Approaching first RE Rental with two options

[Brian Roth]

HI BP,

I live in Charlotte North Carolina and have been trying to plan and prepare to develop a real-estate rental property portfolio as best as possible.

I have been looking to purchase a SFH in the 325K ballpark. For good and bad, the market in Charlotte is very competitive and lots of new money is coming to the area. Because of this there are very few homes that meet my requirements and seem like good long term holdings.

Option 1: 

Continue down this path. The lender I have spoken to say for investment property look to put 15-25% down(49-80K), which is possible, but some of that money would need to come from some other investments (currently running ~15%+ ROI)

Option 2:

Rent my current home, which will come back cash+ from my calculators and buy a new home to live in. My problem here is, my current home was purchased at 520K. One of the bank loan people I spoke with said that in order to qualify for a non investment property (lower down payment) the new house that I purchase needs to be a "upgrade" otherwise depending on what I do, this could be considered load fraud. So, at this 500+ price point at 10% down, would be 50K.  My though was to get a home with a little bit of acreage that in a couple years, after the construction prices settle down a little bit, build nicer duplexes on the property.

Or something different that I did not think of.

Outside perspectives looking in are much appreciated. 

Thank You

-Brian