All Forum Posts by: Kay H.

Didn't read the other comment, but unless you lied to the loan officer, your not getting a FHA on an investment. 20% or bust

 We have narrowed it down.  You want to live in this area.  Is this the way you want to do it?  Is the $800 or $900 rent you will be paying a good deal?  You will also learn how to be a hands on landlord owning this property.  That's worth something.   How much is your water and sewer and garbage collection?  If I was young I would pay a big premium to live in Greenwich Village in New York, or in the 80ties near the Museums and that would be great.  Is this area  easy to sell when you want to move on.  How much, as every one is asking is a similar apartment renting for in a similar building?

@Kay H.  what I meant was that it looks like you are figuring the loss with you paying $700 per month as well.  Was that your scenario?  If all 3 are renting for $700 per month it suggests you could rent for that in other rentals in the area.  You need to know rental rates for your area as well as comps on sales.  If this is average or above average rent it makes the deal worse.  If rents run $1,000 per month in similar properties the deal looks better.  One of the benefits of buying a multi as your first house is that the other renters often pay your rent.  here you are not getting it.

@Kay H.  here are my thoughts.  First, as a cashflow property this is not a good deal.  You did say you would be living in one unit, but assuming you pay the market rent it still loses a tiny bit every year.  Some markets are very hard to get cash flow in.  California is a good example, prices are too high to rent and cash flow, most folks there count on appreciation.  I am not familiar with your market, does it have the same problem of prices being too high to cash flow?  What is your financial status?  I have intentionally bought negative cash flow properties because I have had the seller take a 2nd mortgage for 20% down then borrowed the standard 80%.  I was using a 15 year note so in 5 years I could refinance and pay off the 20% 2nd mortgage.  I had the income to cover any shortfalls.  Normally I would say do not buy with a negative cash flow.  If you have no other cash flowing options in your market maybe consider it, but you need to be able to cover at least  the full mortgage payment out of your salary to do this.  If you cannot pay the mortgage out of your monthly income then one vacancy could get you in bad trouble.  It is better to have cash flowing properties.  If you know your market well you can answer whether or not there are better opportunities.  If not then this option is slightly better than no rental, but it has risk.  If you are counting on appreciation that is a dangerous game.  Its great when you win but hell when you lose, and you cannot control which happens.  Good luck what ever you decide.

The bottom line is many investors on here would not choose to do this deal because of ( alternative investment selections ) where they can achieve great returns going in. Anything above that is just icing on the cake if it happens.

What the person wanting to live in one unit and rent out the other two has to answer is:

1. Does the person love the area and it gives them the quality of life they are seeking??

2. Are they okay being a landlord for years and having tenants live next door to them and getting bugged all the time?? 

For someone living in their investment there are so many other things that matter besides the return component.