Multi Family vs Single Residence

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reckedracing

reckedracing

TTIWWOP
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So i have been in the housing market for FAR too long now...

so i've been thinking more and more about a multi family residence as an alternative...
at first i wanted one cause my parents had income producing property and my brother has been doing it as well, but then i decided it would not provide me with the privacy i need and would be too much of a hassle

but now my search has been dragging on so long that i'm reconsidering the slum-lord route...
2 places i just found, both 2 family, both with garages, both good locations

so whats a good reason not to go with tenants?

the one thing i really like is that my income should be rising rather drastically in the next few years...
so i can always get the nice house i want (but cant afford now), and keep this as solely rentals...
 
A- taxes are more money on them, as they are usually bigger
B- if you don't have tennants at any given time, you're mortgage is still due.
C- now you need to replace 2 old friges, 2 old tubs, etc when stuff breaks
D- noise
E- renters suck
F- renters trash places. even nice people. when it's not "theirs" nor "permananent", they tend to care for it less
G- rent sometimes won't cover half like you think it will, and in the end, you'll have more assets by buying a smaller place.


there's a lot of hasseles involved in it. i thought about it too... but all the multi-family hosues by me are old as shit... 1860's to 1930's

multi's are good INVESTMENT properties, but not a primary residence IMO
 
my parents do the same thing. when we first moved into this house when i was like 8, 4 different parts of the house were rented out. and over the years as my parents payed off more and more of the house, they have slowly taken over parts of the house. one whole apartment became my brothers room, another became my dads computer room/guest room.

they have also had their fair share of difficulty with tennants too, people who dont pay rent, leave the apartment in HORRIBLE condition, leave without notice, etc. a few people owe my parents money in back rent, but i think my parents just dont even bother with it cause its not worth the trouble. but id expect things like that to happen.

its a trade off i guess. theres pros and cons. you just have to figure out what you think you can afford, and if you could afford the loss of if things go wrong with the tenants.

and yea like B said most of the places are old. but sometimes it can be a plus. my place was built in 1820. 2 foot thick stone walls on all the outside walls, and 2 1ft thick walls inside that act as a fire wall in case a section catches fire. they work too, a few years ago a tennant left a baby bottle on the stove and the whole apt caught fire. the apt burned and here was like 100k in damage but it was contained to the apt partly because of the firewalls. and we have good insurance too so they cut us a check for 100k and we got it all fixed. and there's a lot of history into it. i believe its actually a historical landmark or something like that. one downside is that the heating is done by hot water radiators, and its pretty cold in the house all the time, good thing for fireplaces in almost every room :)
 
pissedoffsol @ Nov 22 2005 said:
Quoted post[/post]]
A- taxes are more money on them, as they are usually bigger
B- if you don't have tennants at any given time, you're mortgage is still due.
C- now you need to replace 2 old friges, 2 old tubs, etc when stuff breaks
D- noise
E- renters suck
F- renters trash places. even nice people. when it's not "theirs" nor "permananent", they tend to care for it less
G- rent sometimes won't cover half like you think it will, and in the end, you'll have more assets by buying a smaller place.


there's a lot of hasseles involved in it. i thought about it too... but all the multi-family hosues by me are old as shit... 1860's to 1930's

multi's are good INVESTMENT properties, but not a primary residence IMO
Click to expand...
those are really good reasons right there
 
even that is played out now.

witht he amrket flat-lining, its hard to get your money back now.

IMO, you're too late. if you didn't buy it last year, you missed it for at least the next 2 or 3 years.

lately, everyhting around here is getting reduced because they aren't selling for their stupid high over-infalted asking prices...


and then, there's the whole 2-year minimum turn over, otherwise you get fucked with capital gains taxes...
 
:yes:

Prices have hit a plateau. Hopefully within the next couple years the market will tank and housing will be affordable again.
 
the market will not flop. its just plateaued. from here on in, it will raise like it always has, but slower than it did, especially now that interest rates are on the rise. people who over-paid will get fucked... but only if they sell.

its the people turning shit over that get hurt... if the market is shitty- STAY PUT. it doesn't cost you anything to live there longer until the market comes back up.

the time to buy was the last year or so...
lock in at a low interest rate fixed (like i did)
pay medium price for a place (like i did)
and when it goes up, you're still locked in at your low percent, and you can actually MAKE money off of your loan... sounds retarded... but if your accounts are paying more than your debts are incurring, you are technically making interest.... all of which can be applied to the capital.

i took a 30yr loan...
the first 5 years are ALWAYS the hardest.
pmi's eventually go down, you don't have to buy like EVERYTHING...
but the 5-20 yr range, is cake walk due to inflation and less bills incurring.

