Jump in now, or wait till I save up some more money?

Question

Hey, I am new here to BP and am looking on buying my first duplex to live in and rent out the other side. I am wanting to know if I should jump in now or wait for the market to cool off a little. My original plan was by the end of the year.

I have been speaking with banks and recently was offered a great deal. I am a teacher and qualify for a $10,000 grant to be split between closing costs and a down payment. But it is first come, first serve. So I need to jump sooner than I want to. Like in the next month... This deal also partners with the banks program of 0% down and no private mortgage insurance. It is 30 year fixed rate at 3.85%. This sound like a dream, the only catch is that you have to keep the property for 5 years. Which I am fine with, because I am looking into getting into buy and hold anyways. I called up the lender and asked if I have to technically live in the house for 5 years, or if I could buy another property as long as I don't sell the first. He gave me a wink/wink and said that the grant says "as long as I don't sell it" and that there will not be anyone checking up on me to see where I am living. I feel this was good enough to ease my fears, but should it be?

Other than just jumping into owning my first home and first rental property, I have fears about not cash flowing enough to deal with repairs and such. Do, I need to maybe wait awhile and save up more money before I jump in?

Also, the market is tough right now. Just looking by myself on apps such as zillow I do not see a lot of possibilities. I am looking for something halfway decent if I have to live in it for awhile. I would rather not, but I feel this may be the only way for me to start.

Basically I am asking advice on whether or not I should try and jump in now, or wait awhile longer to get my ducks in a row. I just can't imagine myself teaching for the next 30 years without losing my sanity...

Any advice is appreciated, thanks!

Joshua Janus · Answer

I would definitely jump in! Make sure you are buying in a great market with the #'s working out properly on the property as well. Don't get yourself stuck into a hole.

Joe Norman · Answer

I guess that depends on what you mean by waiting for the market to "cool off". If you think prices will actually fall then maybe there is an argument for waiting, but I haven't seen any indication that that will happen.

What is likely to happen is that the rate of appreciation will slow, but I do not anticipate it to turn negative (deflation).

What is certain to happen is that interest rates will go up over the next 12 months.

In the next twelve months it will not get cheaper (in terms of actual purchase price) or more affordable (in terms of monthly payment) to purchase real estate then it is right now.

Lawrence Briggs · Answer

If the numbers work, jump in now! Best of luck! I'm so glad I did not wait back in 2018. People were saying not to buy, but I jumped in because the numbers worked. Purchased a single family home for $68K in 2018 and now it's worth about $130K!

Ashley Cross · Answer

Buy real estate and wait. Don't wait to buy real estate! A househack is less risk and a great way for an unexperienced investor to get their feet wet. Go for it!

Theresa Harris · Answer

If you find a place you like and the numbers work, buy it.  Interest rates are going to go up and no one knows what the market will do.  Even if it does drop a bit, you are planning on holding it long term so who knows what the prices will be when you do sell.

If you are buying it with the intent of living in it for 5 years, then go for it.  Talk to a realtor who can help you find places.  Run the numbers to make sure they work with the duplex.

Bud Gaffney · Answer

Jump in now.

Lawrence Briggs · Answer

@Michael Blum , thank you so much! Yes, I am closing on my second property this week! By the end of this week, I will have two properties. The goal is a third by end of 2022.

Conner Olsen · Answer

@Sydney Wenger If the numbers work jump in now!

Michael Dumler · Answer

@Sydney Wenger 10k grant? Yes, jump in and take advantage now. Seems as if you have already gotten your ducks in a row by speaking with your lender. I would follow up to get pre-approved and determine how much you qualify for. Connect with a real estate agent that's niched in on 2-4 unit properties and start putting offers in. Hope this helps!

Michael Blum · Answer

@Lawrence Briggs Congrats on the second property! You are definitely on the role to get a 3rd. Who knows, maybe your goal might expand to a 4th. Let us know how it goes!

Jump in now, or wait till I save up some more money?

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