Start your real estate investing career out early by buying a duplex!
February 27th, 2009 Jacquie Cliff - Real Estate Broker
Back in August of last year I did a post on ‘Why your first home should be a duplex’ and after reading an article on BawldGuy Talking I wanted to come back and touch on it once again. With the still low rates we are looking at, it makes sense for anyone thinking of buying a home and wanting to get into real estate investing to purchase a multi-family property.
Lets look at a current example pulled from the MLS, a 4-plex in Lynnwood, listing at $435,000. Assuming that we don’t even try and negotiate the price down (and I would) it would break down like this:
5% Down Payment – $21,750
Payment at 5.5% Interest – $2,436
A bit steep for a lot of people out there right now. BUT! Lets not forget the other tenants in the building in our lovely Lynnwood 4-plex. They are each kicking in about $750 a month for their units for a total of $2250, and bringing or monthly cash flow down to a staggering $186! Now I know I didn’t include the taxes, insurance and other expenses, but even with those I am sure you can see that living in a portion of a property and renting out the other units is a GREAT way to get started in real estate investing, while saving some money on your own housing to boot
I will say that not everyone is cut out to manage their own property. For those people that are forward thinking enough to forego buying a single family residence, and buy themselves an apartment of their own (buy way of purchasing a multi-family property and living in one unit) there is definitely some big benefits.
Consider the just the difference between the appreciation on a $235,000 condo, a typical purchase for first time home buyers and our example duplex. At a very conservative 3% appreciation over 5 years, the condo would have appreciated to about $272,500. A $37,500 gain which isn’t bad. The 4-plex on the other hand would have grown to about $504,250, a gain of $69,250! There are of course the side benefits of any cash flow, tax savings and so on. Plus you have the ability to increase the value of your rental property even further by improving the property and raising rents!
It is my sincere hope that if you are considering buying a home, and have a spark of desire for real estate investing, that you look to living in your first multi-family property. The advantages are definitely there, and it can act as a gateway to your real estate empire!
Jacquie Cliff – The Amazon Negotiator
Let me lead you through the Real Estate Jungle!
Real Estate Broker, Loan Officer and Real Estate Investor serving:
Lynnwood, Bothell, Mill Creek, Seattle, Bellevue, Marysville, Mountlake Terrace, Edmonds, Everett, Snohomish, Kirkland and the surrounding areas!
Call me with any of your real estate questions at 425-773-3149 or email me at Jacquie@jacquiecliff.com anytime!
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