First Property Decisions

[Alexander Vitro]

Thinking about making my first property an owner occupied multi family. The obvious benefits being that renters pay your expenses for you. I'm thinking the downside is that it's a pretty slow way to accumulate capital for additional properties but since I don't own properties yet I'm probably going to need collateral for loans right? I would be buying this property in Hudson County, New Jersey.

Does anyone have thoughts on this? Are there other alternatives/aspects I should consider?

Thanks!

[Greg Potter]

Hello @Alexander Vitro , there are several people on BP that started just the way you are describing, including myself. One main advantage is you need a place to live anyway, why not reduce or eliminate that major expense through owning a small multi family?

Some things to consider - I don't know your market, but if possible I would suggest looking for a 3 or 4 family building for that first property. In many markets a 2 family property will come close to breaking even for a owner occupant, but with 3 or 4 units you can actually generate positive cash flow and the financing options are the same as a 2.

A lot of your success will depend on your ability to manage the property and the tenants. You will need to be firm but fair with your tenants and screen very well. The people who get hurt in this business are most often those who didn't spend enough time screening their tenants and those who let tenants slack off on the rent. Especially as the owner occupant you need to treat the landlord/tenant relationship as a business relationship. A good place to start would be BP Ultimate Guide to Tenant Screening