Young Newbie from Philadelphia area seeking all of your wisdom

[Daniel Bowden]

Hi everyone, my name is Daniel. I'm 22 years old and I just graduated college and now have a full time job which earns me about $60k a year which I hope will be enough to get me started in investing. I have about $20k saved up for a down-payment if necessary, although I've read that I can get an FHA loan that lets me pay only 3.5% down. I still live at home rent free and can continue to do so for another year. I'm currently planning my next step which I was hoping everyone could help me with.

I would like to preface by saying I read the beginners guide and chose my investment strategy. I want to invest in a multi-family home, preferably a duplex to start out with. My goal would be to buy one near where I live currently/near where I work, and live in it while renting the other side out simultaneously. Ideally I would like to get a roommate so I could live rent free. After living here for a while, I would like to move into a single family home while renting out both sides of the duplex. I'm not sure if I could gain enough cash flow from that to pay my mortgage on another home, but I would like to do that if possible.

I am very new to real estate investment, but I'm very motivated, and this is the direction I would like to move in. My hope is that in the future I will own my home completely, as well as a vacation home on a lake, and I would like to do this at a younger age.

Some questions I have are:

1. I really dislike cities which seem to be the areas with an abundance of duplexes, but considering I want to live in the duplex I would prefer to find one outside of the city. Is getting enough rent to generate cash-flow more difficult in non-city areas?

2. When shopping for a multifamily home, what are some questions you ask right away to the seller?

3. What type of qualities in a potential multifamily home get you excited/interested as an investor?

4. What type of expenses do owners typically expect tenants to pay while living there? I've read that they typically pay utilities like heat and garbage, but a lot of people mention that they themselves pay the water bill and sewage bills which can get expensive.

5. I read about the 2% rule, is this realistic? Should I consider a home a bad investment if I cannot achieve at least 2%?

These are just a few questions I have that I can think of right now. As I said, I am a beginner seeking knowledge, and this forum seems to be full of it. Please feel free to shoot me down or correct me anywhere that I may have been out of line. I'm sure my goals will reflect how green I am.

Thank you so much for your time and any help!

[Brandon Turner]

Hey Daniel Bowden welcome and congrats on getting ready to move forward! I love the strategy of buying a multifamily! To answer your questions:

1.) I think you'd be surprised with the number of multifamily properties outside of cities. A lot of times they are labled as "mother in law apartment" or "mother in law suite" - and they can be great.

2.) I'd want to know the condition, the average rent they are getting, and most importantly- the expenses for the property.

3.) When a multifamily is on a street of single family homes. I always like that. Plus when, after using the 50% rule, it still shows a lot of cash flow - I'm excited.

4.) Totally depends on the way it is set up. If the power is metered separately, then the tenant would pay separately for Power. Usually the water/sewer is going to be paid by the landlord unless the units are separate buildings AND separately metered by the city. And garbage - depends, usually will go with the Water.

5.) The 2% rule is awesome, but tough to find - especially in good neighborhoods or larger metropolitan areas.

You've probably seen these, but if not definitely check em out:

How to Buy a Small MultiFamily Property: A Step by Step Case Study

The 50% Rule (video) to Analyze a Multifamily Investment Property

Hope those help! Don't forget a photo!