New user

[Jacob Tucker]

Im 19 years old. I am brand new to bp and live in the utah are. What are some pieces of advice  you would give to someone just starting out and also a question here. What percent of a down payment foes someone have to have to buy their first home. Thanks for the help!

[Chris Bingham]

Hey Jacob, welcome to Bigger Pockets. This is a great resource. My biggest piece of advice is to be sure you are going to make money when you purchase the property. i.e. if you plan to rent it out, be positive that you will be making a profit at the end of the day. If you aren't, it won't make much sense. Don't listen to some guru that tells you it is OK to have a negative cash flow for the first few years. Its not OK. If you are going to do this, make sure you are going to be able to make money at it. When I bought my first rental property I looked at the potential rent and said, OK that looks good. But What If I Am Wrong? Or the market takes a dive right after I buy it. What kind of rent would I need to charge to be positive that I will fill up the vacancy in 1 weekend? When I can drop the rent that much and my numbers still come out with me not losing money on it, that is when I felt comfortable pulling the trigger to buy my first place.

With FHA loans, you can get in with 3.5% down. But beware, the mortgage insurance NEVER drops off on FHA loans. A few years ago it would drop off after you had a certain amount of equity in the property. Not anymore. The pesky mortgage insurance stays on for the life of the loan. So, make sure you plan for that if you go FHA.

Conventional will let you get in for 5% down on an owner occupied place. They have mortgage insurance as well, but it doesn't stick around for the life of the loan. Also, I have found it worthwhile to buy out the mortgage insurance upfront if I plan on keeping the place for several years. 

Another piece of advice. Just jump in and do it as soon as possible. If you hustle and especially if you are not afraid to fix things on your own, you can get through just about any hurdle!

OK, one more. If you live in the property for 2 of the last 5 years as your primary residence and sell it, you may not have to pay any federal taxes on the gain. This is a great way to build up some wealth without having uncle sam take a chunk along the way.

Good Luck!