Quote from @Jason Sousa:
Here is a few helpful steps
1. LOCATION- where the multi is located can drastically change things. If you grew up in LA, then you know the good and bad areas. I would say a tri plex in Glendale is better than Van Nuys right? You can use this tool to discover info on the exact area. https://www.richblockspoorbloc... also look up the amenities and crime rate in the area. Most people who rent in a multi are looking for a decent place at a decent price in a decent area they can afford.
2. RENT- Look up the average rent for the unit you are going to rent. What is the marketability of the unit? Will people pay $X for it and how many others like it on the market are being rented and how fast? Use rent.com or rentometer.com
3. DEBT- If you are going to finance, what is your debt service? If it is a $2200 mortgage and rent can bring in $1100 can you cover the $2200 without the rent if you lose a renter? Never assume that the apartment will be full 100% of the time. You always want to be able to afford the home without the renter being there for 6 or so months on your own with cash reserves or income if you're house hacking.
Talk to local agents and ask them for deals in certain areas, and get a great lawyer to draft up a good rental contract to cover you because CA is a tenant favored state.
Hi Jason,
Thank you so much for all the great feedback! I really appreciate the link and software recommendation to use. I've heard of Rentometer.com but, didn't know it could be a reliable tool for rents. I'm glad you've referred it. As for the debt, I intend to use an FHA loan, so although its only 3.5% down, i'm aware there is a mortgage premium, mortgage insurance, and there would be less equity in the property. I also agree with having enough cash aside for vacancies. I'm spending a lot of time just saving and reducing my cost of living to meet a lot of the closing and up front cost. But this hasnt closed me down one bit. Just takes time.
Thank you!
Ben
