Get in the market NOW with townhouse or hold out for a SFH

[Erwin Li]

Hello everyone,

This is my first post and I have been learning about real estate investing for the last 6 months. I am ready to start my journey into real estate investing and I have started to make some moves.

Currently I have a 3br 4ba townhouse under contract and working through my way to close on the deal. This townhouse should be able to cashflow $300-500 per month with an initial investment of $97k. It is in an ideal area with tons of amenities close by.

I am having cold feet on this deal because of the type of property it is. The property is a townhouse in a strata complex and I have worries around if this is a good option for my first property. Reading through the forums many investors say that a SFH is a better option.

Part of me wants to hold out and see if I am able to find a SFH with a basement suite as my first investment property, this way it allows me to potentially live in one suite and rent the other or rent both.

The other part of me thinks that I shouldn't worry about getting the best deal, but rather get into the market. Especially with how much the 2021 assessments came back I am worried about being priced out of the market in 2022 if I wait too long to purchase.

To give some idea on prices in my area 3br townhouses are going for around $400-550k and a SFH with suite potential will run around $650-800k.

My investment goal is to find something that will cashflow, but also something that may help me in the future to purchase another property. Ideally I would like in 5-7 years to have one primary residence and 1-2 rental units. I love my day job so anything more than 1-2 rental units may take up too much of my time to manage.

Thanks!

[Erwin Li]

Originally posted by @Roy Cleeves:

@Erwin Li

Don't let your cold feet stop you.  This anxiety is normal for your first rental.  You have done the right thing to get into a market close by that will allow you comfort.  And the fact that you can cash flow it is amazing.  I think you will find with time that you will regret it if you cancel this purchase.  I have only regretted the deals that I cancelled and never any that I finished.

There may come a time say in 20 years where you no longer love your day job or even have it due to no fault of your own.  That is why it is so great to build up many rentals rather than just a couple.  Use property management once you get past two since as you said you need to keep your time to yourself.  Also, it will make it so that you want to buy more since you know that you won't have to talk to tenants anymore.

Best wishes.

Thanks for your perspective. I've decided that I will go ahead with this deal even with the huge run up last year. 

As long as the property cashflows no matter what the market does either goes up, down, or flat I can hold the property for the long term. Any appreciation is the cherry on top.

I've realized that real estate investing is a marathon and long term investments will be the way to build wealth. I'm excited to finally be started on this journey!