Advice on buying my first property

[Haley Seaton]

Hey everyone!

I am a single young woman in my twenties. I am interested in owning rentals. I currently live for free with my family and want to keep up the trend of free living, so I want my home to cashflow. I am not really wanting to live alone so I figured that I have a few options. 

Option 1: Buy a renovated home with 3-5 bedrooms, live in one room, rent out the rooms so that they cover the cost of the mortgage plus some. This would require the least amount of work but may not be the best "investment."

Option 2: Buy a house that needs work, also multiple bedrooms. Fix up the house (which I have no experience doing) rent out the rooms, and live in one room. I feel like this would take a lot longer. A big plus is that I could quickly increase my net worth, I could take out a HELOC on the home to buy other investment properties.

Option 3: Buy a duplex, triplex, fourplex. Since I am a first time homebuyer, I could put a lower down payment on a multifamily and have tenants. And if I have multiple bedrooms in my own unit I would probably want to rent those out as well. (not a huge fan of living alone) 

Option 4: Buy a home with multiple bedrooms, furnish it, run it as a short term rental (Airbnb). Live in one room of the house, manage it, hire a cleaner to do the cleans.

Other info to note. I have about $50k saved that I could use towards any of these options. I would love others opinions on the best move to make, or any options I may not have considered. I have been told that the housing market will crash soon and that I should wait to buy. I really would like to buy soon though.

Thanks!!

[Alex Nelson]

Any and all of these would be great depending on what you are the most comfortable with. If you are willing to put in the work and don't mind having strangers in your place all the time, then option 4 could be the most profitable depending on the airBNB vacancy rates in your area. I personally don't want strangers in my home so I'd go with option 2 or 3. Option 1 is nice but it's not really setting you up for a good investment as you're not adding any value. If the market goes down you won't have much equity build up to weather that storm.

I would have to respectfully disagree with @Robert Diamond . If this is your first investment property then you have nothing to protect and getting an LLC will be a waste of time and money. LLC's are meant to protect your assets but since this is your first property, you have hardly any assets anyways. You can always move the property into an LLC at a later date if your REI career takes off.

Also no one can predict the market. A lot of speculators will say not to buy because the market is overheated. But it's not a matter of not buying, it's just a matter of being smart with the deal that you pick. There are always deals to be had in any economy, it just may be a little more difficult to find the good ones at this point in the cycle. I would recommend watching a few webinars until you are very comfortable with running the numbers and accounting for extra expenses. From there, you're off to the races! good luck on your first place!