Contractor · Oklahoma, OK · Member since 2019 · 67 posts · 8 votes
Hey guys! I am saving up to purchase my first rental property. I should have enough for a down payment by the end of the year if everything goes accordingly. I have some questions that would really help me out if you guys could give me your opinion! I really appreciate any feedback that you give in advance!
1. My dad is a home builder, so he will build me a duplex for about 20%-30% cheaper then the selling cost. I plan to live in the duplex for a year and rent out the other side to help cover the mortgage. After a year, I would like to do this same process again every year. Is this smart? Why or why not?
2. Would you do a 15 or 30 year mortgage? Why?
3. Would adding something like a shed in the back of both yards help increase what I could charge a potential tenant?
Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
5y
Hey @Brett Mason, I think this is a great idea. If you can get a new property at a 20% discount, I would do that all day long! Depending on your area, finding vacant land might be an issue. I know the costs of new builds are really high right now due to the cost of lumber, land, and local taxes.
I would always do a 30-year mortgage. While the interest rates are slightly higher, you can always pay more towards the principle but you don't need to. If you are in a rough patch for a few months, it will be nice to pay the lower amount.
Adding storage in the back is usually a good idea but look at the ROI on it. How much would it cost to build and how much could you rent it out for. Let's say you can charge an extra $30/month for it. How long would it take to pay it off and is it worth it? The smaller the units the more beneficial the storage would be.
Insurance wouldn't be a big issue. I would find an insurance broker but they have homeowner policies and landlord policies.