First Time Home Buyer for Future Rental

[Mariah Destruel]

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!

[James Carlson]

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!