Young guy considering investing in rental property
Appreciate any advice, encouragement, or warnings to my idea. I am twenty-one years old and already have a licensed electrical business that profits $90k per year. It does well enough with referrals that in the last year and a half, I have had every week full with 40 hours as well as part-time helper's hours. The funny thing is, I'm still at home with my father, but that needs to change. He is a full time musician that tours the world most of the time which works out giving me independence. Avoiding rent and utilities for the last few years has allowed me to save $120,000. I need to get out on my own and buy my first home but had this idea. #1- I am very cautious and like to assume my income as half of what I really make, so I don't wind up with a house I can't afford. #2- Having such a savings seems like a great opportunity to grow more money. #3 Still being at home for a little while would be ok as I make sure the investment works. #4- If it all works out, I could potentially have an investment that pays my mortgage as well as help me with retirement and the benefits that I do not receive.
The Opportunity I have- An 18 unit apartment building is for-sale for $199,000. It has been completely renovated a few years ago. Currently 11 units are already rented. The rent is apx. $300 per unit. Where it is at now, the loan (with $40k down) at $990 per month plus a hundred or two for insurance, $3300 rent would start with a $2100 profit per month. The bad part is that it is in a somewhat bad area.
It seems being self-employed and in direct connection with every maintenance trade, I could handle the hassles of maintenance. If the building is half rented and someone destroys a unit, another unit could take its place as I deal with the damage. On the other hand, if it is full and someone leaves and vandalizes it, I would have enough revenue to quickly repair it anyway. It seems that as long as four units are rented (out of 18), the rent would pay the mortgage, insurance, and taxes.
So, keep looking into an apartment? Be a little more simple and buy a duplex/ fourplex. Or forget it all and just buy a house? I am proud of my business and do not want to do anything stupid. My broke friends in college sure think I'm doing something right :) Thank you for your time.