All Forum Posts by: Joseph T.

I've been interested in buying a smaller multi-family property to live in and rent out the remaining unit(s). I'm having trouble finding something in my area that analyzes appropriately as a "good deal" unless I include the rent for the unit I'd be occupying myself in the income ("paying myself"). So my questions are:

1) When acting as an owner/occupant, should you include the rent of the personally occupied unit in your projected income when analyzing the property? Or should a truly good deal cash flow positively AND include you living for free?

2) Since obviously single family homes outnumber multi-families, I'm considering expanding my search there too. The only issue is I rent an apartment now myself. No complaints with where I'm living now but is it silly to be a renter when you're also a landlord yourself? I suppose though if you're generating cash flow from the rental and building equity in it too but still paying rent for your own living, it's still not a bad situation. 

What do you think? Hopefully expressed my questions clearly enough. Thank you in advance!

Gentlemen, thank you for the replies.

When looking at a property will the seller typically always let you view the current rental agreements and maybe even look into his/her books more in depth to get a better assessment of how the property is performing?

What are some of the pros and cons of buying an occupied vs unoccupied property?

The pros I can think of is you don't have to spend time marketing and showing the property. You are immediately generating income.

The cons would be getting an "untrained" tenant that may be used to having things go their way instead of what's outlined by the landlord. 

What do you think?

Note: I'm speaking of a smaller multi-family or single home. 4-plex or less. 

Hello Everyone,

This is my first post on BP. I currently rent in the Philadelphia area and am looking to buy a multi-family home to occupy myself and also rent the other unit(s). 

I am having trouble finding properties that even come close to generating positive cash flow after PITI and a 50% rental income maintenance factor. Also having trouble finding properties that meet the >10% rule of yearly rental income divided by purchase price. To be honest I'm flexible in not having positive cash flow because I'd plan to live there and no longer paying rent already puts me $900/month ahead while not even considering the equity being built.

I'm looking in the Philly suburb areas at homes around the 250k mark (which is where it seems you need to be for something decent) and it seems the average rents for nice 3br/1.5bath are only about 1500/month. With a 15 year loan and 10% down that's far from positive cash flow.

Am I looking at this all wrong? Should I be looking at a 30 year loan that would lower my P&I payments to increase cash flow? Should I find a cheaper house with similar or higher rental rates? I really want to do this but initially it seems like the numbers won't work out. 

Notes: I can afford 10% down but wouldn't want to go much higher because that would wipe out a significant portion of my savings. My credit is very good. My idea was to look for a duplex with a smaller (1br/1bath) unit I would live in and a bigger unit to rent (I don't need much space because I'm a younger, single guy). This would be just the initial step in REI for me. Eventually I'd like to continue buying rental properties with a buy&hold strategy after getting my feet wet.

Any advice for the situation I've described above?