Dilemma: Own our own place or start investing

[Wesley Wong]

My wife and I both work and have no kids. We live in Seattle, Washington, where the market is really hot right now. We started looking for our own place back in October, but have yet to land anything. We've put in some bids, but they've all been beat in bidding wars and prices continue to soar.

Our rental lease is coming to an end at the end of the month and we have to renew, along with a rent increase that we received a few days ago. Seeing our rent go to someone else's mortgage and being at the mercy of rent increases really makes us want to own our own place.

We also want to get our own place since we want to start investing in Real Estate. We've always thought that owning our own place would be a good step before we start investing. However, our situation seems to be pushing us to rethink this.

We would like to invest close to where we live as we're just starting out and believe it will be easier for us to be close by. This limits us to the area in and around Seattle, perhaps as far as Tacoma down south and Everett up North. This also means we are not likely to be able to buy both a home and an investment in parallel since prices seem to be quite high here and we'll most likely be going with traditional mortgages for both to start off. We will most likely need to buy one and then another in about a year.

Some other thoughts I had. There are rumblings that there will be a downturn in the next few years. This makes me think it's better to hold off on buying a home until then. Since there should be investment opportunities in any type of market, I'm not as worried about jumping into investing now.

Saying all this, I was hoping to get some thoughts and advice as to what we should do. One thing I'm trying to do right now is negotiate with our landlord about signing a 1 year lease but having a clause that allows us to give 3 months notice to break the lease without penalty. This would allow us to search for a home without a need for timing the purchase.

Some options that I see:

1. Sign the lease and continue home hunting. Only after we find a home do we start to consider investments.

2. Sign the lease and start investing immediately and put home hunting on hold until next year when we're ready to buy again.

3. Sign the lease and start investing immediately. Continue to invest and rent until the downturn. Buy a home during the downturn.

4. Something else?