For folks trying to get into real estate, probably easiest place to start is buying a home where you can safely have an income property as part of your primary residence. There was a great show on HGTV about it and it’s worth finding the old episodes to watch (see Income Property). The basic idea is finding a home to make your primary residence that also has a unit that you can rent out for profit. Depending on where you live, that could be a duplex or triplex that was built to house 2-3 families in separate units. Another option would be buying a house and then converting a basement, a garage apartment, or a backhouse to be a separate property. You could also make this an AirBNB/VRBO type of short-term rental, but I’m getting ahead of myself.

When looking for this property, tell your realtor what you’re looking for and they can set up searches specifically for multifamily properties or single-family units with an out-building. Many older homes may have detached garages or backhouses that could be converted to a separate unit for this purpose. As you’re looking to buy this property, said backhouse may not be quite ready to be a street legal apartment yet, so you’ll have to factor that into your costs as you consider any rehabilitation expenses. Before you fall in love with any though, investigate your local laws. Some jurisdictions are very specific about homes being for a single family only and have rules against renters.

Buying a primary residence with an income property attached is a great start for investing in real estate because you have the luxury of being on the premises. That way, you’ll be able to keep an eye on what your tenants are doing to your property and have a chance to learn up close about being a property manager. Plus you’ll be nearby if you ever need to meet contractors or other service people. Having an income property as part of your primary residence also can help defray the costs to owning the property and help you build equity faster.

For example, say you buy a $250,000 house with a one bedroom apartment off the garage. Using round numbers, you put $50,000 or 20% down which leaves a mortgage of about $1000 month. Add in property taxes of $200 and insurance of $200 a month, and the payment each month to the bank if about $1,400. Depending on where you live, a one bedroom apartment (assuming it’s up to code, has a full bathroom and a kitchen), you may be able to rent that for about $1000 a month. That would offset much of your mortgage payment and allow you to start thinking about your next property (you can do your own calculations over on Nerd Wallet).

What I personally like about this kind of set-up is it gives you flexibility as the owner. When you first move in, you may need the extra income to help pay for improvements. However, say a few years down the road, you have a better job or a spouse and can afford to not rent it. Then you have the extra space to convert into your primary living space. That decision may save you money as when you need a bigger space (say you get married, have a baby or need a home office), you can simply convert the apartment into your space without having to go through the expense of selling your house, buying a new one, and all the moving costs associated with that (on average, it costs about 10% of the sale price to sell a home with closing costs and realtor fees, according to BankRate.com. That can quickly eat up any equity you’ve built up in the meantime which would reduce how much you could spend on a new property).

I also like this set up because it gives you the possibility of eventually having two rental properties. In a few years, you may decide to rent the entire property and buy a new primary residence for yourself. A lot of real estate investors get started with a property they initially lived in, often before a marriage or a job transfer. Another advantage of this type of investing is as your primary residence, you are eligible to enjoy the financial benefits of owning a home (deducting a good portion of your interest and taxes) while qualifying for lower interest rates that come for primary residences.

The folks over at Bigger Pockets have something they call the “BRRR” method – Buy, Rehab, Rent, Refinance, Repeat. This method also works for buying a property with a rental apartment, too. The main idea is that once you’re done living at the residence, you can refinance your original home mortgage (telling the bank your plans to make it primarily a rental unit. And I’m dead serious about this. Don’t think you can lie to the mortgage and your insurance companies about your plans because it could trigger the bank calling in the note or the insurance company not covering something. Seriously, don’t try to deceive them. It’s not worth the potential heartburn over any small savings).

Starting with a primary residence with an income property is great because it gives you a taste of what it’s like to be a landlord on a small scale when it’s super convenient. After a few years, you want out of the land-lording business altogether. It’s not for everyone. I’m grateful my husband and I have a split to our rental house management duties. I like handling paperwork (such as having the real estate license, writing leases, occupancy permits, credit checks, advertising, websites like this one) and he likes handling the people management (meeting prospective tenants, talking to contractors when things break, and talking to tenants when they don’t pay their rent). Of course, if you like the income but don’t like the hassle, there are plenty of property management companies that will do that work for you for a fee (here’s a non-comprehensive list).