I'm looking to get involved in my first real estate purchase. I'm not sure which strategy is best and I'm hoping for some advice or maybe a path I hadn't considered.
I also need to purchase a primary residence leaving from the apartment. So my logic is as follows, please tell me what you think if you don't mind. Any tips are welcome.
Option #1: Buy a single family home. I've placed some offers on really good deals, but have been outbid multiple times thus far. Finding good deals within budget (I've only got 30k to put down) is rare and I don't have the capital to compete with other bidders. So the thought would be to buy the house and immediately begin to plan my next house purchase, this seems very time consuming however.
Option #2: Buy a condo. Provided I can find a cheap condo, I would be able to pay it off sooner than a house most likely and begin to work towards a down payment for a rental property. The lower price point of the condo might also work if I'm able to rent out the condo.
Option #3: Buy a 2-flat: I've taken a look at a few in my area, and only one so far has been economically feasible, but it had a noticeably sloping floor that scared me away from the deal. The others seem to break even or lose a few dollars per month when factoring for all the vacancies and upkeep. The deals are rare, but they could be found and have half my mortgage paid while building equity.
Option #4: ???
I know the post is long but I need some input from the pros! Thanks for taking the time to read. If you need any other financial info I'd be happy to share anything.
1, Figure out how much money you can spend, and how much purchase price you can afford. Then find your price range.
2, Learn how to analyze a income property, put in your living there as part of expense, and see if it will lead you to where you want to be.
3, If you can find a good discount property, you earn equity from day 1 and that will help you to get your goal faster.
4, I think a duplex is surely make more sense based on your goal. If you haven't found one yet, maybe keep looking around.
5, learning networking, doing.
thanks a lot for the quick response zack. my price at 20% down is 150k that I can spend which is not a lot for my area.
Does it make sense to buy a cheap condo with an FHA loan at 3.5% down, and have some cash still left over for the first imvesent property fund so I don't have to empty it completely. My concern is a bank will have issue with a second mortgage taking on all that debt and not having an acceptable DTI
I would go FHA with a four unit. You will need cash reserves for a 3 and 4 unit and an FHA of 3 months PITI. You can ask the seller to pay up to 3.5% sellers concessions. Hopefully your renters will more than pay your mortgage and you can cash flow while living for free.
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