First family home or real estate investment?

[Gladys Villa]

How did you all start in real estate? Did you buy your primary home plus house hacking it? Or bought a primary home and took out some cash from equity to buy a second home for investment? or let go of the primary home idea for the mean time and went straight to real estate investing? 

[Tim Ryan]

Quote from @William Hochstedler:

Quote from @Tim Ryan:

What did Kiyosaki say? Your home is a liability and an investment is an asset.

Interesting.  This is a mindset argument, not a financial one.  It falls apart completely if you think of yourself as as tenant and pay yourself rent (that you would otherwise be paying someone else).

https://www.richdad.com/your-house-is-not-an-asset

I prefer the quote from The Richest Man in Babylon, "Make of thy dwelling a profitable investment."  In other words, take advantage of all of the benefits granted to home owners including lending, zoning, and taxes.  But treat it like an investment.  House hacking is just planning to repeat this process.

Also, learning home ownership on your own house is much more forgiving.  Houses are complex systems where lots of stuff can go wrong and there are lots of opportunities for improvement.  Experiencing these first hand in your own home provides greater flexibility while you figure this whole racket out.

Thirty years ago, I was fascinated by real estate opportunities in an emerging market (Brooklyn) and spent lots of time looking at cool warehouse space in places that are now 30-50 X the price.  But I never acted because I didn't have the money, knowledge or confidence to pull the trigger.  It was only after I got to Utah and purchased my primary residence (and got a real estate license) that it all started to click.  I had to have the visceral experience of committing to a 30 year obligation was 5 times my annual salary and then watch it work out relatively risk free (because I have to live somewhere) to feel comfortable making multiple six-figure commitments.  So I advocate home ownership as the first step.

The most important thing is action.  The best time to buy real estate (and plant trees) is 20 years ago.  The second best time is today.

Two schools of thought.  The point I want to make is this. Society for decades has said, "of course buy your primary as a first step". I'm saying that's not for everyone and I'm thinking more and more people should think long and hard about the possibility of owning rentals first. Either way that first purchase is difficult.

I bought a home for my family years before I ever thought about investing. But here's a story I love to tell.

I bought a 42-Unit Apartment Complex in Chattanooga a number of years ago.  I set out to hire onsite managers.  A younger couple replied and I hired them and they moved into Unit 18.  They were good managers. About a year in they asked for my advice about them buying a house. I recommended they buy investments first. I truly didn't mind if they had bought a home as I would have let them manage remotely. But I was telling what I would do in their situation.

Long story short, they ended up buying two duplexes. Once they got pregnant with twins they decided to move on from the managing and they bought their primary home.

I visited them and saw their house.  At this visit they thanked me profusely saying all of their friends were very stressed for years trying to save for a house, get financing, and making those mortgage payments.  They told me they had little stress at this point, and by the time they were ready to buy the bankers used the income from the rentals, the process was easier, and they got a much better house than they ever thought.

A success in reverse order (but why reverse? who says?)

How about this:  Let's make "Rental Property Ownership" the New American Dream!