First time buyer needs strategy advice

[Lyla Rose]

Hi there,

I’m looking to purchase my first home in the Charlotte area with the intention to live in the home for a year or two, and then rent or sell and do it over again. My husband is an architect and I’m a designer, so we have some skills to make updates if needed.

I have up to $70k to put down. Does it make sense to buy something nicer with a bigger mortgage and exhaust our savings, or go cheaper and have savings left for another house when the time comes to move?

We would not be open to roommates. 

I’m totally new to this and open to any and all suggestions.

[Colleen Goldstein]

From my own investment experience, I'd recommend purchasing something cheaper in a good area. Do not exhaust your savings and where possible, put in the sweatequity to increase the property value upon your exit. Assuming you are on biggerpockets to grow your portfolio and income through investing, keeping your savings may allow you to make other investments in the future where opportunities arise.

Since this is your primary house and not strictly an investment, I would weigh the amount to put down with your comfort carrying the total monthly mortgage, interest rate differential (7% or 7.25% i.e. 20% vs. 25%). For choosing location, I have found great success in getting the start homes in nicer areas (i.e. either desirability like Noda, or good school districts - i.e. Matthews, Indian Trail, etc.).

Given you're not open to roommates, an alternative idea here would be to find a property that you can convert a basement, detached garage into an apartment (ADU) to offset the cost of ownership in the meantime. You will be increasing total value of the property and can maintain to rent as 2 doors in the future or will be increasing the total value of the property to sell with the capital exclusion gains (2 years out of 5 as mentioned above).

Feel free to reach out if you have any questions.