First Time Home Buyer Looking to Start Generational Wealth

[Rick Brink]

Hi everyone! I’m 32 now; Seeking advice here to hopefully retire my 9-5 by 45. I bought my first and current primary residence back in 2021 for $97,500 with a sweet interest rate of 2.75% in a small town a hour north of Indianapolis, Indiana. Realtor.com has the house’s estimated value at $153,000. With a 780+ credit score and only about 10k saved up; you’ve found me here in bigger pockets forums eager to learn and start my investment property portfolio. 

Do I buckle down and save more?
Is getting a HELOC on my primary a total no go?

Should I take another route?

I’m interested in multi family homes for now preferably in the surrounding areas.  

Any and all advice greatly appreciated!

Thanks for taking the time.

[Melissa Justice]

@Rick Brink,

Hey there! Love your ambition and the steps you’ve already taken. Buying your first property with that kind of interest rate is awesome, and you’re definitely in a great position to grow your portfolio.

Here’s a breakdown of your options--

1. Should You Save More?
While saving more will always help in the long run, you don't necessarily need to wait until you have a huge pile of cash to start investing, especially with your 780+ credit score. You could start using the current equity in your home to help finance your first investment property now.

2. Is a HELOC on Your Primary Residence a Total No-Go?
Not at all! A HELOC can be a smart way to tap into the equity of your primary home to fund an investment property, especially with your low-interest rate and strong credit. The key is:

* Don’t over-leverage: Only pull out what you can safely afford to repay while keeping your emergency funds intact.
* Have solid plan for the investment property, ensuring it generates enough cash flow to cover the new debt and costs.
* Understand the risks - if things go south, your home could be at risk since the HELOC is secured by your primary residence.

3. Consider Multifamily Homes
Multifamily properties are fantastic for cash flow and long-term wealth. Here’s why:

* You get multiple income streams from a single property.
* Your tenants help pay down your mortgage, allowing you to scale faster.
* FHA loans or conventional loans can help you finance up to a 4-unit property with low down payments (as low as 3.5% for FHA).

Look at 2-4 unit properties in areas with strong rental demand. You can live in one unit while renting out the others to cover your mortgage, reducing your personal living expenses.

Other Strategies You Could Explore:
*House Hacking: Buy a duplex or triplex, live in one unit, and rent out the others to cover the mortgage.
*Seller Financing: This is something worth exploring, especially in areas where properties may not be as competitive.
* Look for undervalued properties you can rehab for quick equity build-up (you mentioned surrounding areas, so local markets can offer opportunities).

You’ve got a solid foundation with great credit, equity, and ambition. A HELOC or using savings for a*multifamily investment could be a great first move. Focus on understanding the numbers - cash flow, repair costs, and appreciation - before jumping in.

If you're hesitant about using the HELOC, you could always partner with someone (maybe another investor in the area or a trusted friend) to pool funds, share risk, and scale faster.

You’re headed in the right direction and there’s a whole world of opportunity in multifamily investing. Don’t let fear stop you, and don’t feel like you need to wait until everything is perfect!

Excited to hear how your journey progresses. Feel free to ask more questions as you go! Always here to help.

Best of luck,

Melissa