Investing in rental property while having an existing mortgage?

Question

I’m looking into investing in my first rental property within the next year or so. Currently have about 15k saved. My DTI Ratio is about 30%. And I’m working on getting my Credit Score higher. Made some mistakes in the past and currently only around 620. But now have no major debt, student loans are in good standing. No car loan anymore. Only one credit card with very low balance and my current mortgage. I’m A little hesitant to jump in right now only because I don’t know what to expect. Any Insight is greatly appreciated! Should I start the process now?! Or wait until I build a better financial foundation. Credit, DTI,Downpayment etc...

Bryan Mitchell · Answer

I’m with Michael on this one you can do both. Not knowing your situation, I can’t recommend the perfect solution. However, if possible,  I would start by house hacking. Buy a place that you can afford and meets the criteria for a good rental property and a good roommate layout. I’d rent a room or two and use the cash to reimburse your original out lay of cash and then save for a down payment on another property.

Michael Ealy · Answer

Jose,

You can do BOTH. You can continue to build your credit and cash reserves WHILE...doing deals. How? You can seek out other people to do deals with you. You can learn and work hard to find good deals and then partner up with people. Real estate investing is a team sport. You don't have to do everything on your own.

Jose Galvan · Answer

@Bryan Mitchell

That also sounds like a good plan. Thank you! I’ll look more into it. Only thing is I plan on staying in my primary residence, where I currently have my mortgage. So I wouldn’t be able to use FHA correct? What type of loan would be good for my situation. I figure if I know the type of loan I shouldn’t be aiming for. The better I can prepare myself to meet those standards.

Jose Galvan · Answer

@Michael Ealy

Appreciate the insight!  Thank you!