Multi family as a first time investment ?

[Stephanie Sicard]

I'm getting ready to buy my first rental property within the next 2-3 months . I have 13k saved up and I intend to use an FHA loan.

The multi family properties in my area are about 300,000+ for a 2/1 duplex . I found a realtor and he advised that it would not be safe to get a multi family just yet . He said having only 13k would be spreading myself too thin because things could break right after I buy and it could be difficult if both stoves broke for example .

He advised that I should start off with a condo that was 115,000 in a 55+ community , which I could rent for 1600 and get a feel of land -lording . If something broke , it would not be as expensive versus if something broke in both units of a duplex . He thinks I should get a few properties under my built before I buy a multi family .

My original dream and strategy was to get a multi family as my first investment . But I also am aware that if a strategy can’t work for the moment , another strategy can . I feel a little unsure on what step to take . What do you guys think ?

Thanks for all the advice in advance .

[Evan Polaski]

@Stephanie Sicard I cannot disagree more. If you buy a condo in a 55+ community, you have your mortgage, HOAs, and limited renter pool. On top of what happens when condo association decides no more renters, or limits the number of units that can be rented. Finally, with one condo, you only have one source of income. If tenant moves out, your mortgage, insurance, taxes and HOA are still due.

Yes, a duplex means you have 2 stoves, 2 fridges, etc to repair, but that will be part of your inspection period.  The key is understanding those risks and budgeting for it.  This is like any other business.  But with a 2 family, you have one mortgage and two people paying into it.  When someone moves out, you still have at least a little bit, if not all, of your mortgage covered.  You also have only 1 roof, one set of gutters, etc.

I will say, having only $13k saved is a little thin, depending on how much you need to use for down payment.  I try to keep about $5k in reserves for my 2 family at any time, but a lot of the mechanicals are less than 10 years old, as are appliances, etc.  My roof is the next project.