Which to buy first, first home or first investment property?

[Barry Robbins]

Currently my fiance and I are renters. We have discussed buying a home many times but I have several lines of thought which I'd like to run by you all. Currently we pay $1180 a month to rent out a 1140 square foot town home and about $1536.00 after utilities. It is in the heart of the Denver Tech Center and we have been living here for almost 2 years. We enjoy the area very much and would like to stay near this area. I work in the Tech Center just 5 minutes from home and my fiance works about 15 minutes north of here.

Back when interest rates were around 6.5% I talked to some Mortgage Bankers / Brokers and estimated that if we bought a $150,000 house with a 3% down payment we would be paying the same as we are now after PITI minus tax advantages plus the increased utility bill we would be paying if we had a yard and extra square footage plus maintenance expenses. We had looked at many $150,000 homes and came to the conclusion that they were not in places we wanted to live or they did not have the space we desired (especially since we are talking about starting a family in 5 years or so). Our combined gross yearly income is approx. $95,000. Our combined income after taxes is approx. 68,400 (best guess judging 28% taken out of pay check). Right now about 27% of our combined net income goes towards rent + utilities which seems like a reasonable amount to me. My first question is, is it worth it for us to spend a little more of our income on a home and still continue to save or to stay where we are for awhile and save more each month for our future real estate investments? Should we focus on buying a home for ourselves first or purchasing an investment property first? My final question is, how will having an FHA loan affect our ability to get an investment loan? We have discussed buying a home and renting out rooms or purchasing a duplex, but the idea of sharing the house doesn't appeal to us and the latter doesn't make economic sense for where we want to live. Thanks in advance for all your responses and please let me know if any of these points need clarifying.