Beginner in Real Estate Investment while Paying Own Rent

15 Replies

My name is Sean and I've been interested in real estate investment for a few years now. I am just over a year out of college and began researching real estate and how the investment process works a couple of weeks ago (the goal is to buy my first property next year -- 2021). 

Currently, I am renting an apartment in the Buckhead area of Atlanta, GA and I really enjoy this location and the amenities/community of the building. It seems like the only way I'll be able to afford my first investment property is if I took my monthly rent and put it towards a "house hacking" property where I would basically be living with a random person (which also makes me nervous). 

I'm wondering if this is pretty much my only option if I want to move forward with real estate investing or if anyone has some tips about how to have the best of both worlds? Has anyone gotten into real estate investment WHILE paying their own rent somewhere else; does this sound like a dumb idea; all suggestions are welcome? 

@Suzanne Sevier - the last half of my post is the question. I'm looking for advice and opinions on whether getting into investment while I'm currently having to pay rent to someone else sounds doable or like a bad idea. House hacking seems like the best first step but giving up my nice apartment locations and amenities and having to live with someone I probably don't know makes me a bit nervous so this is what is holding me back.

@Sean Ramuchak   Why not look at a duplex or a place with a suite?  You could live in one of the units and rent the other-you'd each have your own place, so no sharing.  Another option, assuming house prices are too high where you are to buy a stand alone rental, is to look for a rental in a nearby town where prices are cheaper.

@Sean Ramuchak I would suggest only moving forward if you can afford it. House hacking is great, but realize you are a landlord and subject to landlord tenant law. Always be able to pay the entire rent on your own and have money for reserves. If things aren’t fixed tenants can legally withhold rent or even sue. If they stop paying you’ll have to pay to evict them all the while having to pay your mortgage on-time all things you don’t have to worry about as a renter. Real estate is a great wealth generation tool, just make sure you aren’t taking too great of a risk.

@Rashaun Forrest if you choose to rent and buy a separate investment property is completely fine if you are unwilling to move to a different area. Again just make sure you can afford all of your expenses, plus the investment property expenses plus reserves. The more property you accumulate the easier this gets as your income increases. Just make sure you are in full command of your finances and you know you can afford to pay all the bills if you have a renter or not.

@Theresa Harris - I have considered the duplex option and that would actually be ideal, I'm just not sure if I'll be able to find that in the area of Atlanta I really want to stay in. I'm keeping all option open though and I'll be exploring options in the suburbs as well. Thanks!

@Rashaun Forrest - I definitely get what you mean by making sure I am in control of the property and can afford all of my expenses without relying on income from a tenant or other means. I was really looking for someone to tell me I wouldn't be breaking some golden rule IF I did choose to buy an investment property while still renting my own apartment haha. Thanks for the feedback! 

@Sean Ramuchak   It isn't unheard of for people to buy a rental while they still rent.  If you live in an expensive area it can be cheaper to rent and buy a rental in a less expensive area.

As for locations, you could buy a duplex in a good area-maybe not where you want to live forever, but could live for 1-2 years.  This would let you get in with 5% down.  After 1-2 years, you move out and rent both sides of the duplex.

@Sean Ramuchak Lots to unpack here so I'll try to get straight to the point. First and foremost, I think you need to reframe your mindset and continue to educate yourself. BiggerPockets is a great place to do this and this community/website has tons of resources at your finger tips. Start by asking yourself why you want to invest and what your end goal is. Once you've established that, start analyzing deals and taking action to move towards your goals. Don't get stuck analyzing'll need to dive in at some point. 

When I started investing, I was living with my Mom at 27 years old. My brother and I shared a 200 sqft room above the garage. Rent was cheap, but it was somewhat "uncomfortable". My brother and I got along, but my social life suffered. I had to give up privacy, space and special amenities in order to save money. Not to mention going against the grain of social conditioning that we feel like we have to live up to. Society thinks we should have a big house, family, two dogs and a white picket fence by our late twenties. Since I made the decision to avoid all those things and make some small sacrifices, I was able to buy my first two properties within a year and half before moving out of my Mom's house. 

My point with telling you this story is to let you know that you'll have to make sacrifices or live just a little differently than what you're use to. I'm not advising moving back in with your Mom, but evaluate your current living situation to see if you can make changes to meet your goals of buying a house hack deal within the next year. If your current rent allows you to save enough money on paper to buy a house next year, then that's awesome. But write out a plan to see if you can make the numbers work.If they don't work, then you'll need to figure out a way to make it happen by reducing expenses and adopting a minimalist lifestyle. If you happen to land a higher paying job that will help, but focus on what you can control and execute on those things to meet your goals. 

Kind of a long post, but I thought it was necessary to share. Best of luck to you!   

@John Lyszczyk - thanks for the tips! I am actually planning to spend the rest of this year through December studying and forming a better understanding of the industry and terms, etc. Around January of next year is when I will seriously start considering the properties that I am analyzing; this will allow me some extra time to save money for a down payment and also re-evaluate my current living situation! 

Originally posted by @Sean Ramuchak :

@John Lyszczyk - thanks for the tips! I am actually planning to spend the rest of this year through December studying and forming a better understanding of the industry and terms, etc. Around January of next year is when I will seriously start considering the properties that I am analyzing; this will allow me some extra time to save money for a down payment and also re-evaluate my current living situation! 

Good stuff man! Keep educating yourself and start developing that game plan. Best of luck!


Do you have to be in Buckhead. Out of Buckhead you'll have more options. What's the area you like? What's your budget? Have you talk to a lender yet? 

@Sean Ramuchak

We bought our first 3 or 4 SFH's and rented them out while we ourselves, a family of 4, lived in an apartment.

We didnt mean to do it that way exactly, but it worked out and im glad it did. We moved to a new area for work and wanted to rent while we got to know the area. When we started looking at housing we found so many properties that were great and so cheap...just not exactly what we wanted to live in personally. So we fixed them up as rentals. It actually allowed us to build some sweat equity and additional income that ultimately allowed us to buy more house than we ever thought we could less than 6 months later. That was 3 years ago and we now own about 20 properties at any one time (we buy and hold and also flip so it varies).

There is no "right way" I think a lot of it depends on your goals, what your opportunities are and what you're willing to sacrifice to make it happen

Hey @Sean Ramuchak .  There are so many paths you can take.  I'm glad you are going to learn more about the industry before taking the plunge.  I would also suggest beginning with a duplex or other small multifamily residence, giving you the option of living in one side while earning income on the other.  One of the advantages to this strategy is the opportunity for funding.  You can secure a conventional loan, possibly a reno loan to help you make needed updates, with a low down payment if you owner occupy.  Sometimes that down payment is as low as 3% (I'm no mortgage expert so please talk to someone with more knowledge before you make a decision)!  I don't know about you, but 3% sounds a lot better than 20%+ that would be required on an investment property if you're buying to rent it out without owner occupying it.  In addition to that, if you owner occupy one unit, a huge portion of your projected gross rental income will be used to help qualify you for the loan to begin with!  

However, knowing the Atlanta market well, I can tell you small mutlifamilies are not easy to find. They are either in need of a lot of work or have already been updated and are at the AVR price point, which is great if that's what you want.  So if any of that sounds good to you, find a REALTOR you trust and get listings that match your criteria sent to you as soon as they hit the market. At the very least, you can analyze deals while you're learning about the local market.

Good luck!