What are my options?

[Kyle Schellhammer]

My goal is to get my first home this year. I currently rent and am looking for something that I can either a) House-hack or b) turn into a rental after a year or so and launch my investment portfolio.

I am currently employed full-time and am also a newly licensed real estate agent. I have no debt, approximately $5k in the bank and a credit score sitting around 800 (+/- 15 points, depending on the day).

For those who are experienced, should I wait until I have more of a down payment? Or, are there options available that maybe I am unaware of? I would like to hear your thoughts/ideas on a strategy to make this happen! 

Thank you!

[Kevin Sobilo]

@Kyle Schellhammer, a few thoughts:

1. Plan for the worst and work/hope for the best! When you are investing, its easy to think about the results you wish for, but sit down and identify realistic situations you will need to deal with along the way and be sure you are prepared to deal with and overcome them. 

2. To add onto #1, you have $5k saved. Assuming you put all of that into closing on the property, would you be able to carry the house with your income alone if a tenant stops paying? If a tenant stopped paying and it took you 4-6 months to get them out, prepare the place and put a new tenant in place could you cope with that?

3. Would you be able to handle significant tenant caused damage in addition to an eviction in #2? 

4. Maybe you have enough income to carry you through, but many people don't have high enough income to deal with those issues. 

Maybe you have a 401k that you could take a loan from in a pinch. That could act as your "emergency reserve" money initially. 

Or maybe you have some other asset you could leverage if the need arose. 

5. Unless you are ready to deal with the difficult things such as #1-3, I don't think now is the right time to buy yet. 

6. I would focus on building savings for a while yet!

7. Since you have the discipline to have great credit and no debt, you might also want to have enough open credit cards with good rewards programs. You could be running all your expenses through cards to maximize the payback from those rewards. 

Also, if you ever need to deal with #1-3, those lines of credit can be a resource to deal with those as well. I recommend this ONLY because you have the discipline to be debt free and have great credit already.