Urban Property Investor

Hope things are going well, everybody.  This is part one of our ongoing series: First Time Urban Property Investor.

For first-time owners, consider this. Instead of looking for a single-family home to live in, how about trying to look for a duplex, a triplex or even a four-plex? Typically they are around the same price as a home the same size in the area, but the pros of these properties is that you can rent it out to people, while potentially getting some sort of tax deduction for doing so. I would check with a professional with that, but typically you can depreciate a portion of the improvement value over 27.5 years, plus you can expense a portion of the maintenance costs if you lease out part of the building, thus giving you some tax break, while also benefiting from having somebody pay for your mortgage payments, going towards your first home.

So why not??? Though you have to deal with potentially troublesome tenants and maintain the property (the latter you should be doing for your own home anyway), you can always get hired help and still end up with money in your pocket to pay off some of your mortgage, resulting in a more affordable house. Live through it a few years and you could always decide you don’t want to be a landlord so you can move up to your dream single-family home. For more information, I recommend talking to your local real estate agent to take a look at the prices of multi-family properties and the most important, the cap rate, the ratio between rental income after expenses versus the property price. This ratio will help you determine whether the property will generate enough cash flow for you to not even worry about mortgage payments in general.

This entry was posted Saturday, September 13th, 2008 at 2:00 am and is filed under First Time Urban Property Investor, Residential. You can leave a response, or trackback from your own site.