Worthwhile investment?

amother

Pink

Mon, Apr 23 2018, 9:18 pm

Two family house for sale in my neighborhood. Each half is small- 2 bedroom and 3 bedroom, both with 1 bathroom. We can live in smaller half which is barely more living space than rental and rent other half, allowing us to cover big chunk of mortgage and end up paying less than it would cost to rent a 2 bedroom in the neighborhood. But what would we gain? Maybe convert house into 1 family when we could afford? Or switch to bigger half when we need the room? So hard to decide if this is a good deal. Scratching Head

Thoughts?

amother

Sapphire

Mon, Apr 23 2018, 9:25 pm

This is a very smart investment! Instead of paying rent to a landlord, you will build equity in your home. The money will be going into your pocket! When you need more space, you can move to the other side/ live in the whole house/ build an extension.

amother

Ruby

Mon, Apr 23 2018, 9:27 pm

Sounds good to me! What do you gain? Equity!
Some years down the line you can sell, or take over the house for yourselves. But spending on rent seems silly if You have this option on the table.

amother

Pearl

Mon, Apr 23 2018, 9:29 pm

Why wouldn't you do this? Personally - I would do this only if I couldn't afford to get a bigger house without a rental unit.. but I place a high value on things like 2 bathrooms.. and space. That's me not you.

how are you otherwise investing your money as an alternative to home ownership?

amother

Pink

Mon, Apr 23 2018, 11:00 pm

So this is what I'm obsessing about! Price is low 6's. Neighborhood is booming. Block is young with park and shul on either end- so convenient! House went on the market right before Pesach. It doesn't make sense that no one else grabbed it yet! That's what makes me nervous. Am I missing something???

amother

Pearl

Mon, Apr 23 2018, 11:03 pm

amother wrote:

Yes. Lots of families don't want to live with 1 bathroom - and can't afford to renovate the house.

watergirl

Tue, Apr 24 2018, 6:49 am

Only do this if you can afford to pay the entire mortgage for a long time without counting on the rental income to pay the portion you mentioned in your op. It can easily go empty for a long time - nothing is a sure thing. Especially with only one bathroom, thats a deal breaker for many people. And I say this as a long time renter (we just bought but the memory is so fresh!), its very hard and uncomfortable to live so close to the landlord (bdtd more than once). Also, you will have repairs to make for the renters, more often than you expect. Read through the threads on this website for mentors complaining about their landlords. I think it’s more common to have issues with your landlords then it is to have wonderful landlords. In my experience, the best landlords have actually been from apartment complexes with a full-time meat and staff. The worst landlords I’ve had have been frum. That’s not to imply anything about you who I obviously don’t know. I’m sure you’re wonderful. I guess I’m just warning you to go in with your eyes completely open. Also, read the thread right now about somebody who is considering buying a house that has tenants in it already. When the time comes for you to have them leave, it may not be so easy. Also before you do this, speak to a contractor and get an idea of what it cost to do the work that you eventually want to do. It is very very expensive. One family on my Block did exactly what you described, in the end it was more expensive than they had initially envisioned and they just wound up putting a door in the middle. It’s still essentially two houses but now they connect kind of like a hotel room. Just gather all the information that you can before you do this, including speaking to a contractor. Also, find out what it would entail from the city that you live in. I don’t know how easy it is to take two homes that were zoned to be two homes and turn it into one. What happens to the address at that second house was assigned? These are all things that I recommend you figure out now.

thanks

Tue, Apr 24 2018, 7:34 am

We did something like that. We then sold the house for a nice profit.

emzod42

Tue, Apr 24 2018, 8:20 am

amother wrote:

As far as what you're missing, could be a variety of factors. Something could show up in the inspection (maybe needs much more work than you think or has other problems), or could just be that there are more affordable rentals in the area where people with smaller families would rather live. You have to figure out if it's worth it to you, and if so, get a good inspector.

amother

Pink

Tue, Apr 24 2018, 12:56 pm

The rest of the block already converted their two's to one family. I saw a few. Some more elaborate and some simple and inexpensive. Layout is favorable to convert into one- can make second kitchen into a bedroom because the location of the upstairs kitchen is perfect for a bedroom. And the first floor master bedroom is behind the kitchen- perfect to open and make kitchen huge. As to one bathroom, there is a big closet where a second bathroom can go as soon as the money is available. Others on the back have and not expensive. Good point about inspection. Have to make sure no structure issues. Current tenants are lovely young marrieds. That's the type current owners always rent to and none have complaints so I don't think that's a big deal. Isn't the man thing location? I think an affordable house low 6's in the middle of Far Rock is too good to be true. Still feel like I must be missing a catch. Thanks for chiming in everyone.

watergirl

Tue, Apr 24 2018, 1:03 pm

Ok I was picturing a side by side duplex/semi detached. Get an inspection.