Hey @Account Closed. Thanks for the reply. Very thorough and informative!
You're right, the cash flow doesn't leave much wiggle room and I would think at that purchase price that any positive cash flow would go into an account for necessary maintenance/repairs over time. To address your points:
1. The location is desirable compared to others in the city and is close to shopping and schools. The vacancy in town is quite low (1.5-2%) and the current tenant is happy there and wants to stay. The real estate market is quite stable in the city due to pretty steady employment and a good amount of demand, from what I know, especially for multi-family properties. I think there would be some appreciation occurring, especially if we put some updates into the upper rental unit eventually.
2. My fiance and I have full time jobs and savings, so would be able to foot some of the bills if there were vacancy or repairs necessary. I feel like as a pure investor I would want to limit inputs from our personal accounts, but in order to keep things in order we would have the resources. I feel there is a balance between buying this as a pure investment property, and as a starter home with rental income. Looking at it as a starter home, I would be willing to put more of our money into it, but still limit the down payment because eventually I would like it to be an income property and build its own equity from renters.
I have also thought about the utilities/expenses and would prefer the units to be metered separately, but this building only has one meter and all expenses would be my responsibility. The heating system is relatively efficient compared to, say, electric heat, but that being said it can get pretty cold in my neck of the woods.
Thanks again Shez! Always nice to hear from a fellow Canadian, but I hope you're enjoying being in California!
