Investment savvy folks, what do you think I should do when buying my first house?

My goal is to make a good investment decision first and foremost. I am a single guy and I don't particularly care about living in my "dream house" at this point. What should I do?:

A. Buy a 2 or 3 bedroom townhouse with little or nothing down and get a roomate (s) to move in. The roomate(s) would be renting from me tax-free but I may not always be able to keep one there. Also, the value of townhouses in my area goes up much more quickly then a rentals do and I would be able to take a tax deduction on the whole mortgage.

2. Buy a 2-unit with nothing or little down and get rent from the other unit which would not be tax free. My purchase price would be similar to the town house and I would almost always have someone to rent it. I could only write off half of the mortgage interest.

3. Buy a 3 or 4 unit with 5% down. I would be able to keep it mostly occupied. The price would be 50% more than the others. 25% write off for the mortgage. Headache of tennnants. Thanks!!

If you purchase the house you live in and then sell it after 2 years, your capital gains are exempt up to $250,000 in gains.

If you purchase strictly a rental, and sell it whenever you do, you will owe capital gains on the property.

Usually duplexes can be classified as your residence if you live there, not so with triplexes or quads. Then only part will be exempt from capital gains.

Also, triplexes and quads require you to actively maintain the property. This usually means you have to mow the lawn, pay for garbage removal, etc.

If it is a duplex or single-family house, you can force those costs on the tenant. With a duplex, you can charge the other side for your mowing the lawn.

I'd like to get the deals you claim to be getting. I've never been able to do a no money down deal.

Good Luck

If you are to invested into your property, you would write it off as a rental property, that way you will get most of your $$ worth in tax filing purposes. By writing it off as in the mortgage by living there, isn't going to do anything tax returned wise vs setting it up as a rental units.

If you use first home buyers grant you must live in that dwelling, yourself for at least 12 months.

All 3 scenarios could be great investments and on the flip side,,they could all be bad investments. You need a good agent and a good Loan officer to help you run numbers, comps and icreases in value on ALL 3 scenarios, What you are looking for is the best ROI return on your investment. Here is what I suggest to my investors:
You should always try and get 10% ROI
So add up your PITI, association fees, etc for true costs
Add the 10% ROI
Then add another 10% for vacancy rates..let's NOT kid ourselves..when someone moves out, you need to clean, spruce up, advertise and get it rented again so she is going to be empty for a bit.
So now we have PITI, etc plus 20% and thats a good deal.
Out of that money you will incur some maintenance fees, so don't expect to profit 10%

And the person who said something about living in a home for 12 months needs to remember that grants vary, We have County grants that do not require a mandatory 12 month residency. Most do, but some don't.

So you see...this can be quite complicated, you should really have someone run the numbers, consult with your CPA for tax`write offs on all 3 and see which nets you the most!

Good luck!
Vicki Watzlawick
Broker Owner
Exit Platinum Realty
www.vickisdreamhomes.com