Buy now or later - starter home and newbie investor

[Alesha Irvin]

Hi all!!

I’m in a bit of a dilemma. I’m planning to move to Dallas in the next month or so to make that home for the next 5-10 years. I’ve moved around a lot and I’m finally ready to pick a place to call home. Previous job based in Connecticut.

I’m already pre-approved and have been looking at place. Was planning to house hack a small multifamily but they’re scarce in the DFW market. Single family homes in a nice area are around 250k> right now. Also, from what I see, distressed properties are in an undesirable location for me as a single woman. && with covid I’m not crazy about house hacking a room in a single family.

I’m trying to decide if I should just rent for a bit in Dallas and continue to invest in MS (currently have 2 properties there; strategy = buy and hold). I’m concerned about tying up a lot of cash in my primary residence and it’s impact on my ability to get loans and continue to invest. My goal is to add at least 4 doors this year.

Also considering purchasing a nice single family, live there for a year or two, then rent it out and purchase another.. just seems like it’ll take forever to build my portfolio.

Thoughts or suggestions?

[Alex Grosvenor]

A lot of people make the mistake of thinking of their primary residence differently from your investment properties. When you have a huge portfolio sure, but when you’re low in number of units your primary residence is still an investment. You are now the tenant. You still need reserves for capex, maintenance and vacancy even if you live there because you won’t forever and repairs still come up.

You get the appreciation and debt pay down not to mention the tax benefits of it being your primary residence. It is a great investment. So don’t think of it being money tied up. It still went to an investment property. Just the one you happen to be living in.

The best time to buy real estate was yesterday. The second best time to buy is today. Due your research. Talk to people who know the DFW area well. Don’t miss out on a year of appreciation, debt pay down and tax benefits just to rent and pay off someone else’s loans. 
 
Make sure the numbers work. If it doesn’t cashflow in year 1 that’s fine because you’re living there. If you break even you got a free place to live for a year. Make sure it cash flows in year 2 when appreciation make rent prices go up and you’re moving out. That’s when it really matters and setting up for cashflow year 2 gives you a huge advantage over competition about what you can pay now.