Starting Small vs Smaller

[Jacob DRuiz]

Hey BP, 

I've been having a discussion with my wife debating on what path into real estate makes the most sense today. 

Brief introduction to the scenario:

Recently separated from active duty service in the Marine Corps. Since then I have eliminated all debt. Our cost of living is low, rent being our highest ticket item. My wife and I are both full time students with part time jobs. 

The main objective right now is for my wife to graduate since she has less than a year left. We want to start a family in the next 2 years so we are debating on whether we should buy a bigger house (3Bedroom 1+Bath) at the 100k range, or buy a start home (2Bedroom 1 Bath) 

Our W2's pay well hourly but school does not allow us to put in many hours so traditional lenders have only preapproved us for about 100k. I can buy a bigger house if I put a bigger down payment, or I can buy a smaller house and keep the downpayment low and just sit on cash until my wife graduates before buying the bigger home. 

The strategy we are going to use to get into real estate is buy and hold, so we intend on renting out whichever home we purchase sooner than later. We both have side hustles that we are using to put into the house fund. Currently, we are at about 30k not including an emergency funds, cost of living etc. Unfortunately, trading options, photography, online coaching, the housing allowance from the VA, etc, lenders are not counting them as income for a couple of reasons, we are still stuck with the same lending cap of 100k.

What I am now forced to decide between is a smaller home with a quicker entry into real estate (1 year) or a bigger home but a bigger down payment so a lot of cash will be tied into that home delaying when the next house purchase can be (2 years) 

I know it is situationally dependent but if anyone has another perspective they could share that would be awesome, thanks in advance.

-Jacob