To buy a home and rent out or not?

[Sara Blatz]

So my husband and I are currently renting but we want to eventually have our own home but we also want to get into Buy and Hold real estate, for the extra income. My question is should we first buy a home for us and then the rental property? Also we’re not into house hacking.

[Kenneth Garrett]

@Sara Blatz

These are two different things, but it's good to be proactive and realize what your goal is. You definitely can invest in rental property without owning a house first. Speak to a lender so you can analyze your debt to income. That is one of the components that restricts buying more property. You can use the cash flow on the investment property, but they generally want to see income for two years to add it in to your total income which increases your DTI numbers. Generally the two year mark is proved by tax returns.

An option is to use commercial lending for your investment property which does not impact your DTI, but you will pay a higher interest rate and will need to own it an LLC or other entity.