Hello everyone, I am brand new to the BP community and am currently strategizing my entry into the real estate investing world and was hoping for some suggestions as to my next move. I currently own a single family home in Thornton, CO which I live in with my family and rent the basement to a good friend (which pays half the mortgage). I'd like to purchase a rental property but do not currently have enough capital for a down payment to do so. I'm considering purchasing a new home to live in with my family (and roommate) with a 5% down payment, and then renting out my current residence. This would get me "into" an investment property sooner than saving up enough for a 20% down payment that most lenders require for an investment property. Should I do this or wait until I have enough capital to purchase a rental property with 20% down? I have about 55K in equity in my home currently. I'd appreciate any guidance and/or advice any of you may have. Thank you.
Welcome! What you are describing- moving in to a new house, renting out your old one, is referred to as "house hacking." There are tons of threads here about it, and it's a great way to get the ball rolling on some equity and cash flow.
Another option, if you have enough equity, open up a HELOC and use that as your down payment on your next property.
Best of luck!
Hi @Brandon Fuelling ,
The endeavor you're speaking about is "househacking", where you owner-occupy a 2-4plex ad then rent out the remaining units, yet have residential loan on the property meaning less cash to acquire.
Very common strategy, I'd highly recommend you do that over waiting to accumulate that additional 15% (ledners I've talked to are saying 25% down is the new 20%)
As long as your household is on board, owner-occupy another 2-4plex and conserve your cash while you acquire experience as a landlord / property manager.
Thank you @Corby Goade and @Nathan Platter!