Ummm...When do I buy a house for myself???

Question

So, I just got started in Real Estate investing. Over the past two months I've went from wholesaling my first property to having 5 more follow after that. I have been able to profit over 60k on these deals (I couldn't have done it w/o bigger pocket).

Now that I've been able to accumulate a little wealth alongside my full time job where I make pretty good money. At what point do I buy a house for myself? I'm 25 and I'm currently paying under $600, a month in rent. My partner keeps telling me that I should just stay in my apartment and I completely understand where he's coming from but what am I to do?

Jeff S. · Answer

Owning a home to live in will divert some of your time away from what you are doing that works. Why not buy a rental now and feel like a homeowner. The largest apartment owner in Portland rents downtown.

Andy M. · Answer

Save up enough to pay cash for your house then get an 80% equity line on it. That way you can spend your cash and still have your cash. Get some room mates for a little extra rental income while single.

James H. · Answer

You have to make a decision as to what is more important at the moment since you can't have it all at the same time. If you can make 60K in a year, why not buy your own house cash, wholesale for a few months and resume with the plan to buy your rentals?

Or stay at your current job until you get financing and once you get your house, your mortgage payment replaces what you were paying for rent and then proceed with your plans. Use your wholesaling skills to find a place in an area you want to live with comparable monthly payments to what you have. You could let off your some of your cash to put a big enough DP to make affordable payments and still have cash left over.

Why not buy a duplex/fourplex/XXplex in the college area and occupy one unit?

The bottom line is this: You can't keep your money and also spend your money at the same time. If you want to spend money without spending money, you will have to look into leveraging and at that point your plan becomes more complicated, but possibly larger albeit with more risk.

Mike Nelson · Answer

Curt - That sounds good but I don't want to stay at my current job. In order for me to stop working I would like to have a monthly cash flow to supplement that income. If I were to save up and pay cash for a home that would leave me no money to purchase rentals.

Mike Nelson · Answer

I def don't plan on staying in the area that I currently live. My credit is around 700 and if I was to buy a house around here for what I'm paying for rent it would be in an area that I wouldn't be to interested in living in. I got lucky on the place that I'm staying in now, it in a college area and it's a 600 sq ft one bedroom apt. I live by myself so that all i really need right now. The housing prices around here have been pretty steady for the past couple of years but there are a lot of first time home buyers in the market currently.

Curt Davis · Answer

If your making this good of money then just save up enough to buy a home cash.

Gene Hacker · Answer

Hard to say without knowing more info about your personal situation:

Are you planning on staying in the same area for a while?

Do you have good credit?

I am not familiar with your market...

What would it cost to buy the house that your renting for $600

Is existing home inventory raising or falling?

Are prices falling, rising or stable?

How is the local economy?