Silly to Buy a Rental Before Owning Own Home?

[Julie Inderkum]

First, thank you to the BP community for all the helpful knowledge and insight. I just discovered this amazing resource last week and have already learned so much!

I am hoping to purchase my first rental property in the Sacramento, CA area within the next year and am wondering if it would be foolish to purchase a rental property prior to owning my own home. Currently, I live in a home that has been in my family for decades; it was inherited by my parents when my grandfather passed away. The home has been paid off for years and I pay my parents a very affordable rent to live there. I love the house and am happy living there for the time being.

I would like to begin investing in real estate (buy and hold), but am curious as to the pros and cons of buying a rental property as my first real estate purchase. Are there benefits to owning my own home before purchasing a rental property? Any downsides to buying a rental property prior to owning my own home?

Any and all advice is appreciated! Thanks!

[Pratik P.]

I'm a firm believer of renting where you live and owning where you rent. Taking out a loan (liability) on something that doesn't produce any income doesn't make sense. Whereas if you took out that same loan on a small multifamily, now you have something that produces monthly cash flow, making it an asset. Despite what many people may say, a SFR which you live in is NOT an asset. It's a liability.