Author Topic: What should we buy?  (Read 699 times)

justgage

  • 5 O'Clock Shadow
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  • Age: 39
  • Location: Michigan
What should we buy?
« on: April 13, 2016, 11:47:19 PM »
This is my first post.  Hopefully it goes over well! 

My wife and I are just beginning on the path to financial freedom.  To make it more difficult (because we like a challenge) we are moving this summer from Michigan (very low cost of housing) to a place on the east coast (very high cost of housing).

In this town we are relocating to there are a few possibilities for where we might live.  Also, we have 3 kids, 2 dogs.  We like remodeling homes and have done it a few times. 

When we arrive in the new spot our financial situation will be as such:

1) Own our Michigan home outright, $175k Equity.
2) $30k Cash/Investments & $5k CC Debt (holding cash for down payment if necessary).
3) $8000 in monthly income.

We've come up with a few options at our new place:

1) Buy the cheapest house we can find and then fix it up.  Cheapest would be no lower than $350k.  And would probably be a SFH with limited potential for side rental income.
2) Buy the cheapest duplex we can find.  Rent one side either long term or short term.  It would run about $550k.  We could rent one side out for probably $2k a month.   Using standard financing this is about the max we could afford with a VA or FHA type loan.
3) Rent at $2500/month.
4) Work some magic and buy a small apartment building.  I've talked with one owner.  His deal, for example, would be an 8 unit (we'd live in one) that may sell for $1.4M.  The owner would carry a large part of the mortgage (mentioned he'd hold 50% and owned it outright).  Maybe we could use our Michigan house as down payment or collateral as we have limited cash on hand.  The property pulls $11,000 in monthly rents right now - which is low - and is consistently 100% occupied.  Property taxes and insurances would come to about $2100 a month on the place before debt service.  The owner of this building is 84 and needs to sell. 

I'm leaning toward option #4 but I'm worried it's only because it seems to have the biggest upside... also has the most risk.

OK - hope this works and thanks for your help!   Sorry if I'm posting in the wrong place or committed some other forum snafu.
« Last Edit: April 13, 2016, 11:50:30 PM by justgage »