Should I live in a cheap house while I try my hand at real estate

7 Replies

I am trying to decide if it is smarter to buy a cheaper house vs a more expensive one while I try to start real estate investing.  The cheaper house will have a larger up front cost due to maintenance and renovations. My wife and I make about 160k a year. No debts. The cheaper house will carry a mortgage of 1800/month and the more expensive one is 2300/month. The house that's 2300 per month is newer, in a nicer neighborhood, and more spacious. It is a longer term house and  we love the newer house. 

Will spending more on this home bite me in the butt later when I try to get loans for investing? Should I choose the cheaper house while I spend a few years trying to start real estate investing. 

Why not just buy a duplex (or tri/quad) and live in one side and rent out the other? You can get some experience that way while still qualifying for a conventional mortgage on a primary residence.

@Kevin Nguyen

Real estate is about location, location, location. What may seem like a cheaper house now may be more "expensive" in a few years if/when you cannot sell what you bought it for. 

Since it's going to be your primary residence, I suggest going with the more desirable house. I would assume it's in a better location and your potential for appreciation may be greater. 

On the other hand, some people may suggest going with the cheaper house, and use the savings to invest or buy another house. 

@Andre P. made a good suggestion. Search "house hacking" on BP, it could be a very viable option to start your real estate journey.

Good luck! 

@andrep 

Ideally I would do that however my wife is averse to the idea. She prefers a SFH and then we could rent out a couple rooms to our friends.

@ChristT 

The more expensive house is in a slightly better location.  It is a newer neighborhood with more amenities and there will be a direct freeway connection to the neighborhood in a few years.  From an educated guess I could see the freeway boosting the price of the more expensive house.

I guess if I run into problems with conventional loan approval (cuz  of my bigger mortgage) I'll just have to try to find money elsewhere or get creative.  Even in the cheap house I am sure eventually I will run into problems with getting a conventional loan.  

No do not get a SFH.

Get a duplex/triplex. Renting rooms is a bad idea. You'd much rather have them in their own space on a lease, and not to family or friends.


If you are still adamant at getting a SFH. I recommend buying the cheapest most below your means house out there that your wife will put up with living in.

Then buy a duplex/tri/quad with your remaining and future capital.

But this is uncessary.

What do you mean by this is unnecessary?

I'll give the multi-unit properties a second thought with my wife.  A lot of the multi-units in the good neighborhoods are 450k plus and I am afraid that I'd be getting myself into a lot in the beginning.   Nevertheless I'll keep my eyes open.  

I mean buying a SFH period. Its much more financially efficient to buy a duplex. And start your investment career there.

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