Seeing advice on how, or if, I should start with Real State

San Diego, California
Starting Out
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Seeing advice on how, or if, I should start with Real State

Jonathan Camacho
Member since 2022 · 13 posts · 6 votes

Hello, 

I was hoping I can get some input from other people on whether or not I should invest in real state in my current situation. I was hoping I can tell you about myself and get some advice. My wife and I currently live in California and are renting a house here. We tried to buy our first home with a VA loan at the beginning of last year but got outbid every time and then rates started going up and we were priced out of the market. We are both professionals and make about 300K a year together. We had about 100K for a downpayment. After we didn't get a house and decided to sit on the sideline I started thinking about using the money we had (plus some that we have saved until now) and buy real state instead, long term rentals to be specific. I have been following BP for a while now, read some books on real state (local and out of state), and thought about my buy box. My question is, since we are renting, would it be better to buy a house now that rates are starting to come down? or should we go for it and make an investment purchase? considering that I think we would have to invest in out of state properties because California is just too expensive, and also, I believe we would have to buy something in this couple of months since when rates come down I believe prices will go up and we will get caught in bidding wars again. I should also mentioned that we have all of our paperwork in order, about 500 dollars a month in debt, and excellent credit scores.

Thank you in advance. I think I would mostly appreciate if I can get input on whether to put all our money to buy our primary residence and use that to buy real state, or just rent for now and use all of our money to buy real state.

Thank you, Jonathan

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y

@Jonathan Camacho

I would start with owning your own home first so you understand the maintenance, care and cost of home ownership.

Where I disagree with you is thinking home prices will shoot up when rates come down - there is really not a huge correlation as they did not drop substantially when rates went up. The macro issue at play is people make X and can spend 28-38% of income on buying a home. If wages have not gone up significantly how can prices? While there may be a FOMO bump when they get to a certain point rates have dropped for like 9 straight weeks and homes continue to sit longer and have prices come down.

Sorry for being long winded but I recommend owning first

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  • Jonathan Camacho
    OP
    Member since 2022 · 13 posts · 6 votes
    2y
    Quote from @Jake Baker:

    @Jonathan Camacho

    I am also in San Diego. I recommend buying a condo in 92101 (downtown) and getting a short-term rental license. Southern bankers Hill is part of this zip code as well. 

    There are still licenses available for this area and bankers hill and some parts of downtown have HOAs that allow STRs. 

    @Maxwell Ventura is an agent that helped me do this in Little Italy. 


     Hello Jake,

    Thank you for your thoughts, this is an interesting idea, I'll explore more and reach out if I think it is a possibility for me.

    Thank you!

    Jonathan

    1Reply
  • Timothy Howdeshell
    Investor · Fresno, CA · Member since 2016 · 222 posts · 237 votes
    2y
    Quote from @Jonathan Camacho:

    Hello, 

    I was hoping I can get some input from other people on whether or not I should invest in real state in my current situation. I was hoping I can tell you about myself and get some advice. My wife and I currently live in California and are renting a house here. We tried to buy our first home with a VA loan at the beginning of last year but got outbid every time and then rates started going up and we were priced out of the market. We are both professionals and make about 300K a year together. We had about 100K for a downpayment. After we didn't get a house and decided to sit on the sideline I started thinking about using the money we had (plus some that we have saved until now) and buy real state instead, long term rentals to be specific. I have been following BP for a while now, read some books on real state (local and out of state), and thought about my buy box. My question is, since we are renting, would it be better to buy a house now that rates are starting to come down? or should we go for it and make an investment purchase? considering that I think we would have to invest in out of state properties because California is just too expensive, and also, I believe we would have to buy something in this couple of months since when rates come down I believe prices will go up and we will get caught in bidding wars again. I should also mentioned that we have all of our paperwork in order, about 500 dollars a month in debt, and excellent credit scores.

    Thank you in advance. I think I would mostly appreciate if I can get input on whether to put all our money to buy our primary residence and use that to buy real state, or just rent for now and use all of our money to buy real state.

    Thank you, Jonathan

     Ooh, San Diego is tough for sure. I agree with @Nicholas L. that local house hacking is a great option. It's real estate investing on training wheels. I think you could get a 2-4 unit with your situation and 5% down. That way you only need to share walls, not living spaces with the kids.

    forget about renting vs. buying though. Nothing wrong with renting if it frees up your monthly cashflow to invest more aggressively. 

    1Reply
  • Robert Comstock
    Member since 2018 · 138 posts · 56 votes
    2y
    Quote from @Jonathan Camacho:

    Hello, 

    I was hoping I can get some input from other people on whether or not I should invest in real state in my current situation. I was hoping I can tell you about myself and get some advice. My wife and I currently live in California and are renting a house here. We tried to buy our first home with a VA loan at the beginning of last year but got outbid every time and then rates started going up and we were priced out of the market. We are both professionals and make about 300K a year together. We had about 100K for a downpayment. After we didn't get a house and decided to sit on the sideline I started thinking about using the money we had (plus some that we have saved until now) and buy real state instead, long term rentals to be specific. I have been following BP for a while now, read some books on real state (local and out of state), and thought about my buy box. My question is, since we are renting, would it be better to buy a house now that rates are starting to come down? or should we go for it and make an investment purchase? considering that I think we would have to invest in out of state properties because California is just too expensive, and also, I believe we would have to buy something in this couple of months since when rates come down I believe prices will go up and we will get caught in bidding wars again. I should also mentioned that we have all of our paperwork in order, about 500 dollars a month in debt, and excellent credit scores.

    Thank you in advance. I think I would mostly appreciate if I can get input on whether to put all our money to buy our primary residence and use that to buy real state, or just rent for now and use all of our money to buy real state.

    Thank you, Jonathan

    So....the question is what are you willing to sacrifice when it comes to where you live (esp in San Diego).  How long do you want be there. How Location stable is your career and job.  I would go look at the neighborhoods that your willing to live in (at the lowest end (A-B-C-D) and review what products they have and how are they priced.  Are you able to make your own home improvements, can you take on a deep fixer, will your marriage survive living in a construction zone for a year and a half if you need to go slow?  Do either you or your wife have any applicable skills? Your strategy will depend on what you want to end up with and how much pain (aka learning) are you willing to take to get it.  Do you want to manage a rental or worse (from a time standpoint) do you want to manage an ABNB/MIDTERM rental.  And WANT TO DO is not the same as COULD DO.  
    0Reply
  • Jonathan Camacho
    OP
    Member since 2022 · 13 posts · 6 votes
    2y

    Hello Robert,

    Thank you for your insightful reply. I agree that I need to evaluate our strategy before we jump into anything. I think one of my main problems is the uncertainty as a military family. A few days after posting this questions, and almost buying a house I would have been able to househack, my wife received orders to move to Japan for 3 years, throwing a wrench to all the research I had done until know. I need to re-evaluate our position now but what you say got me thinking a lot. I appreciate it!

    0Reply
  • Robert Comstock
    Member since 2018 · 138 posts · 56 votes
    2y
    Quote from @Jonathan Camacho:

    Hello Robert,

    Thank you for your insightful reply. I agree that I need to evaluate our strategy before we jump into anything. I think one of my main problems is the uncertainty as a military family. A few days after posting this questions, and almost buying a house I would have been able to househack, my wife received orders to move to Japan for 3 years, throwing a wrench to all the research I had done until know. I need to re-evaluate our position now but what you say got me thinking a lot. I appreciate it!

    Good luck.

    0Reply
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