Buying Primary Home vs First Investment

13 Replies

Good afternoon everyone and cheers from Phoenix, AZ! So over the last 6 months or so I have been debating on buying first home for family of continuing our rental and buy our first investment. A little backgroundI am FT Realtor and have been in the market since 2015. I've blessed enough to have sold 48 deals in my first 2 years and has given me a 6 fig income in 2016 and already in 2017. I have the chance to buy now come January, but torn between using the first buy as one for my family or using money toward flipping. I don't have the option to buy a 2/3/4 plex and live in one. Wife doesn't want that and I don't want that. So would you guys who did it over again for your first flip or buy a prime home first and the start flipping.

Current rent $950 a month and we live in uptown PHX which is a very desirable area with homes in mid 500s +. 

Mortgage est would be around $1500 and then I fig after buying. I would then start flipping. 

Any insight would be appreciated. 

Originally posted by @Phillip Gonzales :

Good afternoon everyone and cheers from Phoenix, AZ! So over the last 6 months or so I have been debating on buying first home for family of continuing our rental and buy our first investment. A little backgroundI am FT Realtor and have been in the market since 2015. I've blessed enough to have sold 48 deals in my first 2 years and has given me a 6 fig income in 2016 and already in 2017. I have the chance to buy now come January, but torn between using the first buy as one for my family or using money toward flipping. I don't have the option to buy a 2/3/4 plex and live in one. Wife doesn't want that and I don't want that. So would you guys who did it over again for your first flip or buy a prime home first and the start flipping.

Current rent $950 a month and we live in uptown PHX which is a very desirable area with homes in mid 500s +. 

Mortgage est would be around $1500 and then I fig after buying. I would then start flipping. 

Any insight would be appreciated. 

- You will not get first-time homebuyer goodies if you buy your primary residence after you own a residential investment property. 

- There are no first-time homebuyer goodies for investment properties, that I am aware of.

(These goodies are regional, I only know about California ones)

@Phillip Gonzales

As @Chris Mason mentioned, you'd lose out on 1st time homebuyer benefits by getting the rental 1st and the primary 2nd. Depends on how comfortable you are with renting and delaying the home purchase. I bought my first home last year and my mortgage is about $700 more a month than my rental, but I have no regrets as the home has made my wife and I very happy and comfortable. With home prices increasing and rates sure to follow at some point, it'd be prudent to buy in the winter vs next summer or spring as you already know.

With that being said, if I were in your shoes, I'd buy the primary and then flip. At least with that notion, you could take out a HELOC (if you buy right) and still have the best of both worlds. Not to mention, with a 6 figure income, an increase of $550 a month shouldn't set you back too much, although I have no idea about the rest of your bills or family situation so I won't assume anything. I'm looking to get a HELOC on my house at some point so maybe I'm a bit biased with my own strategy. If you have any questions, let me know. I'm glad to help.

Happy wife, happy life. I'd buy the primary first. Also, owning your home should help when it comes time to get loans on other properties/flips. Good luck!

Originally posted by @Frederick Kirk Wendel :

@Chris Mason How would this relate to FHA Refi?

or is First Time Buyer different.

FHA loans are not a first time homebuyer goodie.

Congrats on your success.  It sounds like you live in a great area for a pretty decent price.  Would you be looking at buying a half million dollar house?   I would definitely start investing my capital first(I’m a buy and hold guy).  I don’t know how old you are but this seems like a mistake with the older generation.  They couldn’t start investing because of a primary home purchase weighing down on them.  As a younger investor I don’t like the wait until I’m married, next year, etc. scenarios.  I want to make moves as I am able to while time is still on my side.

@Phillip Gonzales

Like everything else in life, you have to figure out what works best for you in your personal situation.  People can give advice to you, but they also don't have to deal with the consequences so take it with a grain of salt.

