Fist time home buyer and landlord, need advice

[Kara Leboeuf]

Hey all, this is my first post on BP. It has been a wealth of info so far, so I figured I would ask for your input about my possible first time home purchase and becoming a landlord all at once!

Here's the situation. I found a 3 unit muti fam home for 129k. In my local city. The rents are all low for the area, all are around $500 a month but could be rented for 650 each with minor updating. The two tenants that would live in the other units have been there for 3 and 5 years. I have met them, the seem like great people. I would owner occupy the 3rd unit. The tenants would cover the mortgage with no money left over if I left the rents as is, but if I raised them to fair market value after doing minor repairs ($1-2k) then I would live in the house for free and have about $200 left over from collected rent.

This seems like a good investment to me. I don't plan on spending many more years in this town, but if I do move I figured I could fix up the units raise the rent and net 200-300 positive cash flow when I decide to move out.

Btw I'm useing a FHA loan for the property.

Any input or suggestions would be greatly appreciated seeing as how this is my first time buying a house as well as starting my investment portfolio, Thanks!

[Chris Masons]

Hi Nick,

I think the deal makes financial sense and is a great way to start off and get your feet wet for a few reasons:

A. you will be owner occupying and getting benefits of FHA loan, property is MUCh MUCH easier to manage when you are living there
B. Tenants are covering your mortgage allowing you to stash cash for your next investment
C. If need be you have some room to bump up the rent as they are below market now.

This is how I got started only it was a 2 family and my tenant payed 3/4 of my mortgage not all of it and I still managed to save. I Think you will be able to save fasteras it will be like you don't have a morgage to pay.

Building equity, paying off your mortgage with OPP - other peoples money, thats how you do it!!

good luck!

Chris