good day
This message is sort of a hybrid "introduce / newbie" question so I hope I've put it in the correct place. I'm 43, I've been dreaming about investing in real estate for years, but with a recent inheritance, I felt that there was no valid reason for being tied down to realestate as the amount of my portfolio would provide a good retirement by intelf. This belief came to an end when Mr. Stock Market recently decided that my portfolio was now worth about 65% of what it was worth 11 months ago -- so now I'm going to do what I've always wanted to do! That being said, here are my questions. I've added a blurb at the end which sort of "summarizes" my knowledge -- or what I think it "true" about single family houses vs. multi units, so please jump on it if you don't think it's true. Okay, here goes.
I'd loke to know some good rules of thumb for quickly determining whether a property will “work,†numbers-wise? For instance, a four unit is selling for 150,000 – each unit is renting for $550, landlord pays oil, they pay their own electric. Obviously, much more work is needed in getting ALL the expenses, but to help “quickly disqualify†obviously overpriced, are there some simple formulas, rules, etc. that I can go by?
What are some good resources / books to get started? I have a personality that gets bogged down in too much info. It’s easy for me to complicate things and get analysis paralysis, so I’ve learned that “Just enough†info works best for me.
My plan is to invest in 3-4 units in above average neighborhoods. I want to be proud to point a building out and say I own it. I want to feel that I’m contributing something good in exchange for the profit I’m making. This might mean I have to pay a little more, because I’m buying in better areas. I had considered single family homes. I have enough retirement investments so that I would not need ANY cash flow until 20-30 years from now, but I’ve talked to 2-3 different people and frankly … I’m willing to forego the benefits of the SFH in favor of cash flow. My education, or rather, what I believe to be true, can be summed up as follows:
Single family homes are great because they tend to appreciate on a supply-demand scale, and if bought in good neighborhoods, you can have a tenant long term who will take much more pride in the condition of the unit than, say, a typical renter in a four unit. Another advantage is that it is common for renter to cover ALL costs, so heating oil and other fluctuations are not as much of a concern as with mult-unit. The disadvantages are that if you lose a tenant, you have 100% vacancy! Cash flow is nonexistent or sparse at best until loan is amortized.
Multi units, on the other hand, have better cash flow, due to the fact that you have four people renting, but only one furnace, one roof, etc. Of course, multi units come with their own built-in disadvantages such as possible lower appreciation—they can only appreciate as fast as rents can rise. Also, tenant issues, more people per unit means more potential for phone calls, etc. Also, cash flow unpredictable as owner often pays for oil.
All in all, I plan on using the cash flow ONLY for reinvestment UNTIL such time as I decide we need to live off it.
Thank you very much all
