How to Get Started Investing With a Roommate?

[Jake Chavis]

So me and my roommate are 1 full year out of college. We're currently renting a house and have great jobs with some money saved up (~$40k) and we are looking to start getting invested in real estate. The two main forms of investing we'd be comfortable with are rental houses and buying a house we would actually live in. The problem is, we live in Arlington, Virginia, where things are not cheap at all. 

When it comes to buying a house we would live in, the areas we would choose have houses no cheaper than around $600k. With an FHA loan, sure we'd be able to buy a house for 3.5% down, but the mortgage payments would be really high, and it would be hard for us to find renters after we wanted to move out that would allow us to come anywhere close to cash flowing (or even net even). We would probably have to wait a year or so to save up more cash to be able to put a decent down payment on a house so that the mortgage isn't ridiculous.

When it comes to buying rental properties, nothing in this area is affordable to put 20-25% down on, so we'd have to go towards the Maryland / North of DC area, which isn't the end of the world. The areas we would be investing in wouldn't be all too good either. The main problem with this method for us is that its taking a lot of our capital out of our pockets, preventing us from using that to buy a house to actually live in. And we don't want to keep being renters ourselves for too long either!

We are trying to weigh our options here and see what's best for us. If you were in our situation, what would you do? Save up for the next year or so and buy a nice house to live in, or find rental properties? I personally am interested in flipping houses, but my roommate isn't. Maybe there is some other idea somebody has that could be a solid option. 

Any comments or ideas would be great. I'm sure there has to be plenty of people out there that are like us in this situation. Let me know what you think!