What’s the best path forward?

[Mike Staehle]

I’m looking to buy a duplex to house hack to save more money to put towards real estate investing. I own the home I live in now, I bought it for $142k, I owe $136k principal balance. When I bought the house it appraised at $169k I’ve since put about $10k into it and a real estate agent I talked to said it’s probably worth about $180k now. I bought this house with a USDA no money down loan and my total mortgage payment with everything included in it is just a hair over $1100 a month, I can rent it for somewhere between $1400-$1600 a month in my area. My question is should I use a heloc to pull the equity in my house to put down on a duplex to live in and rent out the house? Or what other options do I have? I don’t have enough in savings to cover a down payment right now and my current income level doesn’t really allow me to save much of anything. Any help or thoughts about how to move forward would be greatly appreciated.

[Jim K.]

@Mike Staehle

There's a lot of information you haven't provided, but if I had to guess, I would probably say you are house poor. My first thought on reading your story is that $1100/month is an awful lot of money to commit to spending every month on a mortgage. And when you make a wide blanket statement like "My current income level really doesn't allow me to save much of anything," I think we can also safely assume that you also have a car payment, of, say, $500/month. So that's $1600 after-tax dollars disappearing out of your income every month, and if US general statistics on household hold true, that'll mean that your after-tax income level every month is somewhere around $3K. Is that correct?

You look young in your profile pic. Are you married? Do you have kids? Or are you just blowing $1100/month on your own one-person living expenses?