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IS IT A GOOD IDEA AS A FIRST TIME HOME OWNER TO LOOK TO PROFIT THE FIRST TIME BUYING INCOME PROPERTY

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August 31 2011 - Albany
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 "I my self live in a a beautiful home and don't plan on moving "

So you are planning on commiting Ocupancy Fraud(bank fraud)!  If you do not plan to move your are buying an investment property and your down payment requirements change.
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September 19 2011
Rico

You mentioned in your reply that you want to use the property as an investment, which is great way to start building your real estate portfolio. With a three unit building, you will have three tenants to help pay your mortgage. You can count on having a down payment of 20-25%, unless you decide to live in one of the units, then the down payment requirements change. As was stated by others, make sure you get a building that have been well maintained. You don't want a money pit as your first purchase. Find a quality home inspector so you can get an idea on what type of shape the building is in. With today's low rates, I would think a 30 year fixed would be your best financing program. 

I hope this helps. 

Jeff Thomas 
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September 19 2011
Hi Rico, That is a very good question and one that I get asked often.  Most lenders will allow the rent from your inherited tenants be added to your available income helping you qualify for a higher purchase price NICE. Buying a multi unit building is the way to go especially if the main focus is to profit from it. Below

1) Buy wisely with a goal of purchasing a building that will cash flow negative.
2) Aim to get a building that has been properly maintained with a good mix of units preferably 2 bed units as the tenants usually rent for longer periods.
3) One final tool you can use is the 1031 Tax exchange should you wish to trade to another building, this tool helps you defer any tax consequences into the new property when its time to upgrade.

P.s Oh and to put the icing on the cake, the chance of an inflationary period happening again in the next 30 years is probable so not only do you and your lovely tenants pay down the principle the value of the building will increase. Good luck! Kind Regards, Chris
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September 18 2011
Profile picture for rico stylez
Jeff, I guess you can say I'm looking to buy property that I can live in and at the same time rent the other apartments to pay the mortage with the entent to perchase more properties. Jeff , ultimently I'm looking to get into real estate as a business and here, were I live in Albany N.Y. there are a lot of low cost properties and forclosed properies that are priced from 25,000 to 75,000 for three family houses and I just see opportunity . I my self live in a a beautiful home and don't plan on moving so it would be property that I entend to use as income property. Any advice ? And no Jeff these are not duplexes they 're more three family units.
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September 18 2011
Rico

Are you buying a duplex (two units side-by-side) and both are being sold? In my area duplexs are typically two seperate units with two seperate deeds. If you are buying a 1-4 unit property (4 units in one building) that would be one mortgage and renting the other units to cover costs is a great way to get started. But as others have stated, look to buy a home first, the investment comes down the road with appreciation and mortage principle pay down.

Jeff Thomas
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September 08 2011
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Yes Jeff that exactly what I'm looking to do.
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September 08 2011
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" I am looking to buy property to live in at the same time rent to supplement the cost of the mortgage."

If you want to buy a duplex (or bigger) and your income without rental income is sufficient to cover the entire mortgage, tax, insurance, and maintenance cost it is a lifestyle decision.

Do you want to have neighbors just one wall away? The noise they make could be shared with you. If this is acceptable to you it can work out well. Just be aware this kind of property is going to be bought by an investor based on the income producing capability of the property.

If you would depend on the tenant for your mortgage and financial well being I would reconsider the idea. If you sit empty for a few months or worse have a non-paying tenant and have to pay to evict them (taking months) it could really hurt financially.
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September 07 2011
Rico,

As a first time buyer look to focus on finding a property that serves as a home, not an investment.  When you start treating your home as an investment you get into trouble.

Just my .02
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September 07 2011
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Yes I am a a first time buyer who have some experience in building houes and yeas I am looking to buy property to live in at the same time rent to suppliment the cost of the mortgage. I also look to add equity the property and possibly perchase more property as a business.
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September 07 2011

Rico - Not sure of your question. Are you buying your first home as an investment, meaning the property will be rented out? Or do you mean when buying your first home should you look for easiest, shortest path to profit first or buying a home to live in and profit in the future.

Jeff Thomas

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September 01 2011
 
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