Hey guys, want to start by saying I'm a complete noob to real estate, I've always had an interest in real estate and now I'm wanting to become an Investor so I spend a lot of time on Bigger pockets podcasts but I'm in a situation where I'm living at home with my mom but just purchased my first house, FHA style $249,000 in West PHX, AZ. I had the idea of just getting out and having my own home and later investing In properties once funds are more available through possibly house hacking this 4 bedroom I'm buying now. The property is new construction and is projected to be done by the end of Summer in 2019.
I’m wondering how I’ll be effected if the market tanks when I’m buying a new home and I’m not even locked into an interest rate yet? What’s the worst case / best case scenario? Would any of you consider losing the $5000 earnest money I put down in order for the home to be built due to signs of the market? Should I wait until the market tanks in order to buy a home?
And like I said I have no real estate experience whatsoever so any other ideas, suggestions, experience you might have would be greatly appreciated. Thanks guys!!!
Congrats on the new construction. I am assuming you purchased this home with the thought of solely having a roof over your head. There is nothing wrong with this idea as long as you're not spending more than you really need to accomplish this goal. I'm not sure if the 249k is overspending for your area or not, but I would not volunteer my hard-earned 5k as a donation to a builder simply because of a fear of possible negative market factors. If the numbers make sense for you as an owner, buy your house. You can then rent out rooms and earn income as well like you plan to do.
When assessing real estate, it is important to focus on local factors before paying attention to what is happening in other locales. What is happening in San Francisco and the rest of California is not happening in Phoenix right now. Inventory is going up here, but prices and days on market have remained steady. I live in West Phoenix as well and have not seen anything that would indicate we are heading into a hard market correction or anything like that.
People here continuously talk about real market crashes as if they were a normal occurrence and have blinders on to what reality is when it comes to real estate. It is pretty rare to see home prices fall 50% or more in a five-year span and what happened 10 years ago was not a common event. Historically, prices flatten during recessions and may see small dips, but if you're trying to hold out and time the market, you'll just end up missing the boat while others continue to build their portfolios. There are people who have been predicting a crash since 2015 and still are waiting on that perfect opportunity to fall into their laps.
@Justin Tomsic you may have set yourself back a little by making this type of purchase. You are in at top dollar... better to have found something you could create equity in by fixing up or using your FHA $$ to purchase multi-family. I'm sure it will be a comfortable & clean home - but will take some time to advance your desire to "invest". At this point your salvage point would be if you can rent out those extra 3 bedrooms and get your mortgage paid that way. If you don't mind roommates then this is the way to go.
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