Buy a car or house first?

87 Replies

@Michael Guzik I bought my first and only car around your age and making a similar amount of money.

If you like the rehabbing end of things you will definitely want a truck or at least a hatchback (USED & RELIABLE). If you buy a place and your current car breaks down for good, you will be in a bad spot. You can bike or bus to work grocery store etc, but you can't haul windows or hardiboard or cases of flooring!

Have you talked to a lender to know what you can qualify for? I'm in an expensive area where $25k salary could not get you a property that's FHA-approved, but maybe prices are a lot lower in your market! It might be worthwhile to focus on income if you find yourself needing a higher lending limit.

@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.

@Rachel Luoto Thank you for the advice! I have been in contact with a mortgage broker who seems very honest and is actually willing to work with me. At my age everyone ignores me or treats me like crap so those that actually listen and help are valuable to me. He said that adding a car would help me get my third line of credit and help boost my probability of having an amazing credit and qualifying for the FHA loan. He compared what I would be applying for to food stamps for those who can't really afford groceries. San Antonio is not a very expensive market but it isn't a cheap market either. Sadly I work 25-35 minutes for work so I can't bike. My brother does have a truck so I am covered on that end of the rehab part.

@Sung Park Thank you for your advice and for trying to understand the situation before replying I really do appreciate that! You are 100% right I really do need one for work since it is a good 25-35 minutes away. You are also right about the low income and that's why I am looking into careers and things to get into that will provide me with a solid income to then turn around and use for real estate investing. My problem now what career or path to take to accomplish this.

Originally posted by @Michael Guzik :

@Alexander Felice The truth hurts thanks for the input! I'm definitely strongly considering an older car after reading all these comments.

 It does hurt, and it doesn't hurt less as you get older LOL

Look, you're young, you're going to watch all your friends make terrible financial decisions that will plague them for decades to come. Nearly everyone you know is going to live week-to-week for their entire lives. As they say in the army "Do the hard right, over the easy wrong"

Living with a dumpy car is a hard sacrifice, but it's the right financial move.

@Alexander Felice Darn I thought it wouldn't hurt anymore after I'm an adult lol!! You are 200% right I already see my old friends and classmates doing stuff like that. Thanks for the laugh and the advice!

Here’s my naive 22 year old take buttt I would say buy whichever asset flows the most cash. Is your car going to enable you at add more value o your month than 450 dollars? I don’t know how you utilize your vehicle. Will your new home provide you with positive cash flow? Renting? There are obviously risks associated with both sooo hmmmm...


@Michael Guzik  Do you REALLY want to save money  for real estate ?  I mean lots of it ? 

Stay away from the females , they are more expensive than ANY car or truck . 

Originally posted by @Matthew Paul :

@Michael Guzik  Do you REALLY want to save money  for real estate ?  I mean lots of it ? 

Stay away from the females , they are more expensive than ANY car or truck . 

I think you are dating the wrong kinda women.

Joking aside, I agree with the others about not taking over the lease.  $450/month is a lot.  If you need to build credit, get a credit card and make sure that you pay it off every month.  

New cars or worse scams like JD Byrider (Seriously stay as far away from those kinda dealers as possible!) are one of the things that financially cripple young people more than anything else.  My used car is about to turn 10, sure I spend money on it here and there, but now I know it well enough that I can buy a replacement part and save $200 if I do something myself, and I am no mechanic.

Mike, listen to Caleb. Your 19. What about college or a career in the military? Forget the car and real estate for now. Join the US Military (Enlisted or Officer). Apply for a job rating that has something to do with what you want to do after your service. You can get a free education while on active duty, and you will qualify for the Post 911 GI bill if you decide to go to school after the completion of your service. Invest in a nice car you intend to keep for at least 15 years or 200k miles or more and have it paid off before getting out the service. You will have your military connections, your travel experience, money for college, reliable paid off transportation, and the pride and benefits that come with serving your country. Basically, invest in yourself in multiple areas other than just chasing real estate. At 19 you never know, your true love of profession might be in a different field all together. Grow yourself and learn more about yourself in the process. 

Best regards,


@Tom Conant That is a great point thanks for the perspective! It will definitely be a safe and comfortable ride and will give me money through that but it will not cash flow like the house would. However if I were to House hack and find a great deal the house wouldn't really cash flow exactly I would just be living rent free. It is really hard to find one that would kill both of those birds with one stone!

Originally posted by @Matthew Paul :

@Michael Guzik  Do you REALLY want to save money  for real estate ?  I mean lots of it ? 

