Primary or Investment property first?

[Sarah Enero]

Hello everyone, I am still trying to learn a lot about RE investing. I've binged listened to a lot of BP podcasts, read the forums and 3 BP books, and still trying to learn the best strategy for me. 

Currently a renter but have enough capital to buy a property. I have great credit, no debts and good income. I wanted to house hack but living in San Diego, I can only afford a 1/1 condo, most of them staying in the market for only couple of days, sometimes going for 15 to 20K asking price. I thought of long distance investing to help get started and get some cash flow, and I found I can afford to get a SFH about few hours away, do vacation home loan with 10% down, convert into STR when I'm not using it, cash flow $2k (conservatively) all while staying in my current apt. With either one, I would still have a year of reserves in the bank (and only ever use for emergencies)

I don't mind not getting my primary place for couple more years but now I am thinking I might get priced out of my area. My goal short term is to get some cash flow but my long term goal is to be financially independent in 15 years. 

Is it better to put 3-5% down (and save some $) and get a primary residence in SD in a prime or up-and-coming neighborhood, live for a year or so, then get a HELOC and invest in another property?

OR

Get the STR, force appreciate the place with minor updates, cash flow, and get capital back sooner then invest in another property then get a primary?

Thank you so much for sharing all your knowledge!

[Michael Swan]

Hi @Sarah Enero

This is Swanny.  I was a guest on Podcast 238 and live in San Diego too.  Me personally at these extremely inflated San Diego prices would not have purchased and only rented for now.  I would look into buying out of state rentals where you can get the 1% rule or greater.  I would try to chunk in my rent with rental property income and the eventually replace a portion of my w2 before tax income and then maybe more and more and more until you have eventually replaced all you after tax w2 income, making you financially free.

I love this stuff and am available to talk.  I just retired from my teaching job this past June of 2021 and am now financially free!! My first little rental property I purchased was about 10 or 11 years ago.  Now I have about 200 front doors and counting.

Don’t be afraid to reach out!!

Swanny

Guest BP Podcast 238