WHAT SHOULD I DO? Stay put or get tenant?

Question

I am purchasing my first property and I am deciding whether I want to rent it out and get a cheaper apartment or stay in it and pay the mortgage myself. As of now my plan is to buy a 3bd 2bath starter home for $200,000. PITI will be $1600-1800. I will buy it in a neighborhood outside the 610 loop (20-40 minutes outside of downtown) in an up and coming neighborhood where rents for comparable properties are $1800-$2000. While my tenants pay that mortgage, I plan to live in an apartment closer to downtown for $900-$1200. Does this make financial sense? Is there anything I should be concerned about? Is there something that I am not considering? Please help me make this decision.

Jeff Pasmore · Answer

Leyha, let’s break this down logically. Your idea isn’t bad it’s actually a smart way to let someone else pay down your mortgage while you keep your flexibility. But here’s where you need to think like an investor, not just a homeowner.

I like numbers - I can lie numbers can’t - First, the numbers.

• PITI: $1,600–$1,800
• Expected rent: $1,800–$2,000
• Potential apartment rent: $900–$1,200

At face value, you’re at least breaking even, maybe cash flowing a little. But let’s talk about what you might not be considering.

What could go wrong?( Think about this)

• Vacancy & Maintenance – If your place sits empty for even a month, you’re covering both a mortgage and rent. Plus, you’ll have maintenance costs—water heaters break, A/C units die, tenants complain. Are you financially ready for that?
• Property Management – If you’re moving 20–40 minutes away, are you self-managing or hiring someone? Factor in management fees if you don’t want those 2 AM ‘the sink is leaking’ calls.
• Reserves – Do you have at least 3–6 months of expenses saved? If not, this could backfire quickly.
• Tenant Risk – A bad tenant who stops paying can put you in a financial chokehold. Have you factored in screening, legal fees, and potential eviction costs?

What’s the upside?

• You build equity while keeping your cost of living low.
• You’re positioned in an appreciating area, meaning your asset should gain value over time.
• You keep your downtown flexibility while someone else funds your mortgage.

Now does it make sense?

It can—IF you run it like an investor, not a hopeful landlord. That means:

• Screening tenants ruthlessly.
• Having cash reserves.
• Understanding the risks.
• Having a Plan B if your place doesn’t rent as expected.

If you’ve got reserves and a solid plan for managing the property, this could be a great way to start your investing journey. If you’re stretching your budget and hoping ‘everything works out,’ that’s where investors get burned.

What’s your backup plan if things don’t go smoothly?

I hope this helps you … Best of Luck

Obed Calixte · Answer

Are you purchasing this with an owner occupied or investment loan?

If owner occupied, you don't have a choice but to live in it until you meet the required occupancy stipulations in the loan. Thereafter you can rent.

Financial wise there are a couple things to consider:

-When considering the property taxes, ensure it is based on reassessed tax amount, not current tax rate. It will change.

-Vacancy, maintenance and capital expenditures will need to be accounted for

-Will you self manage or use professional mgmt ? In either case it is great practice to account for property mgmt costs.

Sam Kahl · Answer

Hi Leyha, consider if you'd be able to pay both the mortgage and rent for a period of time if needed due to a vacancy or non paying tenant. Other than that, does the house you're looking to buy offer the ability to rent a room or level of the house to someone? I get that sharing a house isn't ideal but some people love the house hacking approach.

Personally, if I own one piece of real estate, I want it to be the one I live in. Life is more than monthly cash flow :-)

Daniel Tanasa · Answer

Hello Leyha,

Buying your first house with an owner occupied mortgage will allow you to come with less cash at closing and give you a better rate. I would try to get a house with a small garage apartment where you can rent the front house to cover most of your monthly payment and you can live in the apartment.  That way you take advantage of the more favorable loan terms and most likely your monthly payment for your housing will be less than what you would pay for renting an apartment.

Paying the full $1800 by yourself when you can live comfortably only paying $900 in rent doesn't seem like the best option. If you can only find a single family home and nothing with a garage apartment in your price range, I would look into renting the home by the room while you live in it, if you would be comfortable with that.

I hope this helps. Good luck!

Feel free to DM me if you have any questions and I will be happy to point you in the right direction.

Gustavo Delgado · Answer

@Obed Calixte hit a key point. What loan are you purchasing with? Owner occupied or investment loan? Read what your loan states about occupancy time before you can rent the property. I want to say they at least want one year occupancy before you make it a rental. Your  property taxes will be higher since it won't be your primary residence and your INSURANCE will be much higher too, since your policy would be a dwelling policy and not home owner policy.

Leyha Williams · Answer

@Jeff Pasmore Thank you!! This is great and I will consider these factors before making the decision.

Alex Perrault · Answer

This is THE answer!

WHAT SHOULD I DO? Stay put or get tenant?

Most Popular Reply

I like numbers - I can lie numbers can’t - First, the numbers.

What could go wrong?( Think about this)

What’s the upside?

Now does it make sense?