All Forum Posts by: Lara N.

I'm debating between two investment scenarios & would appreciate your input!

I'm considering buying an updated older 2/1 house in a hot neighborhood with a permitted 1/1 basement apartment with it's own full kitchen, exterior entrance & washer/dryer. The house is lovely & unique, plus it's taken care of.

I would need to put down $230,000 cash for the down payment due to the mortgage/terms & my portion of the rent (minus roommate payments) would be $700-800 month plus utilities. If I rented out the whole house plus the basement apartment I would net about $300-$400 monthly.

**My 2nd option is to buy a cheaper house which would allow me to keep more of my cash but I would pay a higher monthly mortgage payment.

I'm only working part time now & will be starting a new business soon so I'm leaning more towards having more cash in the bank.

Thoughts on the best investment strategy?

I have a pending sale on a 3 bedroom 1 bath craftsman single family home built in 1912, it has a non-permitted but livable basement with it's own full bath, sink & separate outside entrance. The home is in a desirable neighborhood but faces a busy street & it's been sitting on the market for 5 months w/ only 1 buyer who backed out. If the house was on a side street it would of sold quickly & for $100K+.  The sellers marked it down almost $150K.

The house looks solid & has curb appeal plus I can rent out the 3 upstairs rooms & my roommates have their own bathroom to use, and I have mine in the basement. All 3 rooms rented will pay for my mortgage/taxes/insc.

I made an offer & they accepted, now we're going to do an inspection. However I'm starting to think it wasn't a wise investment despite the location & 4 rooms due to resale value in the future, loss of appreciation due to the busy street, higher than typical taxes & future repairs on a 1912 home.

Should I back out of the deal as it's too risky?

I'm trying to find a home (house or condo) that I can buy & rent out the rooms to pay for most of my living expenses (P/I/taxes), so basically my roommates would be paying my rent while I live for free or I put in a bit monthly.

The housing market in Oregon is hot right now so properties aren't cheap & my financial goal listed above only gives me so much flexibility.  I have several strategies to choose from & each have pluses/minuses, they are;

1. Make an offer on a 3 bedroom 1 bath house in a desirable popular neighborhood that has a finished (non-permitted) basement w/ a full bathroom, sink, separate entrance outside & washer/dryer. Good sized yard included & nice curb appeal. The house has been on the market for 5 months & is priced about $100,000 below value b/c it's on a busy street. The upside is this home allows me to live in a house in an area I wouldn't be able to afford & it has enough rooms to rent out & have the roommates pay most of my living expenses.  I would live in the basement & rent out the 3 upstairs rooms. The downside is I have more financial risk b/c I'm only working part-time & I need the roommates to cover expenses although I do have cash saved to cover me, higher than average taxes due to improvements, vacancy rates, dealing with 3 roommates, repair issues on an older home, not being able to get decent rent values based on the busy street factor, selling & appreciation issues. I plan on keeping & living in the home long-term.

2. Second option would be to buy a slighter cheaper house or same price ($350-$400K) but it will have less rooms, most likely 2 bedroom 1 bath. The loan would be about $200 cheaper monthly plus about $200-300 cheaper in taxes monthly, less roommates to deal with & the house wouldn't be on a busy street so selling it & appreciation are better. The downside is the property would be in a less desirable area which makes my quality of life a bit more challenging plus it could make finding quality roommates more challenging too. I would think the less rent due to the area would be offset with the first option of a more desirable area but on a busy street,so the price per room maybe wouldn't be much different.

3. Third option would be to not get a loan & pay all cash for a 1 or 2 bedroom condo. I can only afford a nice 1 bedroom condo in a desirable area but I would need to cover the HOA & taxes, about $700 monthly. Or I could buy a 2 bedroom condo in a less desirable area & the roommate would cover most of my HOA & taxes. Upside is no loan, only 1 or zero roommates, less financial risk. Downside is I don't like condo living, too many HOA rules & paying HOA dues monthly.

*Which option do you think is wisest, esp financially?

Thank you!

Thank you everyone for all your helpful input & suggestions, I will consider wisely!

@Account Closed  Thanks for your reply. Yes as I mentioned I would never allow smoking in my unit, although he assured me he would smoke outside only.

My concern is even an outside smoker would bring the smell in.

Hi Shaun,

Thanks for your reply. Yes as I mentioned I would never allow smoking in my unit, although he assured me he would smoke outside only.

Even if I include a non-smoking in the house clause in the lease he could still smoke in the unit. Also, the smell lingers everywhere, so even if he smoked outside the smell would be on his clothes which would transfer to the house/walls etc. I think over time the smell would build up in the house, regardless.

My concern is allowing a smoker as a tenant who smokes only outside.

Hello everyone,

I own a one bedroom condo in a desirable neighborhood & I will be leasing my unit very soon. I already had an interested prospective tenant view the property & he's quite interested.

He has a solid well paying job, has offered to pay 6 month's in advance & seems like an overall good possible tenant. The only downside is he smokes cigs but assured me he wouldn't smoke in the house. I have a balcony which he could use although I have concerns.

Even if I include a non-smoking in the house clause in the lease he could still smoke in the unit. Also, the smell disgusts me & it lingers everywhere, so even if he smoked outside the smell would be on his clothes which would transfer to the house/walls etc. I think over time the smell would build up in the house, regardless.

I have never leased out my unit before so I would enjoy hearing your experiences in similar situations, as well as your opinion & the downside of allowing a smoker in the unit, even if he smokes outside.

thank you!

Thank you @Don Meinke, great tips on key issues. The long-term value is also my concern but I would think this would be reduced if you just owned the lots, not the homes.

Very good points @George N., I think with the dwindling economy & social programs affordable housing will only rise.

Thank you @Andrew Nisson for the article link, it had some good nuggets of info!

I tend to agree about MHP being a solid investment if the numbers work. There seems to be more leverage across the board, although issues like depreciation, demand & renters are always a risk. 

I'm also focused on less risk for my 1st investment so this is something to consider as well.

Thanks for the replies. I prefer to own just the land with little maintenance & higher returns. I have researched many MH parks thus far but still learning the basics.

If I bought a duplex I would most likely live on one side but not owner-occupied in a MH park. Every deal is different but it seems to me that overall a MH park investment would yield more.

As my first investment, my priorities are return, risk of investment, long-term potential & limited expenses.

Greetings,

I'm in the midst of analyzing which investment route to take, either a multi-family (duplex) or a smaller mobile home park.

From my side, I see typically more upside potential with purchasing a commercial mobile home park as you can possibly add more leasing spaces & there's more acreage to work with in terms of opportunities for additional income.

What are your thoughts on this & what are the general pros/cons of both investment platforms?

Thanks