Investor · Nashville, TN · Member since 2009 · 483 posts · 228 votes
I bought my first property last year and am now looking to do a HELOC and buy my second investment property. I donlt have much equity and houses are expensive AF here in Nashville. My question is how do I buy my second property while living in the first one? Do I need to move to an apartment and rent out the first one or just try to find one that is dirt cheap? I am sort of stumped as to what to do next.
To clarify, did you buy your first property and it was your primary residence? Or was it your first investment property? The statement "How to buy your second investment property" implies you have a first investment property. So just trying to make sure I understand the situation.
It depends on your goals. I would suggest a house hack, if you can. You can get another primary loan at 3.5% - 5% down, have help with the mortgage by renting the other units, or bedrooms if you want to go that route, rent out the first house, and be set. This is all assuming you have the income, reserves, capital, and DTI to support this route in addition to market rent being high enough to cover you.
Thanks for the reply. The first property is my primary residence on a FHA loan. I would like to rent out the first home if possible.
Do you have much capital? If not, be patient and build that up. From there, you can purchase the next home and rent your current house out. Most lenders give you 75% credit on the rental towards your DTI to offset the expense a bit. If you can house hack, I would go that route for sure.
To clarify, did you buy your first property and it was your primary residence? Or was it your first investment property? The statement "How to buy your second investment property" implies you have a first investment property. So just trying to make sure I understand the situation.
It depends on your goals. I would suggest a house hack, if you can. You can get another primary loan at 3.5% - 5% down, have help with the mortgage by renting the other units, or bedrooms if you want to go that route, rent out the first house, and be set. This is all assuming you have the income, reserves, capital, and DTI to support this route in addition to market rent being high enough to cover you.
To clarify, did you buy your first property and it was your primary residence? Or was it your first investment property? The statement "How to buy your second investment property" implies you have a first investment property. So just trying to make sure I understand the situation.
It depends on your goals. I would suggest a house hack, if you can. You can get another primary loan at 3.5% - 5% down, have help with the mortgage by renting the other units, or bedrooms if you want to go that route, rent out the first house, and be set. This is all assuming you have the income, reserves, capital, and DTI to support this route in addition to market rent being high enough to cover you.
Thanks for the reply. The first property is my primary residence on a FHA loan. I would like to rent out the first home if possible.
To clarify, did you buy your first property and it was your primary residence? Or was it your first investment property? The statement "How to buy your second investment property" implies you have a first investment property. So just trying to make sure I understand the situation.
It depends on your goals. I would suggest a house hack, if you can. You can get another primary loan at 3.5% - 5% down, have help with the mortgage by renting the other units, or bedrooms if you want to go that route, rent out the first house, and be set. This is all assuming you have the income, reserves, capital, and DTI to support this route in addition to market rent being high enough to cover you.
Thanks for the reply. The first property is my primary residence on a FHA loan. I would like to rent out the first home if possible.
Do you have much capital? If not, be patient and build that up. From there, you can purchase the next home and rent your current house out. Most lenders give you 75% credit on the rental towards your DTI to offset the expense a bit. If you can house hack, I would go that route for sure.
@Wayne Woodson I think it's a little more simple than you are thinking. If you own your own primary home, and want to buy a 2nd home to live in...then you just get prequalified for a loan like you did before and go and buy it. You'll need about 5% down to buy your next primary home and then you rent out your current home. That's really it.
Have you thought about converting your current property into a rental and buying a new primary? Lots of benefits to doing it this way - lower down payment, lower interest rate, etc. I used this strategy, and it's working out great for me! You could buy a house hack if affordability is an issue. I'm an agent in Nashville. Feel free to shoot me a message if you'd like to discuss more.