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Updated almost 9 years ago on . Most recent reply
Investing in RE without owning primary residence
Hi all,
We are currently renting and since houses/location that we would like to live in are priced beyond our reach for now, I would like to just jump straight into investing in other more affordable areas around us.
Are there any disadvantages to my plan that I should further consider? Such as, in terms of taxes or getting loans, any tax disadvantages to not owning a primary residence? Is it harder to get loans if the banks know we are buying for investment as opposed to primary residence?
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Buying a primary residence with the intention of later turning it into a rental is the lowest risk way to learn the ropes in my opinion. You are essentially your own tenant, your own contractor, and your own property manager in the beginning, and that is a great, low risk way to learn hands on. You don't have to buy your dream home in your dream location as a first property ... this concept seems to have been lost over time, but back in the day there used to be this great concept of a starter home, which was a place to sacrifice a bit, learn the ropes, and build up to your dreams.
On the other hand, you could buy a rental 1st, but that would be much riskier in my opinion since you would not have as solid of a base of hands on experience or financial base as you would by buying your primary first and then turn it into a rental to buy your next home later.
I speak from experience, and now have a nice portfolio of cash flowing single family homes in nice neighborhoods in Southern California. If I can do it, then you can do it!