Primary residence before investment property ?

[Lindsay Magnall]

Wondering if I should be buying an investment property instead of a primary residence first. I am currently renting. Thoughts?

[Gregg Cohen]

Robert Kiyosaki said it right in "Rich Dad, Poor Dad" when he said your primary home isn't your biggest asset...it's your biggest liability! Still, I do think there is a place in the decision for what makes your family happy beyond just the financial impacts.

Depends on where you live.  If you are in a high priced market like California, it makes a lot of sense to rent there and buy rental properties in a strong cash flow/appreciation market like Jacksonville.  You'll pay less in rent in CA than you would on your mortgage if you bought out there and you'd turn that capital into an increase stream from the positive cash flow you would earn on your Jacksonville rental properties. 

If you live in a low priced market like Jacksonville, it still may make sense to buy rental properties before your primary.  I'd run the numbers for what the rent would be vs the house payment on primary home.  Then take into account the additional positive cash flow you would receive if you invested it in rental properties.  

Right now, more than ever, I think it is a great time to consider buying rentals before your primary because interest rates are so low.  If you can use the capital you would've spent on a down payment on your primary to buy 3-5 rental properties with 4% interest on the loans or less, you've set yourself up to be on your way to financial freedom in the next 10-20 years.