San Diego, CA · Member since 2018 · 5 posts · 14 votes
My girlfrIend and I currently rent a 1/1 apartment In San Diego, CA for $1475 ($735 ish each) and I am saving up for my first deal. Considering the high prices in San Diego, should I buy a rental property first and keep paying rent? Or should I buy a property that I can live in first and pay towards something that I’ll eventually own?
Hollidaysburg, PA · Member since 2015 · 327 posts · 350 votes
7y
@Kristian A moreno, If you're just starting out, and you want the biggest bang for your [investment] buck... I suggest you house hack. You will get both of the same world. Look for duplexes, triplexes, or quad-plexes as your first investment, and later on as they are putting money into your pocket you can refinance that property into a full time rental. This will also be beneficial in many different aspects of real estate (i.e. managing rental properties). It's a win win for you, and give you time to save up extra money. Good luck and I hope this helps.
I feel the same as I would rather rent instead of owning and use that cash to buy a rental but... when you rent you have no control of staying put. Landlord can send you packing when your lease expires or redevelop the property.
That’s why owning in a place neighborhood to your liking will be costly but that’s a lifestyle choice.
The logistics of that depend on where you are located. Different states/cities have different rules about a landlord kicking you out. But yes, I would say that is lifestyle choice--how much security you have in staying where you are renting versus it being your own. I've heard of so few people being kicked out by their landlords for non-eviction reasons though I can't imagine that should be the driving force behind the decision. But it is part of it, for sure.
Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes
7y
@Kristian A Moreno It depends on your timeline and financial situation. You can usually buy a home owner occupant with a lot less money down, and for a much lower interest rate, than an investment property.
I bought my first home, a duplex, lived in it, leveraged it, bought another home, flipped it, then used the profits to buy my dream home.
Although I bought my first home as an investor--and actually ended up living in it!--unless you have a large chunk of cash, for most folks it's easier to buy owner occupant to start out because of financing terms. Once the loan closes, you decide how to use your property.
Although I bought my first home as an investor--and actually ended up living in it!--unless you have a large chunk of cash, for most folks it's easier to buy owner occupant to start out because of financing terms. Once the loan closes, you decide how to use your property.
I would be careful using this advice. That is very much bordering on loan fraud. Applying for a loan for an owner occupant with the intent of using it as a rental or flip is loan fraud.
Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes
7y
Agreed @will barnard. I am NOT advising loan fraud, and I would refrain from making any allegation of the sort to a stranger on a public message board. I was just speaking more practically.
Life happens, plans change, and it's important to discuss your situation with your lender to make sure you structure your financing to best suit your needs.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
7y
@Kristian A moreno, it will vary depending on the actual numbers. I have yet to live in a place where I could rent cheaper than buy. My problem was down payment money and credit. Every time I bought and lived in a property I paid a lot less in mortgage, insurance and taxes than I did for rent. Every time I made money on the resale, even when they were house trailers. You get monthly payments cheaper than rent, loan pay down and appreciation, plus tax free capital gains. For me it has always been a no brainer to buy, but run your own numbers. If you can get a duplex, mother in law suite, or even house hack a bedroom or 2 the numbers improve radically. I bought my house for about $38K, it is worth maybe $150K now, and my payments were about $200 to $300 per month for a small 4 bedroom house. I was paying $300 per month for a 1 bedroom apartment.