So I'm thinking of buying my first property. The idea is for it to be a house hack (live in 1 bedroom, rent out the other ones). Here's the conundrum:
I live in Denver where the market is crazy hot. The property that I'm looking at is 1/2 duplex in an up and coming neighborhood and I have barely enough money saved up for a 4% down payment. I'm fairly confident that I can find roommates to help me pay off the mortgage. However, it feels like I'm putting all my eggs in one basket, leaving me with $0 on my savings account and an uncomfortable situation if something were to happen (health, fix something in the property, you name it). I once read that you should only invest your money after having a "cushion" saved up for these kinds of emergencies. Am I rushing into this decision? Should I wait, save some more and try again next year? Or do you think it's not a terrible idea to buy this property and start building equity? Let me know your thoughts!
@Arturo Fuentes you could look at the FHA program for 3.5% down if you plan to owner occupy. As long as you can cover the monthly PITI payments whilst you are looking for a tenant I wouldn’t worry too much. Depending on the deal, you may end up being able to live there for free, giving you a lot more chance to save. Good luck!
How many bedrooms is the 1/2 duplex? Do you have anything(one) to fall back on with some emergency cash?
@Arturo Fuentes Ask your lender if there is down payment assistance program available in your area.
@Joshua Davies Thanks for the input!
@Matt M. It's a 3 bed, 2 baths 1/2 duplex in Westwood neighborhood for $325K. In this scenario, I would use all my cash for the down payment. I do have credit cards that I could fall back on if there was an emergency (which in my mind is not ideal, but I could be wrong).
@Harjeet Bhatti Thanks, I didn't know this option existed. I'll definitely talk to him!