What would you do for your first purchase?

Question

Goals: My short term goal is to buy a 2-4 bedroom house/ townhouse, rent out as many rooms as I can while living in it. Eventually I hope to save up enough money, that I can rent out house #1 and purchase house #2, rinse and repeat until I have a good sized portfolio.

Market: I'm located in Flagstaff, AZ. First time homes/ townhomes are ~225 and up and there are not a ton of decent places I can afford. There are a few that pop up occasionally, but they go quickly. Single rooms rent for ~600-800/ month, a 3 bedroom house/ townhome can go for ~1800-2500.

Question:

Which scenario will most likely work better for me in the long run? Purchasing a 4 bed at my max approval and rent out 3 rooms, or purchasing a 2 bed below my approval amount, rent out 1 room, but have a jump start on my next down payment.

Please share any other suggestions/ advice/ stories on house hacking you have :)

Logan Graham · Answer

What I would do is buy the cheaper house and rent it out and start looking for the other house soon after to keep growing your portfolio.

1. This will help you get your feet wet with having a tenant and understand how everything works

2. I think in the long term you will be better off buy more houses earlier and then holding them for a longer period of time

3. If you ever want to rent out the whole house I have found it easier to rent 2-3 bedrooms because I have a better demand for that. However, that depends on your market though it could be different than mine make sure you look into that