BUY more rentals or buy our dream home ???

Question

With 2 free and clear rentals and solid jobs. Me and my wife was approved for 300k in buying power with Wells Fargo. Keep in mind we’re 27 years old, we have 2 children, and living in a 1 bedroom.

My wife is all in getting our dream home of course.

My business mind is thinking buy more investment properties. Also I’m thinking about the dream home because it was all a goal of mine to get the big house ?

What y’all think ?

John Underwood · Answer

Read the book Rich Dad Poor Dad. The house you live in is not an asset it is a liability. This is because it is not making you cash every month. Buy assets that will cash flow to pay for your house, cars, college education for your kids etc. Do this while you are young and you will soon not have to worry about money or if you were to lose your jobs.

Put off that dream.

Buy a quafplex and live in one unit. Every 2 years but another and live in it. Do this a few times then buy your dream house and have it paid for from cash flow.

Jim K. · Answer

@Isiah Ferguson

Isiah, if you're in this business, then one of the things that needs to go by the wayside is the belief that you should buy a "dream home" anytime during your most active investment years. My wife and I have lived in construction zones now for six years and it's been one of our wisest financial decisions.

The number one silly decision that will limit your capability to turn cash flow into net worth, that is, to save and invest, is spending too much money on your housing situation.

Get a modest 3 bedroom as cheaply as you possibly can.

The book to read that will convince you that this is your best strategy is Thomas J. Stanley's Stop Acting Rich...And Start Living Like A Real Millionaire. This was Stanley's last book, written well after he was catapulted to fame by "The Millionaire Next Door," his most popular book.

Account Closed · Answer

You need a larger home. It may or may not have to be a $300K "dream" house but if you can easily afford it why not? The point of life is to enjoy the journey. Obsessing over the number of "doors" or amount in your bank account or net worth has no value in an of itself. Its value is in enabling you to live you life to its fullest, no matter how you define it. There is a point of "enough". Learn to recognize your "enough" or you will put yourself on a never-ending treadmill of your own making.

Brian G. · Answer

@Isiah Ferguson read @Dave Foster wrote again. If you plan to sell, his advice is very financially efficient for your situation if rightly applied. The big question in doing a 1031 exchange is whether or not you really want to hold a given property longterm. If not, what Dave suggests is great advice. It’s all about having an efficient portfolio that is in line with your risk tolerance and improving the quality of your holdings over time. Congrats on your success so far. Way to go!

Max T. · Answer

I would split the difference - go for a solid 3/2 in an appreciating area that you'd be comfortable in for at least 5 years, and that would also make sense as a rental after you move out. Bonus points if you can force appreciation while you're in there. Ideally you can put 5% down now, then rate/term refi in a few years after appreciation to drop your PMI.

And I wouldn't sell the rental unless you really don't want it. I prefer to open up a HELOC instead - it is super flexible and cheap to set up.

Isiah Ferguson · Answer

@Dave Foster Thanks for the feedback. Idk but I think so many options can be not so good lol. Your scenario giving sounds like a great idea especially to avoid paying the govnt any of my funds. I will consider both buying 1 rental cash and another leverage. I think that’s a win win. Keeping my primary with debt isn’t a bad idea either. It’s cheap financing and it’s only about 28% of my earned income. 1 of my free and clear rentals right now can wash the payment if need be as well. Manly, as long as me and my wife is on the same page, it’s all worth. With her it’s about comfort and stability, she can care less about buying property but understand what it can do for us. Somewhat complicated but we’re figuring it out. We’re first generation intentional wealth builders in our family.

Isiah Ferguson · Answer

@Jasmine Hieke I completely understand. I swear I need a life coach. Me and my wife did not grow up with many choices and now we have so many ugh. But we are blessed. We are first generation when it come to investing, so we’re figuring things out on the go. It’s a journey and we are super positive.

Samuel Liapis · Answer

Yes but then you are essentially starting from nothing again. You wouldn't have any bills so that would be great! But you would only be able to save your income from your jobs to start investing again, whereas if you stay in your current situation, you could have the cashflow and your income to compound and buy more properties faster. So instead of a 300k dream home, you are looking at a 2.9 million dollar dream home in south Florida with a dock to park your personal boat.

Ok that's my dream home, but still you get the point =D

Sam Shueh · Answer

Family comes on top of everything.

BUY more rentals or buy our dream home ???

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