Home day care in investment home

[Shaka Farrier]

Good afternoon BP,

I am currently a Navy Reservist preparing to go on a 10 month deployment early 2014. Long story short, I will not have many bills while on deployment which gives me plenty opportunity to save and purchase an investment home upon my return.

I wanted to see what you all thought about me possibly purchasing a property here in Hampton Roads Virginia below market value using either FHA or my VA loan. I was thinking that I could use saved cash to make minor repairs (paint, siding, roofing).

Heres the twist...I have also spoken to a general contractor about possibly extending the house so that I could get zoned for a small at-home daycare for up to about 5 - 6 children that my girlfriend would be able to run. He quoted me a rough estimate of 15k - 25k.

I figured that the extension would possibly build some equity and raise the property value while bringing in enough cash monthly to cover the mortgage without me having to really come out of pocket from the paycheck I already make at the shipyard. I didn't want to make this post too long please fell free to ask any questions. I could use your help BP. Thanks in advance.

[Joel Owens]

I think the estimate will usually be higher than what they quoted.

Has your girlfriend ran a daycare before or worked in that field?? A tenant of mine ran one of those and to do properly it is a lot of work.

What happens if that puts a strain on your relationship? What if down the road you break up and she is no longer your girlfriend? What if the property goes vacant and now you have a specific use for the property and are having trouble getting re-rented.

It's easy to think everything will work out for the best and go as planned but when investing and starting out right you have to think of all the possible problems and what you will do in that situation if it happens. If you do not contemplate such things then buying wrong can sink your investing and growth for years or even decades.

Hope it helps. No legal advice.