Buying a house on a busy street in a good location, good or bad?

[Lara N.]

I'm trying to find a home (house or condo) that I can buy & rent out the rooms to pay for most of my living expenses (P/I/taxes), so basically my roommates would be paying my rent while I live for free or I put in a bit monthly.

The housing market in Oregon is hot right now so properties aren't cheap & my financial goal listed above only gives me so much flexibility.  I have several strategies to choose from & each have pluses/minuses, they are;

1. Make an offer on a 3 bedroom 1 bath house in a desirable popular neighborhood that has a finished (non-permitted) basement w/ a full bathroom, sink, separate entrance outside & washer/dryer. Good sized yard included & nice curb appeal. The house has been on the market for 5 months & is priced about $100,000 below value b/c it's on a busy street. The upside is this home allows me to live in a house in an area I wouldn't be able to afford & it has enough rooms to rent out & have the roommates pay most of my living expenses.  I would live in the basement & rent out the 3 upstairs rooms. The downside is I have more financial risk b/c I'm only working part-time & I need the roommates to cover expenses although I do have cash saved to cover me, higher than average taxes due to improvements, vacancy rates, dealing with 3 roommates, repair issues on an older home, not being able to get decent rent values based on the busy street factor, selling & appreciation issues. I plan on keeping & living in the home long-term.

2. Second option would be to buy a slighter cheaper house or same price ($350-$400K) but it will have less rooms, most likely 2 bedroom 1 bath. The loan would be about $200 cheaper monthly plus about $200-300 cheaper in taxes monthly, less roommates to deal with & the house wouldn't be on a busy street so selling it & appreciation are better. The downside is the property would be in a less desirable area which makes my quality of life a bit more challenging plus it could make finding quality roommates more challenging too. I would think the less rent due to the area would be offset with the first option of a more desirable area but on a busy street,so the price per room maybe wouldn't be much different.

3. Third option would be to not get a loan & pay all cash for a 1 or 2 bedroom condo. I can only afford a nice 1 bedroom condo in a desirable area but I would need to cover the HOA & taxes, about $700 monthly. Or I could buy a 2 bedroom condo in a less desirable area & the roommate would cover most of my HOA & taxes. Upside is no loan, only 1 or zero roommates, less financial risk. Downside is I don't like condo living, too many HOA rules & paying HOA dues monthly.

*Which option do you think is wisest, esp financially?

Thank you!