First Time Home Buyer for Future Rental

3 Replies

Hey there!

I am wanting to take advantage of the first time home buyer programs offered with a low down payment. I plan to live there for a year and then start renting out the place. I'm trying to stay completely unemotional and just look at the numbers since I will only be living there temporarily.

I found a small one bedroom in downtown Denver for a price that I can afford, but it seems the rental rate and the mortgage will break even.I hear multiple thoughts that if it's a good location, the rents will go up, so as long as it breaks even it's okay. But I also hear that it should be positive due to cap ex. I do plan to hold this property long term too.

Any advice is great appreciated as this is my first deal!

Hey @Mariah Destruel , I don't know what your personal situation is like but is house hacking an option for you? 

I'm just south of Denver in CO Springs and all along the Front Range there is a lack of affordable housing so finding tenants to rent out rooms is very easy and you can get premium rents. That way, you could live where you want, eliminate your housing expense (likely have cash flow every month if you buy the right house), use the first time home buyer programs to your advantage, and begin your investing career. 

Just an idea!

-Dan

Hi @Mariah Destruel

First off, congrats on taking a big step. That's exciting. My and my wife's first purchase was also a small condo in Denver -- a 1br condo in Capitol Hill -- that we bought in 2015. Now, we have four doors (and are under contract on a fifth).

I have a couple thoughts:

  • Turning your property into a medium-term after you move out can juice the rental returns a bit. Furnish it nicely, get nice photos, and rent it to 3-month or 6-month traveling nurse types.
  • I see you're in Dallas. Are you moving permanently to Denver? If so, I always think your first "investment" should be your primary residence. You have to live somewhere. You might as well own that. I think trying to buy out of state for the first purchase is a headache that can turn you off from investing in the future. Make the first one an easy one and you're more likely to replicate it -- whether in Denver or elsewhere.
  • Yes, ideally, you'd cash flow. But again if you're going to live here, buying a place and getting all the other benefits of owning is still great. Depreciation on your tax returns. Someone else paying down your mortgage. Appreciation long-term.

I wish you luck!

I wouldn't buy a break even property, but that's me. Yes rents have skyrocketed, but they have been flattening. You might look into the MetroDPA loan programs as well.