Hi Clementine-you can have the best of all investor situations with best loan terms, owner occupied PRIORITY TO WIN HUD BIDS and get bank foreclosures, all while maintaining complete control over timing, tenant selection and growing your appreciating income producing portfolio at your own pace. (Investors usually buy duplexes for monthly cash flow which is small. It's hard to find an affordable duplex, townhome or condo that appreciates and someday you WILL want to sell.)
In my experience it's best to buy your own home first, live in it awhile as short as 6 months, ( buying it owner occupied for the lowest down payment and best 30 year interest rate: do an adjustable ARM, 5 year if you can get it.) When you decide to turn it into a rental, you go rent for 3 to 6 mos until you can find another perfect house to buy owner occupied. LENDERS won't count your 1st property's mortgage against your income if you have a signed written lease and 6 months verified tenant paid rents.
DON'T BUY YOUR dream home now, buy the most rent-able property: a minimum. 3 BR 2 BA SINGLE FAMILY HOME , bigger if you can afford and a garage is a huge plus. AREA to buy in? ONLY look where the best schools are, in the best neighborhoods you can afford.
The neighborhood and house should have instant curb appeal, sit 'at or above' street level, yard for the kids to play in. Families are the best tenants in your area-- most stable, mature, settled and usually 2 or 3 working adults with income.
KEY: Make money the day you buy.
Use an investor savvy realtor that you personally like and can build a relationship with. Of course buying HUDs is an option but be choosy because you may find a GREAT house in a not so great area.
BANK and ESPECIALLY local Credit Union foreclosures are a dream, as owner occupied you can negotiate repairs, new wood flooring, HVAC units can be installed and cost added to the purchase price banks will add New Appliance packages and even BLINDS for all the windows. KEEP YOUR CASH IN YOUR . POCKET. ALWAYS!! ..once you are negotiating with the bank and agree on a NET PRICE to them, you can boost the purchase price adding in all rehab costs as part of the deal..you can even have the bank give your Buyers Agent Realtor a $2000 bonus which in most states your realtor can REBATE to you on the closing statement (limited to a max of up to 1% of the agents usual 3% commission..so there's probably a few extra bucks going to your realtor in the end and she will love you for that.
At our NCSECU cr unions in Charlotte they offer their fixed up foreclosures FOR RENT and HELP the owner occupant buy it, even if you are not a member! SWEET.
ANYWAY, when buying especially your first property buy something of quality that you 'would' choose to live in and rent to tenants you thoroughly check out: verify income, pay stubs and 3 mos of bank checking account statements!! and job stability and former verified LANDLORD REFERENCES ( check tax records to make sure you are talking to the property owner NOT a tenant prospects cousin.
Ok, THE SUMMARY : LOW RISK & COMMON SENSE
1. MAKE MONEY THE DAY YOU BUY. Buy at a discount aka below market and tax value. Proactively structure the deal with no cash out of your pocket for rehab, closing costs.
2. NEVER owe more on a property than its market value.
3. BUY quality SINGLE FAMILY homes SFH.that appreciate.
4.Always do a home inspection using a certified home inspector ( with utilities turned on) and separately hire an A.C. company to thoroughly inspect the state of the HVAC ( it might be blowing cold air today , which passes a home inspectors test) but the coils might be shot and the system riddled with leaks and crushed air handling tubes. Do the land survey at purchase for your protection and because it can be financed into the loan closing costs.
5. ALWAYS make clear title a condition of closing.
6. YOU CANNOT BUILD WEALTH IF YOU SELL OFF YOUR APPRECIATING ASSETS .
Buy Smart. Structure the deal.
HOLD the property, refi and take out cash repeatedly if you need it and current lending rules allow ( that option cycles about every 5 years!)
7. Use a CPA! for your taxes at least the first year!!! To take every possible tax deduction...put notes and receipts in a shoebox ( worst case) save EVERYTHING!
8. Check out your Renters income and bank statements.
And join the local APARTMENT ASSOCIATION and use their tenant lease!!! Never use the Realtor Association lease which is not LANDLORD friendly!
9. HOLD YOUR PROPERTIES at least 10 years and 15 if you can...they should at least DOUBLE in price by then. And the tax write-offs make your W2 Earnings a lot higher in take home pay.
10. Fasten your seatbelt ... 10 years will fly by and only having 3 good solid properties will provide you with excellent retirement funds.
