Posted by Randy on September 24, 2003 at 12:39:03:
You can get pre-approved for the loan based on the target range of the properties you are looking at. Any good mortgage broker or lender can than tweek the numbers to account for the rental income. Typically only about 75% of the rental income will count in your total debt to income ratio, so keep that in mind while you shop.
Buying a duplex to live in and rent out. - Posted by Brian
Posted by Brian on September 24, 2003 at 12:23:59:
I’m not a real estate investor. In fact, I’ve never done a single RE deal in my life (except for renting apartments from a landlord).
But it’s time for me to move up and buy a house. I’m 28 years old, have a stable job that pays well, and I’d like to stop making my landlord rich and get a house for myself here in the Los Angeles area.
An idea I’ve had is to purchase a duplex, live in 1 side and rent out the other. I know that when buying a SFH, the normal process is to get approved for a mortgage then go find a house that you can afford.
Does it work the same with a duplex? They’re more expensive, but that is offset by the rental income. But the rental income isn’t known until you actually find a property.
Should I find a property first, then try to get financing?
Any advice or tips on what I should expect would be appreciated.
Thank you.
Re: Buying a duplex to live in and rent out. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on September 24, 2003 at 17:03:54:
Brian–(CA)---------
This is probably a bad idea. There are some parts of the country where this would be a good idea, but you indicate you are in the Los Angeles area. There is likely is not a good idea.
In Costal California the prices of properties are very high. However, the rents you can charge are not commensurately high. Thus, you would likely find yourself having to pay more each month to own the property than the cost of the one unit in which you would live. You would have to pay the bank each month for the privilege of having a renter.
You might well be better off to buy a condominium, if you want to live in a multi-unit property. There may be some duplexes that are already condos. If so, you might find that you are better off buying just one unit and letting somebody else own the other unit.
Now, there are some economic advantages of owning rental property beside the cash flow. One is the potential appreciation, the other is the tax benefits. If you want these benefits, you will want to own rental property. However, probably not in Coastal California. If you want to own rental properties, you probably will have to buy in the eastern part of the state or out of state. In the eastern part of CA you should get positive cash flow and appreciation. Plus tax benefits. In other states you might get even higher cash flow than in non-coastal California. You probably will get little appreciation and your tax benefits should be similar to what you would get in non-coastal California.
Good Investing**Ron Starr