Rental Property Investor · Bridgeport, CT · Member since 2018 · 49 posts · 20 votes
Should an investor own there home or rent it ? I’m hearing a lot about renting your home and not owning it , it’s good to just own investments that make you money !
I know nobody likes hearing this answer but.. it depends! I personally don't plan on renting in the near future. I lived in my first investment property as a "house hack". Now I'm currently doing a "live-in-flip" and when I sell (or rent) this house I will move into my next investment property- preferably multi family.
I personally am doing this because it's pretty easy for me. By that I mean I'm young and single with no kids. I don't mind living in a construction zone or living with my tenants if it gets me where I'm going. Not to mention that its easier for me to get a loan when I move into a house IE: lower down payment/better interest rate/long term fixed rate financing.
Also being able to get loans is muy importante to me- and debt to income ratio is a big part of that. If I were to rent a house now that would just hurt my DTI and keep me from where I want to be. Same thing if I were to finance a car or something like that.
As I get older and progress with my investing I'm sure I could end up renting. But for now it's cheap used cars and house hacks.
Unless you are using passive income (rental income) to pay for a primary residence, your primary residence is a liability, not an asset. Moreover, creating an LLC to acquire said primary home and pay yourself!
@Charles Bruce I currently own over 20 SFRs and don't own a primary residence.
I purchased a primary residence with FHA financing a few years ago then owner financed it. Now I currently rent a garage apartment for $600/mo, while I look for a 2-4 unit multi-family to purchase with FHA financing.
I believe it depends what stage you are in your investing career. When you start you need to look at every expense (housing, transportation & taxes are the big ones) as dollars that could be invested into real estate, earning you more dollars. This mindset is what helped me acquire a lot of units very quickly.
Once you get more established with a family and financial independence, then it doesn't matter.
I think it would really depend what their strategy and goals were. In my situation, I do not plan on selling, but rather rent out my current home when I am ready to move. I didn't really tie up much money either because I took out a HELOC on the equity built up in my house since I put 20% down and my home has increased in value 10% in 2.5 years, then used that HELOC to fund my next purchase. Depending on how you buy, owning a house could be a great opportunity to do a live-in flip over the course of a year or two.
@Charles Bruce Great topic! I owned many "owner-occupied" homes over the past decade. I would buy them distressed, then fix them up while living in them and sell them 2 years later and pay no taxes on the gains (legally). That is one of the best tax strategies out there. However, in the past 2 years, due to the high-priced market I live in, I chose to sell my owner-occupied residence and now I rent and I invested 100% of the previous "home equity" into real estate syndications in more affordable markets. Hope this helps!