Need Advice Of Wise Men - Should I Buy Condo or Duplex

[ItsAllBull]

Hey Fastlaners , Need some advice on my next move.

I have been approved for a mortgage and I have 2 options :

1. Buy a low priced condo
2. Buy a duplex , triplex or quad .

The reason I am considering a mortgage at this point is because its cheaper to buy than it is to rent in my area (Atlanta , Ga) at this current time. The Main goal is to reduce or eliminate my living expenses so I can save more cash and quit my job to focus on my entrepreneurial career and take some risks in that area.

My current salary at my job: 60k (I work 50-60hrs a week if that matters)
Living expenses outside of rent :$ 550 on average
My current Rent:$950 for a 1br apartment (Insane!)
Total Expenses : $1500
Avg Money I save : $1000

Now let me layout the options

Option 1:Buy the condo .

Right now there are multiple deals I can get on a condo within or around the city of atl in a B-class area for about 35-60k.

The Plan If a Buy a Condo:
If I buy a moderate priced condo of 30-50k my monthly mortgage plus hoa fees range from $350-480 (roughly) total.

I would Then take the difference ($450-$600) and add it to my normal monthly saving of $1000 thus giving me $1450-1600 savings a month which is $17400-19200 in cash ill be able to save a year. Giving me the options to just save and quit my job or experiment with business ideas with the extra cash while working.

Cons to this strategy:
I HAVE A MORTGAGE! However , If I lose my job or my business attempts fail even getting a part time job at Mcdonalds would give me enough cash to to cover my new monthly expenses totaling around $1000 a month. Or with the cash im saving I could easily pay it off.


Option 2: Buy the Multi-Family

The Plan if I buy the Multifamily :
I would be house hacking and living for free and having $0 housing costs thus bringing my avg monthly expenses would be $500 ish This allowing me to save $24000 a year in cash.

Cons to this strategy:
Multifamily prices in Atl are high. They currently at about 50k a unit in a c pr b-class area. Also the rents I would be able to get would be only enough to cover the mortgage plus a few hundred left over for maintenance (CapEx ) . This is true for the duplex and triplex. If I got a 4plex id have a small profit of about 200-400 a month however main con is multifamily units are a challenging to find in Atl will take time. My lease expires in 6 months I would like to have made my move by then. Another thing to consider is do I really want to land lord? Which will also have certain costs if i have to evict and also in time spent every month managing the property Which if you consider that it would bring my 24k in savings to about 20k or so.

So which one of these moves would be the best viable option all things considered?

 

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[jon.a]

What do you want to do when you grow up?
1. Invest in RE... Get the multi
2. Some other business... Probably the condo

 

[Locomote]

Option 1 = Liability (doesn't make you money) $480 x 12 = $5760 + upkeep of the condo

Option 2 = Asset (pays for itself while keeping a roof over your head)

You can't rush a good investment, theres probably a very good reason its challanging to find a multifamily unit.

 

[MidwestLandlord]

Multifamily prices in Atl are high. They currently at about 50k a unit in a c pr b-class area. Also the rents I would be able to get would be only enough to cover the mortgage plus a few hundred left over for maintenance (CapEx ) .

As a very rough rule of thumb, you can figure about half the rent being taken in expenses (some months higher, some lower)

The remaining income pays liabilities and profit (principal on the mortgage is a liability, not an expense)

Example:

Gross yearly rents: $30,000
Estimated Expenses: $15,000
Remaining income for mortgage liability and profits: $15,000

Assuming you borrow say $150,000, your payment would be around $700-$800 a month, or roughly $8000-$10,000 per year.

I would figure the cash on cash return if I were you. Take your estimated cash flow remaining after the mortgage and expenses, and divide that into the cash you would need to spend to purchase the place and get it fully rented (total cash out of pocket)

If it is less than 10%, I would likely not buy it.

Also,

Multi-family in my area is going for $80k-$100k per unit haha

 

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[EvanOkanagan]

I always look at control as one of the main drivers when I buy an investment property.

With a condo you're restricted as far as control goes. There are rules and regulations. Where I'm from (Canada) oftentimes there are rental restrictions as well--so what happens if you need to sell and the market went down, but you also can't rent it? A: You're writing a check to sell your condo.

The multi-fam makes a lot more sense to me as an investor.

 

[Denim Chicken]

The HOA alone would make me not want the condo

 

[DustinH]

The HOA alone would make me not want the condo

I agree. Condos can be a pain in a$$ sometimes. My vote would be to go for the multi-family... as long as you're ok asking for rent and asking your neighbors to come see your cycle.

 

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[ClaytonAlbright]

What do you want to do when you grow up?
1. Invest in RE... Get the multi
2. Some other business... Probably the condo

Or the better option, invest in RE and also some other business. Just because you have a rental doesn't mean you can't run another business. Rentals take very little time to manage. I should know since I own one (very soon 2).

For the time I put in my rental is about 2-3 hrs a month, netting 1400. About 466hr.

The vacation home I'm in the process of purchasing, 833/hr for about 3 hrs of time.

In total both homes will take 6hrs of time. More than enough time to run another business not to mention fund it.

Mind you I only deal in nightly renters, not long term leases that you make very little on.

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