Author Topic: Two houses vs house with MIL apartment?  (Read 2253 times)

Bearded Man

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Two houses vs house with MIL apartment?
« on: October 13, 2015, 04:28:40 PM »
I'm looking at a roughly 2,800 sf house in the Kent, WA area, about 20 minutes from Seattle. It has a MIL apartment below that is a studio with it's own laundry, kitchen, bath and garage, separate entry, etc. The house is three stories so I would live on the top two floors.

Between what I could get for the MIL apartment and principal pay down/tax benefits, I would make $500 more per month on this house than I would buying two houses.

Still, if I buy this house I get two rentals; convert my current primary into another rental and the MIL, moving into the top floors myself. My after tax and principal pay down as well as rents from the MILA, my housing expense for that house then comes down to $400 a month without getting a direct room mate, and I'm still making money from my current house that would then become a rental.

 If I bought two houses and moved into one of them, I gain two rentals, but my after tax and principal pay down payment is about $1,300 a month for the house I live in. Each rental pays about $600 a month in profit.

lauren214

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Re: Two houses vs house with MIL apartment?
« Reply #1 on: October 13, 2015, 04:54:11 PM »
I've always thought that a house with a mil unit would be awesome from a life flexibility perspective as well as a financial investment. The unit can be rented to a random person, but if life circumstances ever change it could be a place where a family member could live or even if someday you needed a caregiver they could live there. Also, I know a couple that bought a house with a mil unit in it and for a few years they lived in the main house and rented out the mil unit, but around a year ago they decided that they wanted to travel most of the time, so they moved into the mil and rented out the main house and are traveling on the increased profits.

Bearded Man

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Re: Two houses vs house with MIL apartment?
« Reply #2 on: October 13, 2015, 05:12:45 PM »
I've always thought that a house with a mil unit would be awesome from a life flexibility perspective as well as a financial investment. The unit can be rented to a random person, but if life circumstances ever change it could be a place where a family member could live or even if someday you needed a caregiver they could live there. Also, I know a couple that bought a house with a mil unit in it and for a few years they lived in the main house and rented out the mil unit, but around a year ago they decided that they wanted to travel most of the time, so they moved into the mil and rented out the main house and are traveling on the increased profits.

Definitely a possibility. I would live in the MIL and rent out the top two floors. The rent would cover the mortgage and I'm still making good money on the principal pay down while living for free. Essentially, if I moved into the MIL, I'd be FI. Though I could say the same with moving back into paid off house.

Bearded Man

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Re: Two houses vs house with MIL apartment?
« Reply #3 on: October 17, 2015, 04:16:58 PM »
Bump.

undercover

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Re: Two houses vs house with MIL apartment?
« Reply #4 on: October 18, 2015, 04:48:28 PM »
What exactly is the question? Obviously you have ran the numbers, now choose which one makes more sense to you from a lifestyle perspective (we can't answer that).

Bearded Man

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Re: Two houses vs house with MIL apartment?
« Reply #5 on: October 18, 2015, 05:29:46 PM »
What exactly is the question? Obviously you have ran the numbers, now choose which one makes more sense to you from a lifestyle perspective (we can't answer that).

It's in the title of the thread: two houses vs house with MIL apartment? Which is better. Perhaps my numbers are not taking into account some kind of strategic benefit of two houses instead of one with a MIL apartment.


Ricky

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Re: Two houses vs house with MIL apartment?
« Reply #6 on: October 18, 2015, 09:07:16 PM »
The only other non obvious scenarios I can think of is if you were to do a 1031 on one of your current properties that has appreciated the highest for the MIL house. Or you could sell the house you're in now if you've lived in it long enough to qualify for tax-free capital gains and roll that into the MIL and one of the other properties you're looking at. Or, do both! That's the only other financially beneficial things I can think that you possibly overlooked. Like you said, either way you get two more rentals.

slugsworth

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Re: Two houses vs house with MIL apartment?
« Reply #7 on: October 19, 2015, 02:46:18 PM »
In many places in Washington State for a property to have an accessory dwelling unit, AKA a mother in law unit, there must be a covenant recorded that states that one of the two units is owner occupied. I don't think this is a big deal, but if you don't plan on living in one of the units you may want to look into that.

needmyfi

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Re: Two houses vs house with MIL apartment?
« Reply #8 on: October 19, 2015, 03:02:27 PM »
I've done both.  Personally have much better experience having my rental income coming from the same property I live in.  Less worry, super  easy to self manage and cheaper insurance.