Live for free or start investing?

[John Paul Whaley]

I am currently living in my parents’ old house and not paying rent. I have a good job and am banking every single cent I make. I am also ready to start investing. I have enough down-payment money saved up and have analyzed a few deals that I feel fairly confident about. My strategy would be to put 10-15% down on a primary residence, live in it for a year, fix it up a bit, then start renting it out after one year. I would take out an investment loan but I don’t have 20-25%, as I live in an expensive area (DC).

What should I do? Again, I am ready to start investing, but I have a great thing going on for the time being, living for free. What would you do if you were in my shoes? Continue living for free and saving tons of money, or jump into REI?

[Frank Chin]

My brother liked living at home, and my parents enjoyed having him around. This was over 25 years ago, they made a deal where he could stay to save up paying for his home ALL CASH living for free. He finally bought a townhouse for $180K paying all cash after saving up over $30K a year. Initially his only expense was car payments, and he had a job travelling and had meals and entertainment on the expense account. Then for the 2nd car, it was all cash.

He was thinking of buying a rental at the time, but when you're 27 years old, you can pay all cash for a car and a property, its awesome. With all cash, he didn't have to consider low down payment OO loans, or more expensive NOO mortgages. At the time, had he bought 2 of them all cash, he could've retired at age 33.

I was 10 years older, at the time, I was married, and all my married friends were struggling with mortgages, car payments, credit cards, and my brother goes around paying cash for everything, i.e. house, car. When I mention it to my friends, they found it hard to believe. I told them, it's not so hard, all you have to do is stay home with mom for a few more years.