Updated about 9 years ago on . Most recent reply
Thoughts on a personal residence townhouse in San Jose, CA
I wanted to get some opinions on this. I am tired throwing money away in rent out here in the bay area (~$2400/month for 1b/1b). I realized its all money lost and even if I found a good cash flow property out-of-state, it would no where near enough to cover my rent check (I'm new to real estate so I don't have any rental income under my belt yet). I know that SFR are better investment than a townhouse, but realistically a townhouse is what I can afford at the moment. Even though it would have an HOA fee, I feel that paying an HOA fee is better then throwing away money in rent. Here is my very high level plan on this:
1 - buy a townhouse now as my personal residence.
2 - live in it until I'm at a point where I have a 40-60% equity position, either through loan pay down, appreciation, or both.
3 - at this point I can choose to refi and lower my P&I payment to something more reasonable and potentially make this a cash flow positive property if I move out and keep the unit as a rental. I guess the way I'm thinking about this is at a 40-60% equity position, refinancing would lower my P&I payment enough to make this thing cash flow.
Not sure if this sounds like a good plan. Feel free to poke as many holes in it as possible. Open to all feedback.