Balancing Investing with Improving Family Life

[Peter U.]

Hi Everyone, 

Looking for some opinions here. I'm 29, married with two young kids, and a third on the way. Currently, we own a small house, and our mortgage balance is around half of what the house would sell for.. We bought the house as a foreclosure and have since made a bunch of repairs. 

The problem is, as our family grows, the house is becoming two small. We also want to get started in real estate investing, and are considering using some of the equity in our house to get started. My issue is that I don't want to sink all the equity in an upgraded house and lose the opportunity to use the equity to invest. But, "real life" is going to dictate that we move at some point, because we will be out of room in the house. 

On one hand, I am willing to be cramped in the small house for another two years while we get our investing started. The kids are 3 and 1 and will likely not remember too much of this stage as they get older (not that they are REALLY suffering, but you get the point). On the other hand, they are growing fast, and I'd love to provide a place for them with an actual yard and space to play. 

I should also mention at this point we've decided to keep my wife home to take care of the kids. So we are currently making due on my single income. 

I would imagine that this question is always present - no matter where you are on the investing spectrum. For example, no matter how much money you have or investing you've already done, the question of when to *spend* money with no return other than taking care of your family or yourself will always be there..

So, I am just wondering how other people have handled similar situations. 

Thanks in advance for any input!

[Jason D.]

What if you were to take out the equity to fund the down payment on and FHA loan, and keep the house you are living in now as a rental? As long as the current house cash flows, could be an easy way to eas into being a landlord. Depending on the equity you have, it may be enough to buy a second rental as well.