Buy now with 5% downpayment or wait until december with 20% downpayment

[Anique Akhtar]

Hi,

I am new to real estate investing and would like to buy my first-ever home in SoCal. I am struggling to find property since there is too much demand at the moment. I am also having liquidity issues at the moment. However, by December and January, I would have more cash to pay a higher downpayment. I am salaried, earn well, and live in a high-cost-of-living area (HCOL).

Since I am new at this, I am struggling to figure out how to find out my cost for these scenarios and figure out which scenario is best for me. Can the more experienced folks help me figure out which of the following scenario would most likely be the better financial decision?

My current rent is $3k and the property I am targeting is a $600k 2b/2b condo. Assuming the housing prices don't change or I am buying the property for the same target price:

1. Buy a property with a 5% downpayment with as much permanent rate buydown as allowed. After 9 months, pay enough in the principal to make it 20% equity and then recast/re-amortize the mortgage with a new payment without the PMI.

2. Buy a property with a 5% downpayment with a 2-1 rate buydown and then after 1 year, refinance with a 20% downpayment and a permanent rate buydown.

3. Wait 9 months and just buy a property with a 20% downpayment and a permanent rate buydown.

I am also planning to become a licensed real estate agent in California. I will start that process in January 2023. I am not sure if this would play out in buying a property right now but I imagine it should save me a lot of money during closing. 

Just need help on how to get started. I have been becoming more and more impatient and want to jump on real estate investing a bit soon but I am also struggling to justify which decision is better.

Any help and advice would be greatly appreciated.

Thanks,

Anique