Buy my home first or buy rental home

[Account Closed]

Hello all, 

I am a newer member of this site and have a few questions about starting off. Currently I am in my last year of school and will hopefully have a career starting next Summer. I want to get my loans paid off before I think about doing any investing (should only take six months to pay). After I get my debt paid off I was wondering if you think I should save for my own house or buy a double and rent the other half out. I know everyone will say buy and rent but I don't like the idea of living with a stranger. I have heard of the buy and live in for a year than you can rent it out. What are the specs on doing something like that (interest rate, pmi, down-payment min.) I was thinking about doing that with a single home and moving into another one after a year. Thoughts? 

Thanks, 

Dave 

[Lawrence Rutkowski]

@David Stergio

David, I did exactly what you are speaking about a year after I graduated from school.

If you plan on being an investor, I personally wouldn't waste the benefits of an FHA loan on a single family, and manage living with a neighbor next store. (This is a great and "convenient" way of learning to be a landlord.

I was able to buy my first duplex with an FHA loan. Mortgage, PMI and taxes are only $494/month (found a great buy). While I was living there I rented out the upstairs for 650/month. Cash flow positive even while living there. To circumvent a long story, my tenants moved out, I improved the upstairs a little, rented that for 700/month, I now live in Texas and rent the unit I lived in for 800/month. Aside from the monthly cash flow, or depending on your market, very cheap living, you get to write off almost everything associated for your rental even while you live there (not so for single family). Mileage to hardware store, tools, interest and taxes, depreciation, contractor costs, paint etc.

This has allowed me to accumulate substantial funds to further invest.

You probably won't find the ROI as discussed above as rates have went up since then (that was 3.1%), but it is a wonderful start.