Excited for a 1st Investment - Seeking Advice!

[Megan Westerfield]

Hi BP,

Excited to finally be signed up for BP Pro, finishing up 'The Book on Flipping Houses' and have been on the hunt for a couple months now for a great first opportunity! I come from a professional commercial construction background with a Bachelors in Interior & Environmental Design and I currently work from home in E-Commerce/Marketing (hoping to blend all these backgrounds into a real estate investing :) 

I had a specific opportunity recently come up that I'm needing some advice on... A residential home, already divided into duplex and has 2 current tenants  (one's lease is until 3/31/18 and the other is 5/1/18). 

We were hoping to househack (as we live in an apartment now) - but what if both tenants want to resign at the end of their current lease? I don't want to kick good tenants out (and don't even know if that's an option) but I don't know if it's worth investing if we'll still have to pay rent at our own apartment. Will we be able to get an honest background on the current tenants and how great or not-so-great they are from current landlord? Curious about any hurdles of taking over existing tenants.

Appreciate the help in advance!

Megan

[David Moore]

@Megan Westerfield

Being excited about real estate can be a liability.  Try to make everything about the numbers.  Is it in your best interest to move in, or keep the tenants.  Consider that if you take one of the units, you lose some of the business depreciation.  So there can be a big tax hit in doing that.  There are a lot of other factors to consider.  Is the existing landlord charging market rents.  I use rentometer.  Just google it.  

Also, don't assume these tenants are sweethearts, even if they have a good payment history.  If they are paying way below market rent, and you make the needed correction to bring market rents, you could be dealing with a crabby tenant as your new neighbor.

Another consideration is size of unit.  Turnover in 1 bedroom units can be quite high.