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Updated over 5 years ago,

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8
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0
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Mila Posternak
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8
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Buy a House For myself or buy a Multifamily to rent

Mila Posternak
Posted

So I'm a little confused because I read that Grant Cardone said to not buy a house for yourself because it's a bad investment. But when I crunch the numbers I seem to be getting more "profit" by buying a house and no longer paying rent, rather than buying a multifamily in new Brunswick, NJ (college town) and renting it out. I also heard Dave Ramsey say that you should only buy houses in cash. I can afford the single family townhouse for myself in cash, but not the Multifamily in New brusnwick, that one will have to be mortgage.  

Here is a breakdown of my numbers. I need some help because I feel like I'm missing something. I also overestimated capital expenses for both, at least I think I did.

Current Rent: 1968/mo (we pay all utilities)

BUYING MY OWN HOUSE (In cash)

250,000 purchase in cash
Property taxes: 649
Hoa Fees : 262
Insurance: 79
Capital expenses: 300
Total: 1290/mo expenses
Savings on rent: 1968 - 1290:
Profit: 678/mo

BUYING A MULTIFAMILY (Mortgage)

500k Purchase price (will probably get it for 450k, but worse case)

If we put 250k down (same as above)
30 year mortgage
2524/ mo total expenses (Principal and Interest 1,187; Property Taxes 824; Homeowners' Insurance: 133 capital expenses: 380)
4200/mo in rent
1676/mo profit
Minus our rent of $1968: -292 profit
---------
After the multi family is fully paid off: 1354 total expenses
After expenses 2846 profit – 1968 = 878 profit

----------------------------------------------------------------------------

So based on this isn't buying a home going to make me more money? At least until the multi-family is fully paid off. I'm not sure if I missed something or if I did it wrong. I would really appreciate it if someone can take a look and let me know if I messed something up or if there is something I am not considering. 

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