Updated over 4 years ago on . Most recent reply
First time home purchase.
Hi all, I am 22 years old, graduating college this December. I am planning on being in my area (Central Illinois) for about another year and a half.
I love the idea of house-hacking (I will definitely be doing one). If I could get any insight I would greatly appreciate it. I currently rent for $450 per month with two roommates also paying the same. So, I know rent by the room is allowed in my area as this is a college town. As far as cash reserves after the purchase of the home, I am not quite sure what a good target number should be. The first home I purchase I do not plan on selling after I were to leave this area as renting to college students would be my exit strategy from the home. My problem arises in that I do not have a lot of cash saved up. Only a few thousand dollars.
I could most likely put some money down in a FHA loan and get a mortgage, however I worry that depleting my savings would put me at a high risk of not having cash for needed repairs should something serious need replaced. Does anyone know of a good target number to hit in reserves? Say you put $3500 down on a home for ~$120k how can I estimate the cash I need to keep in reserves for repairs? Does this soley depend on the state of the property or has someone developed a system to estimate what additional cash they would need per value of home?
There are many questions throughout my post here, so I appreciate any responses at all. I have been listening to the Bigger Pockets money podcast and Bigger Pockets real estate podcast for the past year and a half, and I am ITCHING to buy my first home and start my real estate journey.
Thank you for taking the time to read my post! I have notifications on so I will do my best to respond to any and all responses!
Best,
Ethan