First Home/Rental Purchase

[catccc]

There's a quadplex in our town we are interested in buying.  Well, IDK if quadplex is right, but it's a single property with 4 rental units.  It's 3 flats, plus a carriage house.  Each unit is 2 beds/1 bath, with the exception of the 3rd floor unit, which is 1 bed 1 bath.

I am thinking my family would live in the carriage house, and we'd rent all the units in the main house.  They are currently all occupied, and I believe the 3 units in the house currently bring in $2,850.  The home is listed at $475K, and the taxes are about $6K.  With 20% down, the rental income from 3 units should cover the monthly mortgage payment including taxes.

We've been renters for all our lives, so I'm seeing this from a very very novice perspective.  I know maintenance and expenses will eat into that rental income, but I'm not sure exactly how much.  The place looks well maintained.  Rent includes water/sewer/trash, which is billed by our town, so I guess we'd be paying that.  (Our bill is $200-$250/quarter for that, so x4 units, I guess it'll be about $4K/year).

What do I need to be thinking about and considering before we dive in?

[MarioMario]

My advice since you will be living so close with your tenants is to form a company (LLC maybe, but thats a question for a laywer) to own the house.  And that way you can present yourself as the landlord and not the owner. 

Living so close to tenants can create awkward encounters if they are late on rent or you have problems; especially if your kids play together.  Its easier if they don't see you as the bad guy.

[catccc]

Thanks, I definitely don't want to be the bad guy, I'd prefer a mutually respectful relationship with my tenants.  I think that is what I have with my current landlord/owners.

I'm sure there are other reasons (i.e. limited liability) to have the LLC hold the property, I'd have to look into that.  I wouldn't do it just to call myself the landlord and not the owner, though, because they are going to know we are the owners, anyway.  I want them to know that- that we care about the property, keeping it in nice shape for us/them, and having good relationships with our tenants.