PRIMARY RESIDENCE: BUSINESS OR PLEASURE?

[Jeremiah Gentz]

I want to give you an idea of how my situation is so bare with me...

I'm 23 years old, single, without children, with a job I love and make decent money. I've been with this company for three years but the downside to my job is that my schedule is virtually unpredictable. I could work everyday of the year or not have work for months. Fortunately, I haven't had to experience the struggle of not having work or money at the same time more than once. I learned my lesson on saving and budgeting pretty quickly.

I've been working in Africa off and on for a little over a year now with this company and it's put me into a position to start my life off in an incredible way (according to my standards). Through a few good influences in my life including BP I've learned that I want to be responsible with my money and put it toward something that can increase my quality of life.

I don't have great credit due to a lack of history but good enough to get a mortgage with a tad bit higher interest rate. As far as my bills right now, all I have is a low car payment. I'm pretty much starting from scratch here. I currently rent a room in a friend's house and living there is becoming a stressful thing for me because I don't have enough space. I feel that I need my own place before I start investing. It doesn't make sense to me to have a rental property while I'm still renting myself. I also want to add that I have no financial support other than what I earn (no wealthy family, trust funds, or inheritance) so I don't have anyone or anything to bail me out if things go south. Because of this I am very conservative with my money and what I do in life.

So please keep all that in mind...here are my options I'm looking at (all options include me paying my car off, paying cash to completely furnish the house, and having an emergency fund left over):

Option1: I buy a house (single family or house hack with a multifamily) as if I were going to use it as an investment property (make money going in, positive cashflow, 20-25% down, etc.). In my area the price of a house like that would range anywhere from $80,000-$120,000 for a single family and $100,000-$300,000 for a multifamily (depending on how many units. Also, a lot of the multifamilies in my area seem to be either in bad neighborhoods or not for sale). I would live in this house for about a year or 2 and repair anything that needed to be fixed. After that I would look for another property that would work as a rental and then move into it to do the same but keep the other and find a tenant for it. I would continue to do this until I was comfortable buying a house solely to be my primary residence for a long time. This option would cause me to never really be settled and when I have a family they would have to move a lot until I felt I could buy a nice house without worrying. Plus my bills (including utilities) would be around $1,500 or more a month even with such a cheap house because of the low down payment. Doing this would leave a lot left in my savings but would cause me to save less per month unless I bought a multifamily and lived for free but finding one is the tricky part where I live.

Option 2: Find a house I could live in for ten years or more and be satisfied with it even with a family. That for me would be a house ranging from $150,000-$200,000. I would put 50% down and finance the rest on a 30 year fixed rate mortgage. That would cause my monthly bills including utilities to be no more than $1,000 and I would be able to call it home for a long time without trying to hurry to fix a cheaper house in a neighborhood that wasn't as good so I could move to the next to rent out that house. I would have a decent net worth for my age and be able to save money for investment properties a lot faster and I wouldn't have a ton of debt causing me to be stressed out all the time.

Option 3: Buy a house like in option 2 but instead of putting a large down payment, only drop 20-25% down to be able to keep a lot of my savings and use toward an investment property. Most likely I’ll have to partner up for the investment since my credit probably wouldn’t allow another mortgage on my own for awhile. With this option I’ll have higher bills per month but will possibly be able to build wealth faster. This option scares me a little seeing that I might be out of work every now and then and that could put me in a bind.

My main goal in life is to have as little debt as possible and be able to do the things I love in life without the constant worry of money in the back of my mind. I was raised with that sort of stress and will do anything it takes for my future family and I to not have to experience that.

If you have another option that’d apply to my circumstances I’d like to hear about it. Any advice is much appreciated. I could really use y'alls help and experience.

(My area of investing is Beaumont, Nederland, Groves, and Lumberton, Texas)