I'm a newbie when it comes to investing. I've been reading a real estate investment book and have been listening to the bigger pockets podcast for the past 3 months. Here is my situation. I'm looking to purchase property in the the Long Beach or Bell Flower area of California. I have a total of $40,000 max that I am willing to spend on a down payment and closing cost. Since I am a first time buyer, I'm looking to pay only 3.5% for the down payment through the FHA first time buyer program. My ultimate goal is to obtain enough properties to gain passive income that will ultimately replace my current income. I would like to obtain this goal within the next 7 years. I am torn at this moment between purchasing a multifamily or a single family home. The incentive to purchasing a multifamily is that I would only have to put 3.5% down since I am a first time buyer. My family and I would live in one of the units and use the rent from the other tenants to help pay the mortgage. Apart of me feels like I should take advantage of this now while I'm a first time buyer. (Am I even being realistic that I could a purchase a decent multiunit with an FHA loan in the Long Beach, Bell Flower area) The downside to purchasing a multifamily is that I will not have much liquid available after the purchase of the multifamily. Therefore, I would most likely have to wait for the property to appreciate and take equity out before purchasing another property. My real estate agent told me that it could take a while for multiunits in this area to appreciate. Therefore, maybe it's better to purchase a single family with the FHA loan and do a live in flip. I would have more of a liquid cushion after the purchase and I was told that it would probably appreciate faster. As well, there are other special first time buyer programs in California that will even pay your 3.5% down payment that I qualify for. However, this special program that will pay the down payment is only for single family homes. Overall, I don't want to bite off more than I could chew with the multi unit and have a small cushion of money in my bank account for emergencies. However, I really do want to take advantage of purchasing a multiunit while I am only able to put 3.5% down. What should I do?
P.S. Should I even be looking to purchase property at all right now. I keep hearing that it is a sellers market as home prices have been skyrocketing in the Los Angeles area. It is very hard to find good deals. I keep hearing a lot of chatter about the potential for a housing crash in the near future. Should I maybe just wait for the market to come down before purchasing at all?