Stay away from the females , they are more expensive than ANY car or truck . 

Haha you aren't lying though most of them are!

@Jarrod Kohl You are 100% right man it is really sad how many people there are out there that take advantage of others. I'm definitely starting to lean towards the used car after you guys input. Thank you for the advice!

@Steve Crisp Thanks for the different perspective Steve! I have honestly really never considered the military as an option.... I just really am ignorant and naive to what I would do or apply for in there. I am definitely in great physical shape because I always work out so I think I would fit in!

Hey Michael, I think you get the idea. Plus I know the house hack will give you WAY more satisfaction and pride. Looks like your going to do well with your life!

@Michael Guzik people with lower credit scores than that can get first time home buyer, so I wouldn't worry so much about your credit score. Don't buy your dads car for $9000. Find a used car for $4000. Buy something very common like a Camery, so the parts are easy to get and it is easy to repair. Four doors and boring helps with the insurance cost too.

Great approach working for a property management company. Pay isn't great at $25K, but you can learn a ton and move up the ladder. Then transition into your own properties and business over time.

@Michael Guzik 450 a month is a lot.

I have never had a car payment and never will. I’ve also only paid over $550 for rent for one year of my life.

Save money and househack first, then you can save up and buy a car cash.

Starting to use debt to buy liabilities is a slippery slope...

Mi Michael,
First off bravo for thinking this way at 19, Unfortunately it’s very rare. I know you said you have a good score but if there’s no depth to your credit the score doesn’t mean much to lenders. Most of the time lenders are going to want to see 3 pieces of credit and one of those installment credit, like a car loan. $450 a month seems like a big payment based on your income, and if you make your dads payments it won’t do anything to build your own credit. Have you thought about finding a 3-4 year old Kia or something you can get for under 10k and build your credit on a $200 payment? Keep up the good work and either way you go save as much as you can. You’ll be a Property guru soon enough!

Buy a secured credit card for $500 or open one and pay it off each month to build credit.

You don’t need a car to build credit, just a credit card with your Netflix bill on it.

Looks like most people are advocating to get a reasonably priced car at 4K. Generally I agree to get a low price car you can afford but to play devils advocate and to give you food for thought it doesn’t make any sense to go buy another beater car that will need a repair every 3 weeks and will continue to nickel and dime you. It might make more sense to pay a little more for a car and not have to worry about repairs. Recuperate money in other areas. Move back in with the parents if applicable. Get a side job or higher paying job.


Firstly, you deserve a lot of credit for smartly thinking so far forward with your interest in real estate. I just turned thirty and am essentially in the same place as yourself in terms of deciding to invest. I wish I had an 11 year head start!

I have several things to add:

Hold off on the car, 450 is manageable but houses don’t nickel and dime you, they fifty and hundred you so to speak. If possible find a cheap grandpa car or truck, they are usually babied and meticulously maintained. It may not be sexy but it will get you down the road for a while. I have an old Prius and while it is bland and slow and totally uncool it will haul a good amount of stuff efficiently. This matters because you will do a lot of driving while finding then fixing your investment.

Regarding the military, I am currently Air Force reserve and also spent 4 years active. You will have many great benefits from serving, including a va mortgage, reliable paycheck and excellent health insurance. Additionally the friends you make are the best people you’ll ever know! It will be hard to invest while on active duty, 12 hour plus shifts are the norm and you may move around often or be tdy constantly. 

I chose to be a jet mechanic when I joined at 19 and that job has provided me with the ability to have a good life both military and civilian.

I suggest focusing on real estate for now, see if you’re ready for the analysis and negotiating. The military is a big party so waiting to be 21 may be advantageous.

Either way, you’re doing the smart thing by asking and reading and responding! Good luck!

Think like an investor...not a home owner.

Homeowner mentality will tell you to take what you have and live within your means.  Investor mentality will tell you to take what you have and expand your means, and within that expansion will be the money to pay for the same things you would have spent money on if you thought like a homeowner.

1 - Use your current means to buy a rental property to expand your means

2 - Use the cash flow (expanded means) to buy the car

3 - Let the Tenant buy your rental for you...and the car.

4 - When the car is paid off, you still have that expanded means available for other bills or investment (more expanded means)

5 - When the tenant pays off your property, you have more cash flow (expanded means again)

If you spend the money on a car, it is a one time use.  Spend it and it's gone.

If you use the money for the rental property, it comes back to you...over and over again.

Think like an investor...not a home owner.

LOL This reminds of the old saying that you can sleep in your car but you can't drive a house.

Just an aside, but are you driving a Samurai?

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