First Investment Property - best financing options in high COL area?

[Alex Smith]

Hello everyone,

I am 29 years old and have a decent W2 income. However, I also have significant student loan debt. In the past 2 years, I have used my extra money to pay off student loans by interest rate. I am now at the point where my interest rates are <6%. I have decided that my money will be better spent on investing in real estate. I am interested in a single-family home to start off. The problem is I currently do not have enough for 20% down, especially in a high COL area in Connecticut. If I were to buy a somewhat distressed home, obviously renovations would add to that. What is the best way to finance this? Should I save up for 6 months - 1 year+ to come up with 20% down and reno funds? Is it worth putting <20% down and living in the house for 6 months with FHA? (This would add sig to monthly payments and limit cash flow). Any advice helps! Thank you

[Chris Berry]

Quote from @Alex Smith:

Hello everyone,

I am 29 years old and have a decent W2 income. However, I also have significant student loan debt. In the past 2 years, I have used my extra money to pay off student loans by interest rate. I am now at the point where my interest rates are <6%. I have decided that my money will be better spent on investing in real estate. I am interested in a single-family home to start off. The problem is I currently do not have enough for 20% down, especially in a high COL area in Connecticut. If I were to buy a somewhat distressed home, obviously renovations would add to that. What is the best way to finance this? Should I save up for 6 months - 1 year+ to come up with 20% down and reno funds? Is it worth putting <20% down and living in the house for 6 months with FHA? (This would add sig to monthly payments and limit cash flow). Any advice helps! Thank you

I would agree with what the other comments have said.  Especially if you are living in CT in a high cost of living area, I would assume it is going to be in an appreciating area.  If you were able to house hack with such a low-down payment option that would be ideal.  This will also allow you to get the hang of being a landlord and if you actually like it.  After the one-year period you could rent it out and get another house hack.  This way you have two assets in a higher appreciating area and will start your snowball from there.  While starting off with this strategy you could also be studying more about value-add options and start attending meetups in your area to get an idea of what other people are doing.  I'm originally from Long Island and that is where I started investing.  If you have any more questions reach and.