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Updated about 2 years ago, 11/27/2022

User Stats

23
Posts
10
Votes
Isabel Andrade
  • New to Real Estate
  • Chicago
10
Votes |
23
Posts

First time investment

Isabel Andrade
  • New to Real Estate
  • Chicago
Posted

Hello BP community members, 

I joined 2 days ago and I’m already learning SO much . I have a first time homebuyer question . 
My husband and I are currently renting but saving up to buy our first home . We are planning to take the FHA loan route since it's only required to put down 3.5 percent of purchase price . We are on the fence on what type of property to buy . If we should get a single family home that is priced within our range while saving up to buy another and rent that one out . Another option that we have seen in our area are single family duplexes which have been priced at about 130,000. Unfortunately, I am unable to move out of the city due to my job requirements.

Basically to some it up , what would be a better investment option in the long run to get us started off ? I know Multi-family is a big starter but our options are a bit limited in that area . Thank you ! 

User Stats

2,367
Posts
746
Votes
Harjeet Bhatti
Pro Member
  • Lender
  • Glenview IL- CDLP NMLS#230554
746
Votes |
2,367
Posts
Harjeet Bhatti
Pro Member
  • Lender
  • Glenview IL- CDLP NMLS#230554
Replied

@Isabel Andrade You can buy duplex under IHDA program. IHDA can be combined with other down payment assistance program.  

  • Harjeet Bhatti
  • User Stats

    585
    Posts
    420
    Votes
    Brett Deas
    • Colorado
    420
    Votes |
    585
    Posts
    Brett Deas
    • Colorado
    Replied

    Have you thought about house hacking a single family? I don't know your situation but I would look into making the basement a separate unit and renting it out. I think a Duplex would also not be a bad idea, but from what I see typically duplex's are more expensive. If you would be going to the top of your budget I would recommend house hacking the single family. 

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    User Stats

    23
    Posts
    10
    Votes
    Isabel Andrade
    • New to Real Estate
    • Chicago
    10
    Votes |
    23
    Posts
    Isabel Andrade
    • New to Real Estate
    • Chicago
    Replied

    @Harjeet Bhatti 

    How are the interest rates typically with that program ? 

    User Stats

    23
    Posts
    10
    Votes
    Isabel Andrade
    • New to Real Estate
    • Chicago
    10
    Votes |
    23
    Posts
    Isabel Andrade
    • New to Real Estate
    • Chicago
    Replied

    @Brett Deas

    That’s actually a great idea! But with that how would splitting up the utilities happen ? Adding into the rent I would think would be the best deal ? 

    User Stats

    2,367
    Posts
    746
    Votes
    Harjeet Bhatti
    Pro Member
    • Lender
    • Glenview IL- CDLP NMLS#230554
    746
    Votes |
    2,367
    Posts
    Harjeet Bhatti
    Pro Member
    • Lender
    • Glenview IL- CDLP NMLS#230554
    Replied

    @Isabel Andrade The interest rate is available online on their website. 

  • Harjeet Bhatti
  • User Stats

    143
    Posts
    74
    Votes
    John Mathew
    • Real Estate Agent
    74
    Votes |
    143
    Posts
    John Mathew
    • Real Estate Agent
    Replied
    Hello Isablel, Here's my advice and I hope it helps you. 

    Invest in Single-Family Homes if….
    • Your primary goal is appreciation
    • You want longer-term, stable tenants
    • You want an asset that’s more liquid
    Invest in Small Multi-Family Properties if…
    • Your primary goal is cash flow
    • You want to scale your portfolio quickly –
    • You’re willing to contend with more turnover risk and liability risk

    In general, single-family homes tend to appreciate better than multifamily properties. The prices of single-family homes are driven by comps, and most homes are sold to owner occupants who are going to live there.Single-family homes offer more price appreciation and longer term equity growth.

    User Stats

    585
    Posts
    420
    Votes
    Brett Deas
    • Colorado
    420
    Votes |
    585
    Posts
    Brett Deas
    • Colorado
    Replied
    Quote from @Isabel Andrade:

    @Brett Deas

    That’s actually a great idea! But with that how would splitting up the utilities happen ? Adding into the rent I would think would be the best deal ? 


     That depends on how you want to rent it. For short to mid-term rentals I would just eat the cost because no one wants to pay for utilities. If you are long-term renting it I would reach out to your utility provider and ask for the steps required to get the separate meter as I do not know. 

    User Stats

    346
    Posts
    119
    Votes
    Jewel B.
    • New to Real Estate
    • Lehigh Valley, PA
    119
    Votes |
    346
    Posts
    Jewel B.
    • New to Real Estate
    • Lehigh Valley, PA
    Replied
    Quote from @Brett Deas:

    Have you thought about house hacking a single family? I don't know your situation but I would look into making the basement a separate unit and renting it out. I think a Duplex would also not be a bad idea, but from what I see typically duplex's are more expensive. If you would be going to the top of your budget I would recommend house hacking the single family. 


     How do you find out the legalities or practicalities of converting a basement to a rental? Or of splitting a house into two units?

    User Stats

    585
    Posts
    420
    Votes
    Brett Deas
    • Colorado
    420
    Votes |
    585
    Posts
    Brett Deas
    • Colorado
    Replied
    Quote from @Jewel B.:
    Quote from @Brett Deas:

    Have you thought about house hacking a single family? I don't know your situation but I would look into making the basement a separate unit and renting it out. I think a Duplex would also not be a bad idea, but from what I see typically duplex's are more expensive. If you would be going to the top of your budget I would recommend house hacking the single family. 


     How do you find out the legalities or practicalities of converting a basement to a rental? Or of splitting a house into two units?

    Legalities go just look it up in your HOA, city, county, then state. If you go through that then you should have your answer. Or look up owner occupied rental and that will probably tell you. Splitting a house in two is a little more tricky and I would ask someone in your area who has done it before because it differs too much even state by state. 

    User Stats

    1,503
    Posts
    1,159
    Votes
    Nate Sanow
    • I​nvestor & Agent
    • Tulsa, OK
    1,159
    Votes |
    1,503
    Posts
    Nate Sanow
    • I​nvestor & Agent
    • Tulsa, OK
    Replied

    @Isabel Andrade congrats to you on your decision to invest, and props to you for seeing your first owner occupant loan as an investment. IT SHOULD BE!!! So you are going to be off to a great start just by doing that. My quick vote is a duplex. If you can make sure that you run the numbers both on the cash flow from the other side while you live in one side, and, if you will collect enough in rent to offset the mortgage upon move out, then it is to me a wise idea. Lenders will see the rental income as a credit on DTI, if your plan is to rinse and repeat in a year or two.