Financing my first rental property...

[Nick Dillaha]

Hi guys, I'm brand new to this website and real estate investing. I currently own a townhome/condo as my primary residence in a great community. Other units in the same condition are renting for $1300/month and my current mortgage/insurance/COA fees total $906/month. I've been trying to do all my homework and saving as much as possible. I am looking to purchase another property as my primary residence due to the potential $400/month in rent on my first property. I will have $20k to invest and my bank is willing to possibly do (depending on credit/debt:income, etc.) a 3/3, 5/5, or 10/1 ARM.

Do you think it is wise to find something around $100k solely as a rental property and pay a 20% down payment but stay in my townhome? Or shall I stick with my bank and find a more expensive property that I am willing to live in (150-180k), knowing that I may only be putting 3-10% down and saving some cash...