Ever thought about investing in real estate but didn’t know where to start? Thinking about buying a home but not sure you want to tie up everything in 1 house? Need a place to live but not sure what to buy? Maybe you should start by investing and buy a 2 family home.
A 2 family home is a great long term investment (emphasis on long term). Over the course of many years you’ll find that it is a fabulous addition to your investment portfolio. I believe people get hurt because they don’t commit to what works best – long term investing within budget.
Real estate is cyclical – it goes up, it goes down. However, held over the long term it works and does better as an investment than everything else for the average person.
A 2 family home purchase gives you several advantages:
- Greater leverage because you can afford a more valuable property.
- Better equity growth while you use a tenant’s rent to pay off your loan.
- You get strong tax benefits which your accountant will explain.
- Best of all you get tax free income by refinancing in the future.
There are also disadvantages:
- You lose some privacy.
- You don’t get as much living space for yourself as with a single family purchase.
- Tenants can be a problem.
- There will be vacancy periods and maintenance issues that come up.
- This is essentially your own business so there’s the work of running a business.
To do it right, talk to a real estate attorney and accountant first. The advice and counsel you will get from both is invaluable. You’ll also need the help of contractors and a handyman for small jobs.
Clients of mine who did it right were able to retire earlier, had well over $1 million in property value and rental income for a great retirement lifestyle. So start by investing and buy a 2 family home.
For advice or questions, contact me when convenient.