SteveBott said:
Ha scrap will reply to every thread the solution is buying a duplex. He has an investment strategy based on these. Who the hell wants to shell out thousands to have a neighbor living on the other side of a single wall? Deal with communal parking? No thanks.
Yes Steve YOU ARE CORRECT! There are two reasons to buy duplexes here. One to live in as owner occupied and the other to start building REAL wealth that has a GREAT potential to PROVIDE FINANCIAL FREEDOM in short order!! BTW, I don't live in a duplex, but if I was just starting out, most definitely would and later I would live anywhere I want in any type of housing I desired.
Lets start with this first! A young couple or single professional contemplating buying a home. Yes this thread started out talking about a first time home buyer that is going to be stressed financially buying a home especially in light of the recent run up in prices. Lets start here shall we. This may not apply to you Steve, who has all the money you need to buy the mansion you want but this will apply to a lot of others so bear with me, I'll get to what may apply to you on the next example, but I am sure you already know what I am about to say so this is for all the others.
Buy a Single Family Home (SFH) or Duplex.
Example SFH 150k vs 250k Duplex (I give this example to make my point, but we could make it a 200k duplex, my point would even be better. 3000 taxes for SFH 4000 for Duplex, 1200 property insurance for both, Ok with that?
30yr mortgage @ 4.5%, 3% down for SFH, 5%for owner occupied duplex keeps down payments the same $7500
SFH PITI $1087
Duplex PITI $1637
Good so far, Steve your in the loan business, everything looks good?
Now for the first home time buyer the duplex is better and lower risk, why?
Side A owner lives in Side B rents for $900 (low projection on 250k duplex but I don't want to pad my argument)
Duplex PITI $1631 - 900 rent income = $731 out of pocket vs $1087 savings of $356 per month!! But you say, not so fast Scrap what about vacancies and maintenance......yes indeed we must account. Take out 5% each and less $90 so now net each month is +$266.
BUT WE AREN"T DONE. Lets look at risk!!!!! Dang it, we buy at the top of the market. Hey Steve where is the market today in you opinion, closer to the top or bottom. Recession hits, job cuts abound, owner loses job, has to relocate to find another job, or is stressed out being unemployed and puts his house up for sell for a loss.
Again, NOT SO FAST with the duplex. Keep smiling, take that job to another city and DON'T THINK ABOUT SELLING THE DUPLEX......why? Because he is going to rent out the other side for $900 and now receives $1800 monthly to pay $1637, easy peasy! Wait hold up Scrap, how in the hell is he going to get $900 rent in a recession, people losing their jobs!!!! No problem, your rent pool went up, more people rent and they downsize their housing cost to $1000 or below. HOW DO I KNOW! I started buying DUPLEXES in 2002, I now have 17 units and manage another 6 for my KIDS! I have never lowered rents, even in the 2008-2010 housing downturn my rents went up!
You see people working at MacDonalds don't know three things: 1. Don't experience layoffs, 2. Don't know a Stock Market exist, and 3. Doesn't know a housing crisis is upon them, because THEY RENT and don't own, they make great tenants!!!!
Yeah Steve my answer most of the time is DUPLEXES.
Now lets get to YOU and everyone else who would like to be financially independent some day, shall we.
I tell you what I'm tired of typing let me let Coach Carson tell you.
https://www.coachcarson.com/how-many-rental-properties-to-retire/Good luck Ags!
BTW Ags, A year ago my daughter bought a duplex in Bryan. $130k with existing tenants paying $650 rent. She did slight upgrades (bedroom carpet out, hard tile in), and increased rents to $750 each side, both sides rented, no vacancy on one side the other side vacant for 1 month. She is cash flowing positive.......easy peasy!
Lastly Ags, buy in areas that population is increasing, that is just about anywhere in Texas. However, I really like the HWY 35 corridor from San Antonio all the way to Dallas-Ft. Worth. Better value in Bryan than College Station. Luxury apartments have over built so duplex market can be a challenge, but if you focus on the Graduate Student or Vet Student they tend to not want to be in the Apt setting. As always.......Good Luck.