Buyisng my first property post layoff

[Alixander Laffredo-Dietrich]

TL;DR - I am brand new to real estate and am weighing options on buying my first property that I can use to set me up to buy a full rental property in the future. However, I'm thinking how to navigate a less-than-ideal situation and am looking for your expertise and advice.

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I’m looking at my first property at the moment after a personally rough 2022. FYI, I live in Richmond, Virginia.

The hard news: I was laid off multiple times that year so I don’t qualify for renovation loans. More so I had to move back in with my family which is a major shot to personal morale.

The good news: I’ve recouped my cash savings to $20k in a few months! I’ve got a few lenders lined up and am working with an agent. I'm looking around on this forum to find a mentor as well to guide me through the process.

Currently, I'm staying with family in Richmond, VA as a 30M (layoffs hurt!) so needless to say, I'm trying to exit asap! However, I want to buy a house and not get tied into renting. My budget is $250k although I’d like to stay closer to $200k. I’m looking for homes where I can live with a roommate to offset living costs, and would meet the 1% rule when I move out to my next home.

Unfortunately, I’m having a very hard time with this. Most homes I find are in the .7%-.75% rent to purchase price.

So here are my choices as I see them (again, please offer any advice or other choices I may not be considering).

A. Buy a home on the cheaper side that negatively cash flows just so I can move out and collect equity on something using a conventional loan. Then, after a year, I can qualify for a renovation loan for another house, fix that up, and have a positive cash-flowing property. Pro: I have a home and flexibility. Con: I’m not making money on it.

B. Stick it out and hope things get better while stashing more cash away. Pro: Rapidly increase savings. Con: Risk being a 31M living with his family.

C. Rent and hope things get better. Pro: I’m out of my family’s house. Con: I’m losing money and have less flexibility to leave my rental contract.

I personally am leaning towards A. It’s not perfect, but I’m fairly certain I can get my living expenses around $1k living with a roommate and I can bust butt to regain savings to buy a pure rental property.

In addition, we are seeing a huge influx of people from DC, NYC, LA, and Austin. I lived in Raleigh NC a few years ago and saw home prices skyrocket. I don’t want to miss that train here in Richmond.

Thank you in advance for your insight.

[Dawn Roy]

I like your well thought out questions regarding buying here in the RVA market.  As you already know, we are a very competitive market.  I have a couple of suggestions, if you will.  First, there is an amazing investor community here and we welcome all.  Second, I think buying buying something that needs TLC provides an opportunity for equity PLUS having a roommate will help offset expenses.

Your stated budget will mean a fixer in our market depending on amenities, etc.  There are options that come across my desk daily from wholesalers and some have potential owner financing.  More than happy to explore this subject with you more if you choose.

Cheers!