of course, this is if you've been smart, kept your self out of debt, and kept your bills up to date.

if i stay at the condo for a long time, i imagine i'll have it paid off in 20 yrs tops.

now, if i can only get this raise.... or a better paying job....... or get my shit together and finish my money-maker website...... (and no, its not this one. lol)
 
pissedoffsol @ Nov 22 2005 said:
Quoted post[/post]]
A- taxes are more money on them, as they are usually bigger
B- if you don't have tennants at any given time, you're mortgage is still due.
C- now you need to replace 2 old friges, 2 old tubs, etc when stuff breaks
D- noise
E- renters suck
F- renters trash places. even nice people. when it's not "theirs" nor "permananent", they tend to care for it less
G- rent sometimes won't cover half like you think it will, and in the end, you'll have more assets by buying a smaller place.


there's a lot of hasseles involved in it. i thought about it too... but all the multi-family hosues by me are old as shit... 1860's to 1930's

multi's are good INVESTMENT properties, but not a primary residence IMO
Click to expand...

C- now you need to replace 2 old friges, 2 old tubs, etc when stuff breaks
any modifications improvements to a rental property are a tax write off.

assuming you liv in one unit.
ex. you buy a new fridges for the 1st,2nd,3rd floor, you can write of 2/3 rds of the total expense.
plan things out nicely and say one year you buy a fridge for 3rd floor. 100% tax write off, next year buy a fridge for the 2nd floor, 100% tax write off, 3rd year buy a fridge for the 1st floor, 100% tax write-off kinda sneaky but you claim your putting a fridge in the 2nd,or 3rd floor unit. obviolsy you would space this out over time more and pray you don't get audited to often. or hire a really great tax accounts firm.


Also I bought my house in 2004 for $140K (house appraised at $182k, 8/2005 got a HELOC and the house is appraised at $220k, just added an addition doubling the sq footage, total cost about $40K. so now I have a $180K into my property that will most likley appraise to about $300k after the build is done. In 2 years my house value has gone up 60% not too shaby.

but as B. said the time for these types of gains and purchasing options are just about over.
 
My friend and his wife, own a 3 family in New Britain, CT they live on the bottom floor and rent out the top two floors...their mortgage is 1000 a month they get 750/m + utils from the top floor and 650 + utils from the middle floor....they are making about 400 a month extra + living their rent free which is allows them to save even more....its almost like making 1100 a month renting to people consideirng they are paying to rent
 
Prices have hit a plateau. Hopefully within the next couple years the market will tank and housing will be affordable again.
Click to expand...

the chances are slim like B said, but i'm hoping for a market disaster too...
its just ridiculous these days
income has not risen with housing prices and houses are extremely overinflated...
but RE usually does not LOOSE value unfortunately...

assuming you liv in one unit.
ex. you buy a new fridges for the 1st,2nd,3rd floor, you can write of 2/3 rds of the total expense.
plan things out nicely and say one year you buy a fridge for 3rd floor. 100% tax write off, next year buy a fridge for the 2nd floor, 100% tax write off, 3rd year buy a fridge for the 1st floor, 100% tax write-off kinda sneaky but you claim your putting a fridge in the 2nd,or 3rd floor unit. obviolsy you would space this out over time more and pray you don't get audited to often. or hire a really great tax accounts firm.
Click to expand...
haha, i do taxes for a living, this is cake...
 
writing off a fridge doesn't mean you get the fridge for free though.

take a G off your income is like saving $20, so you still paid $980 for the damn frige...
 
lets say you;re in a LOW income tax rate of 15%

a $1000 expense takes $1000 directly off your adjusted gross income resulting in a tax savings of $150

and who the hell would buy a $1000 for a RENTAL?!?!?!y0ne2!
lol

but i see your point B, not flaming on you

but then again, $1K fridge needs to be depreciated over 3 years resulting in a tax savings of 50 a year
so your 20 estimate isn't so far off...
 
exactly.

everyone goes around saying y0! just write it off!!! but writing it off doesn't mean you get the damn thing for free...
 
and any improvements cost money....

so your 1000 floors cost you 950 after the tax write
and the 800 washer/dryer combo costs you 725...

sure, it may slightly increase the value of the home (doubtful for such small mods) but you're STILL paying for it almost 90% out of pocket.
 
but you're STILL paying for it almost 90% out of pocket.
Click to expand...

85% out of pocket for a poor person
and the out of pocket expense decreases the higher your income(tax level) is...

if you're in the 30% tax bracket then that 1000 fridge only costs you 700 after tax savings...

this is more or less free money considering these are things you NEED to provide in order to collect your rental income...

the real savings comes in when you can write off enough things to offset the rental income, giving you a loss on your rental property, thereby lowering your taxable earnings for the year...
 
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