[Justin]

I’m trying to move out of my parents and have the opportunity to purchase 3 unit building.

Purchase price: $350,000 (no work needed).

I’d put 35% down (122,000) and have a 30yr loan of 228,000.

Monthly Gross Rent: $3,000 (all units rented).

Monthly Cash Flow: $360 (that’s after all expenses).

**If I move into a unit, I’ll be losing about $600 a month. (It’d be like me renting that unit)

I’d be able to live in one unit, rent the rest out the rest. I’d be able to save about 3k per month after I pay all my expenses.  In 5 years I’d have the building and have saved about 180k I could use for a nice house.

My only concern is this doesn’t meet the 1% rule and my cocROI is only 3% if I have everything rented out.  I would have the buildings appreciation though and the loan paid off by tenants.

Any advice or insight out there?

Thank you.

[David]

I would pass on this. I think there are probably better properties. I would but very weary of a $360 spread best case scenario because the best case rarely happens.

I don’t think you should count on appreciation. It is a crapshoot, imo. You could very well be buying at the top of the market. You never know.

However, this is general advice that might not apply to your situation. Take it with a grain of salt.

Don’t miss: We are debating updating our current house vs selling & buying a new place with those updates + more space

[DM Washington]

Not sure how old you are but it’s time to get out on your own and this is a golden opportunity (parent of millennials here who moved out to rent).

You’ll own and basically the tenants will pay your mortgage and the tax benefits are not captured in the math you presented. My vote is go get it before someone else snatch it up. If it helps hubby and I own 5 multi families in NYC, we didn’t do the math on any of them it’s never really a bad idea buying multi family properties imo.

All but the one we closed on just weeks ago are worth triple what we paid for them and the cash flow allowed me to FIRE 8 years ago. If we hold we’ll never need to tap our investment accounts and our kids will have a sweet inheritance.

[Don]

Yeah, rent doesn’t seem high enough if you living in one only saves you $600.

[Author]

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