-

Why I think buying a Duplex, Triplex, or Four Plex as your first home is a great move.

At one point in our lives we have felt the social pressure of, “keeping up with the Jones”. It’s a rat race to see who can have the best car or truck, the biggest house, or the best “toy”. I know I have felt this pressure and even fallen into its trap at times.  

When I began to learn about real estate, my perspective changed. I was starting to learn how to use real estate to build my wealth, but in a steady, long-term way.



There is no one way to go about it, and everyone has different goals in life. However, one of the biggest expenses early in the journey of life as an adult is your house. Many times, we buy one that’s too big or costs too much. Its tough not to because we want all we can get “right now”. Sure it feels great to move in, but every month when the mortgage bill comes, it’s hard to believe how quick another month has gone by.




There is another way!

How nice would it be to have someone else pay your mortgage for you every month? Well if you buy a 2-4-unit building, your wishes will come true. the best way to do it, if you have little cash is to live in one unit and rent out the others.

The FHA loan program allows you to buy a rental property of 2-4 units at only 3.5% down! So, lets run the numbers. Grant it, these are hypothetical, if you want more help on how to make sure it’s a good deal, just reach out to me and I will see if I can help. A little disclaimer too, you have to talk with a lender who is certified to make FHA loans and see if you qualify for that type of loan. 



Lets say you buy a 3-plex for $300,000.

A mortgage with 3.5% down for 30 years at 4.25% interest rate, including taxes and insurance, the monthly payment will be around $1800 per month…Ouch! Imagine having to pay that all by yourself…woof.  

But wait, you have two tenants who each pay rent. Lets say their rent is $900. $900X2 tenants equals $1800. That’s the exact amount you would have to pay to cover your mortgage. So, you are now living rent/mortgage free and keeping all that money in your account every single month. Awesome! What if the rents were at $1000 or $1200? Now your making money to live there!


Wait! You didn’t think there was some kind of caveat?

There are two, actually. First, you have to grow the set of skills it takes to be a landlord, but millions of people have done it (I think you can too). And secondly, if you’re using the FHA loan, Then you will have to live at the property in one of the units for at least one year. After that you can move out, if you want. (big whoop, right?)

This strategy is one of dozens that will get your foot in the door to being financially free in the future. If you would like to learn more about this follow the Bigger Pockets Podcasts. Its awesome and FULL of information.

Tyson Mollotte Broker @ Coldwell Banker Tomlinson R&H   (509)-346-8929

Comments

Post a Comment

Popular posts from this blog

What Exactly is the Difference Between a Broker and a Realtor?

-
Image
Before getting my license I don't think I really even knew what the difference between a Realtor and a Broker was. Is one better than the other? Does one have have more wieght behind it from an experience stand point, or are they just terms that are interchangeable? Although the general public may use the term interchangabley, there is a difference between the two. A Real Estate Agent can also be refferred to as a Broker. Those two terms mean the same thing. Where people get confused is that they associate Broker with "the boss". That is not so. The boss is the Managing Broker. The Managing broker is over all the brokers within that particular brokerage. His job is to make sure that things run sommothly between transactions and he helps give advice and train those who are under him. So where does Realtor fit in then and how is it different? An agent becomes a Realtor by joining the corresponding Realtor Association. The one in this area is called The Mo...
Read more

Selling Your House: The One Step You Don't Want to Miss

-
Image
Have you ever met someone and then later that day looked them up and “Facebook stalked” them? You know, where you go and look at their embarrassing posts and photos from five years ago that they forgot to take down?  Yeah, well a home inspection is similar in that the buyer gets to see all the behind the scenes wear and tear that has gone on in your home during the past 5, 10, or 20 years.   Often times when you’ve been in your house for a number of years, you tend to forget about small maintenance items that I can assure you, the inspector will find. What exactly is covered in and inspection? First and foremost, banks want an inspection done to ensure that their investment is a good one and that the house won’t fall apart anytime soon. An inspector will go through each of the systems in your house. They will look at the exterior, siding, windows, and roof. They will look for the condition of each of those things and make note of any abnormalities (mi...
Read more

FED May Reduce Interest Rates in July

-
Image
As of yesterday (June 3rd 2019), many traders on Wall Street predict that the FED will reduce the interest rate in the July meeting. According to the Article, there is a 68% chance the reduction will happen. If it does, it will make buying you next home… that much easier as a lower interest rate will reduce your monthly payment. What is the FED and why do they control interest rates? FED stands for Federal Reserve. It is the US Central Bank. It is privately run, but by appointed officials from the President of the United States. The seven governors of the FED serve 14-year terms which makes the influence from an elected president watered down. The FED is responsible for maintaining the monetary policy in the Economy. If they see that inflation is getting too high, then they will vote to raise interest rates which helps keep inflation from getting out of control. On the flip side, if the Economy appears to be stalling, they may reduce the interest rates which all...
Read more