Single family homes or multi family homes for cash flow beginner?

Question

So I’m currently recognizing my financial position. I plan on working an second job to get more income. I ran across an old friend I went to college with and I told him my plan to get into real estate. He said he’s good friends with a broker and knows a house he could possibly get with 0 down. This should be something I look forward into doing with my friend not having any knowledge in real estate? I mean I’m reading a book on how to invest by BP, and I’m working and trying to build credit. But I’m wondering if buying an multifamily home would be worth more while? If I build credit and do an conventional loan, 20-80. Me and my partner go have and half on down payment? https://www.loopnet.com/Listing/7316-Penrose-St-Jacksonville-FL/16684952/ I seen this multi family home and started wondering because 20% of 185k is 37k. Half of that between a partner is 18.5. I’m a first time home owner so would I have perks of using that to my advantage?

Spencer Hilligoss · Answer

@Trellis Alexander - sounds like you're in the brainstorming stage of developing your strategy, which is an exciting time!I took a look at the Loopnet property you linked above. Have you run analysis on it yet to see how it performs as a rental? Assuming you have put work into educating yourself on how to analyze rental properties (books, podcasts, dozens of analysis practice runs, digging into the BP forums on similar threads), then the next step would be to run a full analysis on the market+submarket and the deal itself, to see how it performs as a rental. The calculators here on BP are rock solid (in my opinion) and perfectly fine to use when analyzing real deals.If you run the numbers and it still meets your investing criteria (e.g. monthly cashflow), the next step would be to checkout the property in person. To your question above: "This should be something I look forward into doing with my friend not having any knowledge in real estate[?]" I think anyone should be encouraged to jump into real estate if they are willing to put in the sweat equity (hard work) and effort in to educate themselves, first. You "make money on the buy," as they say... and you'll want to know how to spot a good deal and pass on the landmines.

Tj Hines · Answer

@Trellis AlexanderThis should be something I look forward into doing with my friend not having any knowledge in real estate? (Before doing anything that can potentially cost you thousands of dollars is to get educated on the exact niche of real estate you want to be involved in. Maybe even consider taking on a mentor. Someone who you resonate with the most. Be sure to vet all potential mentors. There are some good ones out there, just as there are those out there that have their own selfish motives) But I’m wondering if buying an multifamily home would be worth more while? (I think so! Especially if you can house hack a duplex. Rent one side out. Stay in the other. You minimize your expenses by paying the mortgage with rent from the one side you're renting out. House hacking a SFR is a little tougher, unless you are going to convert rooms into short term rentals, or do just an airbnb rental. Multifamily has more advantages in my opinion)If I build credit and do an conventional loan, 20-80. Me and my partner go have and half on down payment? (This would be good, only IF you guys have the same interest and goals are aligned. Partnerships are easy to get into, but costly and hard to get out of)I’m a first time home owner so would I have perks of using that to my advantage? (I think so! By using FHA 1st time home buyer program. Makes for easier financing with a duplex, because the lender knows that one side will be rented out. This makes them feel comfortable that guaranteed income should be coming from one unit you're renting out)

Jermell Shavers · Answer

@Trellis Alexander I plan on buying single family homes until I reach about 4 of them then save up reserves and then take out a Heloc on of them to get my first duplex or four plex or maybe even a portfolio loan possibilities are endless just depends on how you want to get going. But don’t get a partner especially if it’s your first couple of deals work on yourself without other distractions. You don’t want your first property to be your last partners to me always hold you back

Michael Dang · Answer

Good sound advice above. Get educated and share your experience with others. Attend local meetups and events those are great places to build your network and learn.

Trellis Alexander · Answer

@Tj Hines thank you so much, the first time owner loan is going to be great for a multifamily home. Thank u for being active on my post tj. Don’t be a stranger to future post.

Trellis Alexander · Answer

@Spencer Hilligoss thank you so much. I’m still learning, but leaning more towards multifamily homes. Thank u for being active on my forum, please continue to be active on future post, I’m new and learning everyday.