be open to saving. If and when we decide to move out I would be pulling rent from a family or 2 tenants for a positive cash flow. 

I do not fully understand ALL of the tax implications of having a live in tenant with the single-family home yet (separating area 50%/50%, reporting rent to be taxed, deductions, etc.). However, just overall seems like a scenario where not much change except the extra money in my pocket to be placed towards other assets. 

Wanted to see if any others have had this debate? What they decided on? Experiences? Thoughts? Strategies? Etc.?

Thanks,

Phillip Ballard