Since your question relates to the FUTURE, then before you go any further you need to consult with a mortgage broker about the posture of lenders today. For example, if you are planning to obtain an owner-occupied loan, especially an FHA loan, you need to understand the guidelines as to how long you should live in the property before renting it out and how many properties you can have owner occupied loans on. Rules are tighter today and unless you become really familiar with them your idea could backfire on you.
Now I will assume you have already had that discussion with your lender. In addition to being a long-time real estate broker, I am also a long-time landlord. In considering the purchase of an investment property I suggest to my clients that they ask themselves this question: "What would make me want to live there if I were a tenant?" I also suggest you drive the particular neighborhood in the early morning, then again about dinner time, then again about 10:00 p.m. as that will enlighten you as to parking conditions, loiterers, street lighting, etc.
With real estate prices so low and there being rebates for first time buyers, I am seeing a softening in the rental market. There are more rentals sitting on the market longer and the rental rates have dropped significantly. We used to get $1,200 for a 2 bedroom apartment that is now renting for $950 per month. Craigslist is a good place to do some research by watching listings in your intended area and see what other landlords are asking, what amenitites they offer and how long you see the ad on Craigslist. Generally, a landlord will keep an ad posted until he/she rents the property. Bear in mind, what rents are today may not be what you can expect to get in the future. If they are a couple hundred dollars or more lower can you really afford that? Digging into your pocket to cover negative cash flow may lead to financial disaster. Be careful, Chris. Your idea is good, but your plan needs to be sound and well researched.
Joanne L. Gardiner, Broker, e-PRO RealtorÂ®
CA Brokers License #00822285
"You may never know what results come from your action. But if you do nothing, there will be no result." â€“ Mahatma Gandhi