A Richer Path to Your Dream Home

With low inventory of good homes to purchase, what's a first-time homebuyer to do? Sure, buying a fixer upper is a possibility, but there's another (more financially rewarding) option to consider.

With only a 3.5% down payment, a first-time homebuyer could purchase a duplex, triplex, or fourplex! Awesome!!!!!

Wait, did I lose you there? Hear me out, and you'll be glad you did.

You could purchase a multi-unit property (up to four units), live in one of the units, and rent out the remaining units. The rents for the remaining units can pay the entirety of your mortgage (or a major portion of it). Do I have your attention now?

"My income's not high enough to purchase a property that big," you might be saying right now. Au contraire. (I've never used that phrase before in any of my writings.) The rents of the other units you're not occupying can be counted IMMEDIATELY as income based on the appraised value of rents in the surrounding area. And you're only required to live in that multi-unit property for a year.

For many first-time homebuyers, this is the ideal way for them to get into a home AND have an investment property. Because you have other parties paying rent for the remaining units in your property, more often than not, those rents are paying the entire monthly mortgage payment (or a ginormous chunk of it). When you've lived in your property for a year, you can move out, slide in an additional renter, keep the property, and go purchase a single-family residence (white picket fence included) possibly with a bigger yard and a little more room to grow.

Let's recap: only 3.5% down, the possibility/probability that someone else will pay all (or a large portion) of your monthly mortgage, AND an investment property that produces passive income as you move out and buy your dream home. Is there anyone out there who thinks that's bad? I didn't think so.

Comments

The Definition of Insanity (in Real Estate)

More than a couple of years ago, I witnessed something that makes me laugh and cringe at the same time. Having lunch at a local restaurant, I spied a real estate agent and a loan originator having what I would characterize as a “first date”. I couldn’t help but overhear little snippets of their conversation, and as far as I could tell, things were going relatively well . . . at least until the agent asked the LO this question: “So, do you like to sit at open houses with agents?” I immediately looked to the LO’s face awaiting the response. I didn’t need to hear another single word coming out of the LO’s mouth because his face said everything: you would have thought the agent had asked him if he enjoyed bobbing for apples in a pool of acid judging by the look on his face. While his face was communicating complete revulsion, his lips said, “Yes, of course.” And that’s when I looked over at the agent’s face to see, ...

Time for a New York-Style Housing Fix

Previously, I’ve written about a man who works in our office who lived in New York City back in the late ‘80s and early ‘90s – let me assure you that while that does seem like a very long time ago, it’s not nearly as far bac k as when the wheel was invented and humankind learned to harness the power of fire. If you’ve been to New York City recently and blissfully walked around Harlem to get chicken and waffles at Sylvia’s on Malcolm X Boulevard between 126 th and 127 th Streets or stopped in at Keybar on 13 th Street between First Avenue and Avenue A to wedge yourself into a cozy corner next to their notable fireplace, you wouldn’t get a sense that these areas were once . . . not as welcoming and glitzy as you now see them. Our office mate has told some fairly interesting stories of living in those and other areas of New York City that give a much different sense. In the late ‘80s/early ‘90s, no matter how many great things you heard about Sylvia’s food, 127 th Str...

Change: the Only Sure Thing

Which headline is better for grabbing your attention and prompting you to read the article to which it’s attached: “Credit Reports to Exclude Certain Negative Information, But Read on to See if This Even Applies to You” or “ Credit Reports to Exclude Certain Negative Information, Boosting FICO Scores”? Obviously, the former is less than tantalizing while the latter makes you say, “Tell me more!” I was in the “tell me more” camp, and the folks at The Wall Street Journal sucked me into their vortex. The development, set to go into practice on July 1 st , is certainly a departure from how the Big Three (Experian, TransUnion , and Equifax) have done things in the past, but it’s not going to wave a magic wand and make bankruptcies, foreclosures, short sales, etc., go away. It’s sort of a bittersweet development. Let me explain: Many tax liens and civil judgments will be removed from people’s credit reports if they don’t include a complete list of a...

Search This Blog