Hey guys I'm 19 years old and work for a Real estate property management company in San Antonio. I make 25k a year and have a credit score of 720-725 depending on what score is used. I need to get a new car because my old one is nickle and diming me and the repairs cost more than the value of the car. I bought this car used for cash a while back so I wasn't making monthly payments on it and didn't have a car loan. I would like to take over the payments for the vehicle that my Dad drives (he has 9k still owed on it and it is worth about 14k) and put it in my name to build my credit. I would like to build my credit as much as possible since I am also looking to purchase a property this summer or fall 2018 and house hack. I've heard two different sides to the issue of buying a car or house first. Some say that the car should wait because then I won't be able to get a decent house because I will have more debt. Others say that the debt and consistent payments will show mortgage lenders I am responsible and can pay important payments every month with no issue. I know I'm young and don't make much so I don't have a lot going for me and I realize this but I would like to get started in real estate ASAP. With this in mind I am trying to be very careful and not do things that will hinder me being able to get my first property and house hack and begin my real estate journey to freedom. What do you guys/gals think and why? Any and all comments or opinions are appreciated thank you!

At this stage in your life do not buy a car, or any large item, that you can not pay cash for. You only use credit when you can pay it off as soon as the bills come in. Clear all bad debt first and begin to save diligently to invest. You need to get established, improve your income, possibly with a second job, learn to live frugally, save every penny possible for the future, put aside your ASAP investing plans and begin to associate with the right people. What you are working toward is a life plan not a today plan, life is not a race. You must plan and save till the time is right based on your financial readiness. All too many beginners want to rush into what is a long slow race to the finish and will burn themselves out before they even begin.

Buy an income property with the cash flow enough to buy the car. When the car is paid off, you have that as income to you....and your tenants will be buying your property and your car for you.

I'm 34 and well established, own a couple renal properties, multiple flows of income and can easily afford a nice new car. and yet I drive a $3500, 15 year old beater. what kind of econ math are you doing where you think buying something that depreciates so rapidly is a good idea? Stop using emotions to make financial decisions. Go get something dirt cheap off craigslist. nickels and dimes don't add up to tens of thousands. here's my advice, spend 5% of your net worth on a car.

Michael, at 19 years old, just keep in mind that the decisions you make now will be the foundation of your future. Small decisions now will make huge directional changes over the course of the coming years. Think with the end goal in mind! I am still driving the used pickup I bought when I was making $20K/yr. Now it has hail damage and looks like a real gem :) At the time, buying a used car for cash was necessity. Now that I save in a month what I used to make in a year, it's become more apparent that capital is the tide that will raise your business. Nickel and diming you every month is still less than $450 a month in payments. Credit will come without it. That represents a huge percentage of your income and saving ability. I say skip the car, you don't need it. Reach out if you need any input!

Hey @Michael Guzik, If you haven't already, I suggest building your personal financial statement. Lay everything out in order to fully understand your income, expenses, assets, debt, savings rate etc. This gives you better visibility into your financial runway, and will allow you to run "what-if" scenarios to see how decisions now will impact you within the next few years. Then you can perform your own analysis and see what getting the car now will do to your financial situation over the course of the next year or two. Numbers never lie, so I say lay out the data and see what it tells you. Dan

Agree with the above comments. Why not just keep the car in dad's name to keep your DTI down. I would get a credit card and connect it with a service like Debitize which will allow you to use your credit card as a debit card while keeping it paid off at the end of the month. This should help with keeping an established credit history and improving your already good credit score.

buy a used truck for 4 grand. My friend did that, got him a 2002 Ford F-150. Also if you think about going to college I’d do figure out if you want to do that or not before getting into REI. No matter what anyone tells you this business takes money. The more you have the easier it is.

Buy a car or house first?

Sung Park

Rental Property Investor · Philadelphia, PA · Member since 2016 · 191 posts · 165 votes

8y

Michael Guzik Love how people start recommending you all sorts of advice without a clue as to your overall situation. From what it sounds like, you need a car for work. If you can live without a car, that’d be the best situation to reduce expenses and save faster. If you absolutely need it, what kind of car? Depends on what you need for work, how reliable it is, and how you’d like to use the car down the line for real estate. How much to spend? Obviously as little as possible to meet your minimum needs, not your wants. 4K is not a lot and 25k is really low income. Shawn Q. Is right, you need more income. If you want to get into REI, the more money you can earn, the better. If a cheap car can help you get a second job, that might be a good way to approach this purchase.

Buy a car or house first?

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