Purchase 1st Rental Property

[LeeAnna Zepernick]

Fork in the Road-

What is the best strategy to buying our first investment property?

Using a 401k loan:

-pay ourselves back-not bank

-little to no fees

-5 year term

-higher payment than 30 year mortgage

- we would be a “cash buyer” in the transaction

- a lower dollar amount to work with to purchase the property

OR

Conventional Mortgage

-30 year term

- lower payment requirement in case of no occupancy and we have to afford it

- a higher dollar amount to work with to purchase the property

- higher mortgage related fees

[Jody Sperling]

I think it depends on what kind of property you want to buy and whether you want to scale your business or grow slowly.

If you take a loan off your 401k, you'll pay less, but grow more slowly. If you use bank leverage, you can likely grow relatively quickly.

One rental property won't change your lifestyle or allow you to retire to a remote island to rest and relax for the rest of your days, but 200 properties could do that for you.

I know my goal is to replace my income, freeing me to pursue my passions of writing full-time. If you know what you want, that should help you determine how to purchase your first rental.

Best of luck!