I've heard different opinions on this. I'm 23 years old with a wife and 10 month old daugher. We just moved to the Houston, Texas area and I've recently just started making good money for the first time in my short adult life. I work in the door to door sales industry selling pest control. I'm in the position that I can start seriously considering real estate options now. Granted, by no means do I want to get over zealous and just jump straight in. Ive really wanted to buy my family a home (real estate is stupid cheap here) but I also would like to hear if anyone would say to keep renting and spend the money on investment real estate instead. We both hate renting for the simple fact that we prefer not to pay money for things we acquire no equity in and aren't fans of living by other people's rules. Nonetheless, we mainly want to just make the correct financial decisions because those will be better in the long run. Thank you in advance for your help.
Hi @Zach Simpson , here is another opinion... Buy a duplex or larger small multifamily property. This way you get into investing and you get your family a home. Best of both worlds. This is what I wished I would have done...
Ah! House hacking! This is just theoretical, but if that weren't a thing, what would you do?
@Zach Simpson whats your real estate goal? To own rentals, to flip, wholesale....sharpen your focus then ask your question again and it will give you clarity.
@Zach Simpson I would say to consider your goals. I know for my family, having a house to call our own was very important to my wife. We bought a personal home first 3 years ago, and a SFH and a duplex since then. If property is "stupid" cheap", maybe you could do both a personal home and rental property in the same year?
Read The Wealthy Renter. It is based on Canadian economics but very similar to may areas in US.
Your answer is in the book.
It really depends on what your goals are. Everyone is different. Think of where you want to be in 10 years. Do you want to replace your income or your wifes with real estate or are you just looking for some side income? What's the magical number a year where you say ok that's it I am making enough where I quit my full time job?
Then you can decide if you want to do SFH or Multifamily. Both will get you there, but you may get there a little faster with Multifamily. There is nothing wrong with buying a SFH to start live in a year or two then rent it out. Or buying a Multifamily and living in 1 of the units.
I would recommend buying a multi-unit. I personally bought a duplex because like you I didn't want to be putting money into someone else's pocket. So now, i'm able to learn about investing and have my mortgage paid for. The best part is that if you get to chose who you live next to. So no more loud annoying people at all hours of the night! And if for whatever reason you happen to lose your job or your wife does, your mortgage will be something you won't have to worry about as much because it will be paid for by the tenant. It can help lessen the blow of something sudden like that.
That will help you get your feet wet without over extending yourself in any way. Then when you do some more research and learning and you feel ready you'll have a good base of knowledge and some basic experience with it. Just my thoughts.
Rental first. Reason being that once you purchase a primary home suddentl6kife happens and now you need a new car or etc. If you rent for 2-4 more years and buy 2 rentals during that time your primary residence expenses could be covered completely and your DTI will be in a better place since you'll have rental history as assets going for you.
Secondary point is you can have more time to pick a place for your children to go to school. Especially since they won't be in real school until age 5 anyway.
Rent Rent Rent.
I have seen it said already but, I will repeat it. It depends on your goals. What do you want out of your capital?
My wife and I rent with 3 roommates. our total rent is 675. Instead of dropping the money for a down payment in our expensive market, we decided to buy rentals with our capital.
Instead of owning a very marginal/below performing asset (Your own home). You leveraged that capital to earn 8-12% cash on cash returns plus plenty of tax benefits.
After several years, refi out tax free and take that money and use for your own home.
Wow! I am new to this and I am so loving this forum. I had the same question but reading rich dad poor dad answered this question...rental first until there’s enough cash flow to buy a house. Buying s house now will increase expense...
I will echo the other people.
Based on personal experience, If I knew then what I know now, I would have purchased a multifamily and house hacked it as my first investment.
@Zach Simpson . House hack buy a multifamily or duplex fha you get a place and then you also get tenants
I've thought of the same thing too. For myself I wanted that primary resident and suit it for my needs. But as I continue to immerse myself with RE, I've change my decision and invest in a multi-family property. That way I can qualify for a residential loan (down 3-5%) and live in one of the units for 12months. Then decides if I want to house-hack another multi-family or go after a primary residence. I choose this route so I can still make some passive income and then decide if the next property should be rental or primary residence.