Should i buy a home or investment property firts?

Question

hello, my name is benjamin and I am 22 years old.

Ive always wanted to get started in real state, and I’ve been saving for an investment property and get started.

The problem for me comes now when my family wants to buy a home, and be owned by all of us (sister,brother,parents and me). I told them that it was a better idea that, instead of buying a home first, we can buy an investment property and keep renting after we build some equity, sell it and put the down payment for 2 houses or a duplex and live in one and rent the other one (for me, i could keep renting until we buy a lot of investment properties and then move to one of them), but my family wants to buy a home firts and then the investment property.

Can someone give me a light of what is better or the pros and cons.

Thank you so much.

John Karg · Answer

Hi Benjamin,

I typically recommend owning your own primary residence before investing. The benefits on the lending side are huge--lower rates and much lower down payment requirements. Your family might benefit from buying a 2-4 unit property with 5% down using a conventional loan. Feel free to reach out if you have any questions!

John

Jaron Walling · Answer

If you establish a business foundation you can invest with family successfully.

It's not the ideal situation but everyone takes a different path to start the journey. They could partner on a deal. Everyone needs a role and lane to drive in. What are there strengths and weaknesses? What value does your family bring to the table? It's a 5 year TIME+$$$ commitment. If they want to invest in real estate without a plan or exit strategy I'd never consider it. Cheers.

Tanner Lewis · Answer

I would buy a house hack for yourself. That way you can reduce your living expenses and get cash flow from it.

I would stay away from owning a primary residence with multiple family members, it tends to get really hairy down the road, but owning an investment property with family members is less hairy.

Alan Asriants · Answer

As others have mentioned here, getting started with the house heck is the best way IMO. You kill two birds with one stone by giving yourself a roof over your head and an investment property at the same time.

Plus your barrier to entry on this property that can later become exclusively an investment is much lower as you can qualify for mortgages that require as little as 3 1/2% down.

Nathan Gesner · Answer

Investing with family or friends is dangerous. There's a high likelihood that family dynamics will come into play. You could be the smartest one in the family, but decisions get made by your parents that are detrimental to the overall plan. Or maybe you end up doing all the renovations and management while your princess of a sister does nothing but spend the money on new shoes.

Better to be your own man and make your own path.

Theresa Harris · Answer

It depends on your goals and the numbers.  Is your family currently renting?  If so, how much does that cost vs owning a home?  Can you buy a rental (either single family home or duplex) where the rent will cover all of the expenses?  It takes a while to build equity as most of your mortgage payments go towards the interest at the beginning.  Look at some charts to see how long it takes to start paying down the principal.

Also think about your family itself-you're 22, what happens if you get married in 3 years?  Same question with your brother and sister.

If you can find a duplex where you and your family live in one half and you rent the other half, that is a good way to cut down your housing expenses.  However, if you live in the half that is rented, make sure you are paying market rent and have a lease drawn up to avoid family problems (eg your siblings feeling like they bought a home, so you could have your own place).

Luis Maqueira · Answer

Simple,

Buy income property, and business first. With the cash flow you pay the house, the car the living expenses.

Your house is not an investment. It gives you plenty of savings, tax benefits, lower you expenses etc.. But does not give you money in fact is an expense.

Still is a great del you rent money for 30 year fix rate  and the asset increase of value with time.

Luis M

good luck

Account Closed · Answer

In general, investing in an income-generating property first can potentially provide long-term financial benefits and greater returns. However, buying a home for personal use can provide stability and a place to call your own. Consider your family's goals and financial situation to make the best decision for everyone involved.

Mathew Pezon · Answer

Hi Benjamin,

Kudos on getting started with real estate investing at 22! I was in a similar position once - eager to begin investing.

In my experience and piggybacking on Emma's response, there are pros and cons to both approaches that are worth considering:

Buying an investment property first allows you to dip your toes into landlording while still renting yourself. As rental income starts flowing in, you can save and build equity faster to buy your own place later. Just be cautious taking on a lot of debt/maintenance as a new investor.

However, buying a primary home provides stability and potential appreciation too. If your family is contributing, you could purchase a multifamily home to house everyone, while renting out units you don't need. This builds equity while offsetting housing costs and how I started my real estate journey - house hacking.

My advice would be to run the numbers on both scenarios, factoring in real estate goals, finances, and family needs. Are there affordable investment properties in good areas near you? How much can everyone contribute to a down payment today?

There’s no one-size-fits-all answer. The key is balancing your dreams with practicality. Patience and discipline are crucial when starting out. Maximize savings, learn about your market, and the right opportunity will come! Feel free to message me if you want to discuss more.

Does this help provide some guidance on weighing the pros and cons of buying versus renting first? Let me know if you have any other questions!

Ray Hage · Answer

I would say it depends. Are you guys planning to stay in the Miami area long term? If yes, I would probably lean towards owning your home rather than renting forever. You have benefits like the homestead exemption and you can be sure a landlord won't raise your rent or ask you to move out to renovate, etc. I have a friend in this current situation now. He just had a set of twin boys and his landlord told him that he is planning on renovating and selling the property. You can imagine moving is not fun under those circumstances.

Buying a duplex up to a quad isn't a bad idea whatsoever. In fact, it might be the best idea for you and your family! You get the benefit of the homestead exemption plus having tenants paying some of the mortgage (if you can find a fairly priced property...not easy in south Florida!).

Should i buy a home or investment property firts?

Most Popular Reply