Im currently thinking about purchasing my first investment property when prices stop falling. I want it to be a 3/2 so i can live in one room and rent the other two. Can anyone give me some advice on this kind of investment?
If you wait for the bottom of the market, you may be waiting another year, maybe two.
Correct, i am in college right now so there is no rush at all. I currently have the credit score and down payment to afford a budget of 300k. I want to wait a year so i have enough to cover my mortgage payments for at least two years in case something goes wrong and i cant get room mates or what not.
Your plan sounds fine.
It is also possible to lowball offer and possibly buy something now for the bottom level price that you expect it to be in two years.
If you shop carefully, it isn’t necessary to pay fair market value, especially in the market of today.
If you are in college and buy right, you can end up with a free place to live as your roomates pay the mortgage.
My only caution on this is that it works best if you intend to stay in the area. If you plan to move to a new area when you graduate, you must take into consideration the sale of the property when you move. Sometimes that works easily, sometimes it doesn’t.
Yeah i want to get it a nice price so it can cashflow. I was thinking to buy when the banks start to dump properties, any idea when that is going to happen?
They already are dumping them.
Should i buy it as an LLC since people are living there and i want to protect my other assets or just get rental insurance?
You’ll want to check into an insurance policy for a NOO or non-owner occupied property. This can also be known as a landlord policy. It will cover the structure and all things that come with the structure. It will not cover the tenant’s belongings. You can bump up the liability portion of the insurance from the quoted coverage (which will probably be around $300K liability) up to $1MM for a VERY small increase in your premium. That will be the easiest way to protect yourself. Keep the property in good shape and follow all state and local laws regarding landlording and you should be fine.
But that doesn’t protect me from them taking my other money and assets.
Search some of BLL’s posts regarding LLCs. If you intend on actively managing the property and doing your own repairs, the LLC will be of little benefit to you.
The insurance and aggressively fighting frivolous lawsuits will help protect you. Be fair, but firm.
If you have a net worth higher than the maximum limit for a homeowner’s liability policy, then you need professional advisors helping you structure your asset protection plan.