Question about my budget for an investment property...

[Tyler Brown]

I'd like to get some input on how much I could/should be spending on an investment property, given the fact that my wife and I will be looking for a home of our own in the next 1-3 years.

We live in New York City, but I've been interested in purchasing a multi family investment property for a while now, and am getting the ball rolling on that.

Our household income is around $180k/year. We are currently renters, and have no debts of any kind. For our personal home (which would probably be a SFH on Long Island), we'll likely be spending somewhere around $450k-$550k, and property taxes range from about $6,000-$12,000 a year.

For the investment home, given our income and savings, we could simply purchase a duplex out in Long Island, which, in a lower class neighborhood, could be had for $300k-$400k, and rent out for $4-$5k a month total.

Or, on the much cheaper end of the spectrum, I've been looking MFHs in Northeastern Pennsylvania, that go for under $100k and rent out for about $1k-$1.5k total (the best of these properties that I've crunched the numbers on cashflow at about $500-$600 a month, after PITI and property mgmt fees, but before any CapEx).

Obviously I like the cash flow numbers on the more expensive homes here, but since we're looking at buying a home for ourselves in the next couple of years, I'm not wild about having that much capital tied up.  I'm not sure I'd be able to come up with a 20% downpayment for our personal home after the downpayment that the investment property will require.  It also may throw off our debt to income ratio, even if it's cashflowing nicely, because from what I've read, many lenders will not consider rental income until it has been established for two years, and we may be looking for a personal home in under two years.

Anywho, if anyone has any comments or suggestions about purchasing an investment property when you're < 3 years away from buying a home for yourself, I'm all ears!