Updated about 5 years ago on . Most recent reply
Am I financially ready to buy my first SFH
Hello PB,
I’m eager to get my real estate journey started, but I want to be sure that I am financially set up to take on my first home.
I’ve been working hard to pay off all my debt and saving money for a rainy day fund. The only payment I have right now is a $460 monthly personal loan payment ($17,000 left, 2.99% fixed interest). I make about $5,000 a month, and my job is very stable.
How much should I have saved up to buy? I will be using the VA loan, so I won't need a down payment.
I’m excited to be part of the BP family and will appreciate any advice! Thank you!
Most Popular Reply
VA loans are great if you plan to house hack and live in your property. They've recently become much more strict about "checking to be sure you actually live there", so you'll want to play by the rules if you're going that direction. Also, purchasing a 4-plex is absolutely the best use of your VA money. Rent out the other 3 units to cover all expenses plus cash flow. As a general rule, any good financial manager, advisor or accountant will tell you to have 6 months in liquid assets to cover any unforeseen damage, maintenance or bills if you lose your job (you never know). It used to be 3 months, but the smarter answer is 6. BUT, don't let that dissuade you from getting into a property sooner rather than later - you just have to be more diligent about saving back a larger percentage of your income for a longer period of time (think Ramen noodles instead of steak dinners) until you have that cash buffer.
Last, as a financial advising professional, let me leave you with this. There are several high interest accounts these days - and I'm talking 0.5% as opposed to zero in a regular savings account at 0.05%. Push all your liquid assets into an interest bearing account like this so it's not wallowing in the "no interest" zone. It's better than nothing!
Good luck, feel free to reach out if you need any more help!
Lee