To invest or not invest?

Question

Looking for advice on when/how/what to invest for first property with my current situation:

Husband + wife, 3 kids and 1 due in September. Currently crammed into 2 BR apt and need more space ASAP.

Option 1 we considered purchasing a house for us to live in for a few years and then either sell/rent later on as we move on to something else.

Option 2: since property prices are so extremely high right now, we rent out a 4BR house and wait to purchase our first home some time next year so we can save for down pmt and hopefully prices drop (live in southern CA).

Just started learning from BP a month ago and we are serious about becoming investors and change our family’s life. Wisdom & direction from current investors would be greatly appreciated.

Darius Ogloza · Answer

Finding a larger place and renting for a while longer sounds perfectly fine IF you are serious about saving for a down payment (as you say above) that will allow you to buy a home on favorable terms available to owner-occupants.

Chris John · Answer

@Jose Guzman Congratulations on the incoming special delivery!  haha.  I miss the days of having a young family.

It's really tough to say with any certainty, but I'd strongly consider buying the cheapest house that would work for my family that my wife would let me get away with.  The idea that I'd have is to save as quickly as possible for a down payment on a more permanent home later.  Then I'd rent the current house and move up.  That way I ended up with a permanent home and a rental.  I don't know the rules, but can you fha every 2 years?

Honestly, if prices stayed high, I might move up once or twice in the meantime until my "forever" home and collect rentals along the way.  I'd just be super careful not to borrow as much as a lender would let me, so I could sock some away.

Best wishes and congrats again.

Aaron K. · Answer

@Jose Guzman if I was in your shoes I'd make finding a new primary residence a top priority, because 4 kids and 2 adults in a 2 bedroom apartment isn't going to last for long.  That doesn't mean you have to buy a primary residence but I'd look for something with more space that you plan to stay in long term.  Given that it will likely be more expensive than your current place whether you buy or rent, once you get settled you may need to reevaluate, what is doable with your new savings rate.  You could invest out of state or locally depending on your budget and investing style, but I wouldn't hold my breath waiting for SoCal prices to drop like they did in 2008

Aaron K. · Answer

@Jose Guzman I like buy and hold and I think that is a good place to start, you'll have to figure out your own comfort level as to where you buy though.

Jose Guzman · Answer

@Aaron K. Thank you for the feedback. What’s your investing style? We don’t have a specific style because we’re amateurs in REI, what would be a good start?

To invest or not invest?

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