I can tell you what I have done personally, in order to offer a different perspective on the matter.  I'm recently married and the wife wants the "final home".  We sat down and went over numbers on what it would look like as well as a few different scenarios if we were to continue investing.  We ultimately decided to continue to grow our portfolio until we have kids that are old enough to go to school.  Once they start kindergarten or 1st grade, we will have the house with the white picket fence,  sun room and all the other crap that she has been dreaming about since she was a kid (I don't get emotional about homes so it's her choice lol happy wife happy life).  

I had 4 rentals when we got married and have since then purchased 3 more (doing out of state now).  I have a good 4 - 5 years to buy up all the rentals my little heart can handle, at which point we will pull equity back out and purchase our "dream home" for cash.  Until then, we live in an upscale area at an apartment that is older and the owner is OLD and doesn't raise the rents lol.  We pay $1,300 per month for a 2br 2ba, have a roommate paying $800 and save save save.  Comparable 2br 2ba in the area go for about $1,500 - $1,800 and a single family home across the street just sold for $700k.

It's actually pretty funny filling out rental applications and having them look at your income and credit.  They are always perplexed at seeing over a million dollars in mortgages and tons of rental income, but not owning a primary residence.  It's also fun going into the bank at the beginning of the month and turning in all your rents and then getting back a cashier's check for your own rent to turn in.  I was asked once if I was paying someone else's rent lol they assume when you are a landlord that you wouldn't rent anymore.  I let the math make my decisions for me (until I have kids of course!).

Originally posted by @Phillip Gonzales :

Good afternoon everyone and cheers from Phoenix, AZ! So over the last 6 months or so I have been debating on buying first home for family of continuing our rental and buy our first investment. A little backgroundI am FT Realtor and have been in the market since 2015. I've blessed enough to have sold 48 deals in my first 2 years and has given me a 6 fig income in 2016 and already in 2017. I have the chance to buy now come January, but torn between using the first buy as one for my family or using money toward flipping. I don't have the option to buy a 2/3/4 plex and live in one. Wife doesn't want that and I don't want that. So would you guys who did it over again for your first flip or buy a prime home first and the start flipping.

Current rent $950 a month and we live in uptown PHX which is a very desirable area with homes in mid 500s +. 

Mortgage est would be around $1500 and then I fig after buying. I would then start flipping. 

Any insight would be appreciated. 

 $950 a month to live in a very desirable area and you are even considering buying a primary residence.......lol

If I was in your shoes, I would buy investment properties first. Locking yourself down with a home that will likely have a much higher payment than where you rent doesn't seem like a great idea. I bought my first investment property (a 4 plex near 27th and Greenway) while living in an apartment that I rented.

@P.J. Bremner That is what I was telling my wife lol we live in a place where it would for my taste not smart to leave. We have about 4 years before our oldest goes to school and i feel with keeping our monthly bills down. It gives us the chance to go after investing! Thanks for insight brother and best of luck!

@Anthony Gayden I want a 4 plex first before anything, but from another comment it makes most sense and especially already being in the industry I don"t get over excited for a home. 

PFFT, do both!! buying a primary residence is the absolute best time to buy an investment property! Buy, Fix, Refinance, Repeat!

If you are an agent with any experience working with investors then by all means use that experience and the information available on here; buy a property that needs work for a deep discount, fix it, move in, refinance, and repeat. You can get into a home for 0 down with NO MORTGAGE INSURANCE in most cases as long as you buy right. 

For example; My primary residence, I was able to get move in with 0 down after refinance, the property appraised at a value of 80% LTV after repairs were completed therefore no Mortgage Insurance and now I've opened up a HELOC on my primary residence at a limit of 95% LTV that I utilize for acquiring other properties!

it's not a matter of invest VS buy home for yourself.... it's just a matter of finding the right property that makes sense as an investment that you also like enough to live in... at least until your ready to go bigger or move somewhere else.. I will be moving at least every 3 to 5 years and my real estate equity will grow with each and every purchase! 

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