Don’t quit your day dream!

[Valerie Morgan]

Hello everyone! My name is Valerie, I'm 27 and I've never been a homeowner. I thought why not buy a duplex of some sort and live in it while I rent it out? I've been listening to podcast and videos to gather more information but with "fair" credit and no capital And then learning about an LLC everything is starting to run together and I don't know where to even start. Any Advice?

[Kevin Sobilo]

@Valerie Morgan, first off you don't need to answer everything to move forward. NOBODY knows everything when they start something new.

The LLC question is largely moot for a small time landlord. There are no tax advantages for having an LLC. It is there to limit your risk of someone suing you and going after your personal assets. If you never owned a home, you likely don't have much in assets to be concerned about. Also, you can simple get an additional umbrella insurance policy to cover you for liability issues.

My concern would be this. I NEVER recommend someone acquire just 1 or 2 rental units. If they plan to manage themselves they will never become proficient at it. They are also likely especially in the scenario you describe to rely on the income and with so few units it can be uneven especially when you have turnover/vacancy or worse yet a bad tenant experience (eviction, damages, etc).

I would make a commitment and general plan to acquire MORE units and also have some reserves to cover any growing pains you might have while you learn to be a good property manager. Even getting to having 3-4 units you'll start to become active enough to be competent and also when you get a bad tenant situation the income from the other units will keep it from feeling dire.

Anyone can do it! So, don't be scared or discouraged, but be honest with yourself that it won't always be coming up roses. Its an investment because there is risk but if you stick to it and learn you can do fine in the long run.