I have $300K to invest in real estate in 08. Should I buy a second homeor multiunit (4) re?

Asked by Mitch Mohtasham, 90732 Mon Jul 16, 2007

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Kathleen Bar…, Agent, Santa Barbara, CA
Mon Jul 16, 2007
Hello - good question! Always buy as many units as you can afford. By afford, I mean financially as well as maintenance-wise as well.
If you buy a second home for yourself, are you going to rent it out or just have it for your own use? If you rent it out, will you have a management company take care of it?
The more units you buy, the more "help" you have paying your mortgage, taxes, etc. However, the more units you own, the greater the maintenance.
some investors start with a duplex, live in one side, and rent the other. this is easier to manage as you are right there and can see what needs immediate attention. Then graduate to a 4-plex or greater. good luck. Kathleen Barnato,
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Richard M. J…, , Sherman Oaks, CA
Tue Oct 16, 2007
Hi Mitch, I suggest you focus on your ROI.
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Chris Tesch, Agent, College Station, TX
Thu Jul 19, 2007
Dear Mitch,
I believe that answer might just lie in the market you are investing in. In my own town, College Station, Texas (Home of Texas A&M University most people focus on multifamily properties and target students. My investors have found excellent success with targeting graduate students and associate professors who will be here two years or less in single family homes. Last year I sold 11 single family homes to investors. I focus on neighborhoods that have parks and schools nearby and always target homes between 140-180K. Each is rented out for more than 1% of the sales price per month. They also have appreciated better than average in the last year (in some cases close to 10%).

I did sell one 4 plex last year as well, along with several duplexes. These haven't been quite as successful with some having vacancies and slower appreciation.

Other markets might be quite different.

Good luck no matter what you decide!
Web Reference:  http://www.ChrisTesch.com
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Ryan James, , Brea, CA
Thu Jul 19, 2007
As the sales manager for a national real estate investing company (CA, AZ, TX, NC, SC, MO, GA) I work with clients and try and find out what their goals are long ad short term and where they are comfortable in investing in.
We deal with everything from OCCUPIED properties, Multi-family, single family, new and pre construction, commercial, and foreclosures.
Please feel free to contact me if you have any questions or check out our website.
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Robert Rees…, , Texas
Thu Jul 19, 2007
You didn't really specify what your investing purpose is: Cash Flow or To Build Capital (Flip or Through Appreciation). Also what AREAS are you willing to invest in? Just around Harbor City?

Where you invest helps determine how you should invest. For a while here in the Austin area buying a fourplex meant negative cashflow, but they were appreciating at an incredible rate. Now Second Homes are doing well.

Just some things to consider to maybe add to your question to help you more.
Web Reference:  http://austinhomeinfo4u.com
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Bruce Lynn, Agent, Coppell, TX
Tue Jul 17, 2007
Buy in TEXAS mitch. Prices are still fairly low compared to CA, rents are good and we still have good population growth rates. I'd buy the multiunit so you can pay for the second home.
Web Reference:  http://www.teamlynn.com
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Rebecca Cham…, , Palos Verdes Estates, CA
Mon Jul 16, 2007
Hi Mitch, Harbor City was just featured as one of the area in the US are that still increasing in value at a high rate. It depends on where you are looking to buy. If you are looking for 4 unit in LA city, it would fall under rent control and since the relocation fees just more than doubled, I would suggest you invest in a SFR.
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Artur Urbans…, Agent, Burlingame, CA
Mon Jul 16, 2007
Mitch, a good reply from Kathleen. This is definitely one of possible options. Another option would be to buy a property(ies) out of state. For $300,000 you can buy 4 to 6 duplexes with 95 % utilization and positive cash flow of several hundred dollars per unit (that includes property management cost). You hold it for five years and than decide what to do next. Contact me if you would like to discuss it further.

At our company we specialize helping people to start investing in real estate. We help clients to treat their purchase as investment, even if the first property they buy is their own house. Good Luck!
Web Reference:  http://www.cimpler.com
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Mario Pinedo,…, Agent, Cupertino, CA
Mon Jul 16, 2007
Leverage and preferential tax treatment are what makes investing in real estate so beneficial. You will get the better of both in buying a larger (4plex) rental property. My wife and I bought our first property in 1994, it was a 6 unit apartment building that we lived in. Within 1 year we refinanced out a downpayment for a single family home. That first investment choice changed our financial outcome for the better.
Assuming you are in LA, that is a great market to invest in. It will always be a destination, rents will continue to climb and people will always want to live there. Buy close to home, something that is managable in size, not a low rent neighborhood, not a high rent one either. Hold on to it for 10 years at least and watch your equity and your net worth rise. Structure your debt to match your current needs too. If you do not need the cash flow, take a larger loan and leverage more. This gives you more deductions too, which eventually means cash flow that is quite tax sheltered. That's the best kind!
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Susanne Chri…, , Metairie, LA
Mon Jul 16, 2007
This is a question that everyone seems to have. Being a realtor and an investor, I also toyed with the idea. I invested in a 4 plex and I have been very happy with my decision. I have a management company running the property so I do not have to deal with the headaches and it is definitely worth the 10% that I pay. You really have to weigh the pros and cons. The pros being in a duplex or more there are more units so the profit is better. In a single home you may spend 300K on the property, but your return on the rent may not support the 10% return you should get. Have you thought of purchasing in other areas outside of your particular state. For example, I am a Realtor in Louisiana and I have several investors from out of state that have been taking advantage of the hot market in this area. There are many investors in this area at this time after the storm. There is a need for housing in this area and many are buying the rentals and getting very good returns. This is just an idea. You really should look at what you want your 300K to do for you. My company helps many investors with questions that help in making their decisions. I would love to discuss any issues you have. You can contact me anytime by phone or email. My phone number is (504) 621-6711 and my email is alijoshathome@aol.com. I look forward to speaking with you.

Thank you for your question. Susanne Christoffersen Specialized Real Estate Services Metairie, Louisiana 70003
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