First time homebuyer - with a new gleam in his eye.

[Randall Williams]

Hi gang, 

I'm sharing my story here because I'm interested in your thoughts and feedback, and because I'm pretty excited about how the buyer-turned-investor learning curve is shaping up. 

My girlfriend and I bought our first house together 6 1/2 years ago. She had the down payment, I had the credit score and monthly income to make it work. I didn't know how to look at the terms of the deal - she was excited that "they gave us a house!" But I was fixated on the six-figure interest projections of the 30-year note. 

It was a 5/1 ARM at 5.65% - I didn't know what an ARM was. we split a year later, I bought her out, then for $600 bucks in fees, I moved into a 5/1 ARM at 3.99%. I strongly considered a refi and fixed-term loan, but I decided on the ARM with an aggressive payoff schedule.

Twice last year, I looked seriously at rental property - once getting approval to finance, the second time I worked out a 3.5% home equity loan at for 80% of my current house, which would have bought the other property outright. I ended up not doing either deal. In addition, I've been renting out two rooms in my place for about four years at an average return of $750 a month.

I got within striking distance of paying off the mortgage this year, but decided to invest in liquid index funds and keep the mortgage interest deduction coming. The ARM is up soon. The bank has informed me that the interest rate is dropping half a point, and my new payment is $160.00 a month. Goodbye, mortgage interest deduction, hello extra cashflow.

And THAT's when I finally cracked. The opportunity cost on not investing the extra dosh now seems way too high, right? 

My current plan is to buy a single-family home near mine to rent and hold long-term. Once that's rolling along solidly, I'll be ready to look at other options. 

The rent-should-be-2%-of-the-buying-price axiom is slowing me down. I think I can hit 1% and cash flow positive, but 2% seems really hard in my area. Better to stay close to the place I already own, or branch out and deal with the extra logistics of property elsewhere? 

Thanks for reading - I'm pretty excited about this community, and grateful for the connections I've already made. Forward!