Owning an investment property before your own home

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Owning an investment property before your own home

Gabriel E. Martinez
Investor · FL · Member since 2020 · 7 posts · 1 vote

I am an renter, and I am in a hurry to start using real estate as an investment. I think I have enough savings to buy a small place, but nothing as nice and as big as where we live. (Actually, this is where we have gotten stuck before:  the up-front expenses to get into a house/neighborhood of our preference).

I would love to hear ideas and experiences about anyone who started their investment journey before landing on a house to call home. Also, those who are shrewd with money, do y'all think this could make financial sense?

This would be a "buy and hold" for me, whereas I plan on moving out of our current residence within 5 years.

Thank you very much for your time!

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Adam TafelBusiness Member
Real Estate Agent · St. Paul, MN · Member since 2017 · 592 posts · 403 votes
6y

@Gabriel E. Martinez - welcome to BP! That's a good midset, delayed gratification is what it's all about. Buy a few income-producing assets before upgrading your personal home. However, you'll probably want to take advantage of owner-occupant financing. I recommend starting out by occupying a 2-4 unit property for a year, then moving into your next investment purchase for another year. 

It's inconvenient to move a few times, but it makes the most financial sense. You can acquire multiple investments for 3.5-5% down, rather than 25% payment on an investment loan. 

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  • Adam TafelBusiness Member
    Real Estate Agent · St. Paul, MN · Member since 2017 · 592 posts · 403 votes
    6y

    @Gabriel E. Martinez - welcome to BP! That's a good midset, delayed gratification is what it's all about. Buy a few income-producing assets before upgrading your personal home. However, you'll probably want to take advantage of owner-occupant financing. I recommend starting out by occupying a 2-4 unit property for a year, then moving into your next investment purchase for another year. 

    It's inconvenient to move a few times, but it makes the most financial sense. You can acquire multiple investments for 3.5-5% down, rather than 25% payment on an investment loan. 

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  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    Gabriel,

    I agree with @Adam Tafel - you have a great mindset!

    As long as you buy a property that you plan to turn into a cash flow producing asset, you're good! You can read up on house-hacking and the use of low-down payment options for owner-occupied homes. 

    Best of luck!

    [email protected]832-770-7090
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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    6y

    Remember that any asset is potentially a live-in. Maybe you are renting and you buy an investment property and then in a year, the tenant leaves and you decide to move in. Win-win. Maybe that happens later. One of the best things about growing a hold portfolio is that if something goes haywire in your life (job loss, etc.), you have assets you can move into if tenants are leaving. Or you do it for a year to offset costs and house hack. You don't have to house hack off the bat, you can delay it as well. I don't think it's a problem to be renting and buy for investment as long as you can do the downpayment, which of course is more than a live-in.

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  • Gabriel E. Martinez
    OP
    Investor · FL · Member since 2020 · 7 posts · 1 vote
    6y

    Thank you @Adam Tafel @Cameron Tope @Jonathan Greene for taking the time to answer my question! It is encouraging... Plus, you gave me a few more things to consider. I will look/read more about "house-hacking".

    This is all new to me!

    Thank you so much!

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