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I'm looking at a 5 unit near Akron Ohio for 97k. The owner is willing to finance with 30k down, 7 years, 7% interest. Operating expenses will be around 4k a year and rents are below market at $2300 month fully occupied at the moment. I will be an out of state first time investor. Should I start with a duplex or single family owner financed home under 40k?
Please take my advice. Start (and continue) with properties very very close to you. My husband has what he calls the 20 minute drive rule. And boy are we glad we obeyed that, when he gets a call (as he did today) from the fire department at 6 AM Easter morning, saying, "You've got a tenant reporting water and a ceiling coming down in a unit in one of your buildings!" He was able to be there in 20 minutes, shut off the water, sleuth out the leak, and plan and is right now in the process of executing the repair. If it were far away, he'd probably have had to pay thousands to get a plumber there on Easter morning.
So many aggravations with landlording, all compounded by being far away. Any property that is far away, you're gonna have to pay a management company, and all they do is call in expensive tradespeople (taking kickbacks, likely) to do work at full price, and it may not even be competently done.
Your best bet is to buy a multi near you and move into one unit - that way you can get a bank loan, owner-occupied, for 30 years at 5%, with as little as 3% down, if you can get FHA, certainly no more than 30% down. Then, you do the next one the same way in a year or two. And so on.
Go on a website called bigger pockets. You can learn a ton from those who've been through it. You don't have to take any courses to learn how to do this. The courses you should take are basic handyman stuff through home depot - simple plumbing, carpentry, electrical.
The only reason that we can make money on our little multi biz is that husband can fix anything, and we manage it ourselves.
If you live in San Diego and you only have 30K to start playing monopoly with, you can't afford it. Look for another type of investment.
Seriously. You are running a tremendous risk of horrendous expenses, and winding up defaulting on the loan and ruining your credit. Do NOT do this!
This was one of my main issues is trying not to get too greedy and taking big risk this early. I just sold my California home so now I have around 45k to invest with. I also still have my VA so I may wait it out see if prices drop a little lower unless I can find a great deal in the meantime
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Op try giving a little more info like your income and how much you have as discretionary income, savings, etc.
Lots of other factors to consider.
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