Financial/ Investing Plan advice.

[Shane Short]

Hey Everyone, 

So I need some advice, as i'm in a very difficult decision making point in my life.

I currently have approx. 9,000 in my savings. My goal was to save 14k by the beginning of March '18 (when my lease ends for my apartment), and purchase a Duplex to house hack the one unit, and rent one of the rooms of the unit i'll be in. I was approved for an FHA loan for 3.5% down. I already have a guy wanting to rent a unit for 1500, as rent here in Portland is Insane, and that's on the cheaper side. And I have my current roommate, who'd also be moving into my unit and continue to pay 650/ mth. to rent it. All in all profit of a little over 2k a month, and my mortgage would be about 1600 at max since i'm setting my max purchase price at 400,000.

The dilemma i'm having though is this, I'm currently 22, and about 27k in debt. Credit card debt to say the worst.... long story short, lost my HVAC business a few years back and lived off of a card for a while. I've been paying it down for a while, but I don't know if I should go with the duplex, then allocate my current 3k of savings a month to my debt after buying a duplex, or to pay off all of my debt for the next 8-12 months, continue saving a little more, and then purchase a duplex. 

Choice No. 2 sounds a lot more stress appeasing, but, being able to save an additional 700 a month that i'm currently paying for my rent, plus making a 5-600 dollar profit would help tremendously, and i'd be able to pay off my debt much faster, and also get another MFR late summer/ early fall of next year.

Any help would be greatly, greatly appreciated. I'm so eager to get out and start making good money. I've been trying to situate my life for this for years. But I want to make sure i'm not making a mistake and letting desperation get in front of my decision making. My long term goal is to have 10-15 properties to provide passive income, and to be able to flip houses, go to college for whatever I feel like learning and being able to enjoy it and do it for me, not just a 9-5 career immediately after graduation, and to be able to travel and start having kids, and being able to devote my time and energy to what matters in this short life we have.

I appreciate you all listening to my rant!

[Shiloh Lundahl]

@Shane Short In your current situation it might be difficult to qualify for a loan because of your DTI (debt to income ratio). A bank wants to see someone's ability to pay off the loan and they may not count the future income that you will be receiving from your friends who have told you that they will be renting from you. In other words, you may need to qualify to buy the house/duplex on your own and make the monthly payments out of your own wages. I'm not a mortgage broker but they may need your debt payments to equal 43% or less of what you take home in pay a month.

So if you were to purchase a property for 400k, with 3.5% down ($14k) and finance the rest ($386k) at 4% for 30 years your payment would be roughly $1843 a month. Then add all of your other debts such as a car loan, credit cards, etc. let's just say around $500 more dollars a month in debts. So your total monthly debts would be around $2343 a month which would be 43% of $5449 a month. I'm not sure if that needs to be gross or net. If it is gross then that means you need to bring in over 65k a year, if that is net, then it means you probably need to bring in more like 80-90k a year to qualify. Again, I'm not a mortgage broker but these are some ideas of what it might look like to qualify on your own. So in order to qualify for this home you may need a co-signer or you may need to pay off your other debts or bring in a big enough down payment to bring the DTI down.