Repost from @thisisjohnwilliams
What I hear when asked this question is: What type of property would enhance my life and how much would it cost me to purchase this property? 😎
Let’s say that you are a 25 year old M/F and your expenses are:
Car: $400.00 (payments, insurance & gas)
Student loans/credit cards: $500.00
Wage/Salary: $20.00 per hour, 40 hours a week= $800.00 x 4 weeks in a month is $3,200.00 gross income.
This leaves you with $700.00 in pre-tax profit.
The first deal should REDUCE 📉 your monthly expenses allowing you to save more 🏦 and buy more property 🏘🏢 to secure your future not increase them leaving you house poor 📈😧 I am an advocate for the small deal 2-4 units 🏘 for the first time buyer for many reasons. The first being is it these deals allow you to lean on your tenants for your housing costs + if you want to take off and travel you could simply rent out your unit and be on your way. The second is that overtime the cost of living will increase and so will their rents😃. The third is that eventually this property will be paid off all the rents will serve as monthly profit 😎💰 that can support you and your family for many many years to come. Fourth, if you have a vacancy you are still servicing your loan as you are diversifying your risk over multiple doors. In closing, the 2-4 unit residential deal qualifies for a smaller down payment than a 5 + unit commercial deal
Let’s compare this strategy to buying a house 🏡 . If the first time buyer purchased a single family home they are responsible for the taxes 📃, mortgage, repairs, upkeep, and are obligated to your job to make their housing payments. If you decide to rent your home and your tenant stops paying or have issue you are fully responsible for the mortgage payments. Always leaving you a bit on edge🧗🏼♂️ I believe you should look at your monthly expenses as the problem. Then solve that problem through the small deal and then once you are in a strong position where you are saving 100% of your earnings, then scale up into bigger and better, or relax 🏖🛬🚁 It depends