Hello all, I've got a question for you all:
As paying rent to some landlord isn't exactly my cup of tea, my friends and I (very good friends. Trustworthy. Known them for almost 15 years) are looking to purchase a mixed use property in order to use as our primary residence. Primarily, we are looking for a 2 unit property (1 commercial storefront, 1 apartment on top in which we will live). We want to collect rent from the commercial tenant and live in the apartment.
Our primary purpose for doing this is not actually real estate investment, but free/affordable housing. I've always said that even if we have a shortfall of a couple hundred dollars per month that we have to pay out of pocket, that's still cheaper than paying rent or owning a "regular" house (which would cost us $1,200-$3,500 per month). And the reason we're looking to have commercial tenants rather than residential is due to the former supposedly having less work and liabilities involved to the landlords (one of my would-be roommates once owned a small business in which he rented the storefront from a commercial landlord who couldn't answer a question with anything other than "I'll have to ask my lawyer". Said landlord was practically able to get away with murder due to everything being the tenant's responsibility).
Now, the thing is that we don't really have any landlording experience. Actually, between the three of us, we have none at all. We also live in an expensive city and can't really afford multimillion dollar properties simply due to the high price of the down payment/closing cost combination. We all have jobs (one person makes about $90,000/year with the city) and we all have perfect/near-perfect credit, but none of us have $100,000 we can each throw at a property (I have a little over $30,000 saved for this property, I know my friends each have "a little bit more").
So now, knowing the situation, I have some very broad and vague questions for you guys. Namely, should this be something we even attempt to do? Should we avoid this like the plague? Should we opt for a commercial mortgage or a residential mortgage? Should the property be in a C Corp, S Corp, or LLC? Are there any programs to assist people who can't afford down payments, but would have no problem paying the mortgage? How do we evaluate a potential tenant? How do we analyze their business and ability to pay, or do we even have the right to do that? Any major do's or don'ts that I'm not even considering?
Just wanna know what the badass mustachian community thinks.
Sincerely,
ARB--Angry Retail Banker