How to begin: Basics, what type of house to start with, mortgages

[Cory Parish]

Hi everyone, relatively new to BP/real estate and looking for some advice. I am in the Cleveland, OH area and looking to get into real estate. Most of the houses in my neighborhood are out of my price range, but one just came available at the top of my price range (actually probably a hair above, but hey). My question is, is it best to begin by buying a nice property in a good area for a reasonable price or to buy something that is very cheap and try to start of in the lower end. FYI the property has a 2BD/1BA (with a spare room that could be an awkward 3rd bedroom) down and a 1BD/1BA up laundry in downstairs only, both kitchens are functional but could use a slight upgrade and carpet needs replaced/wood floors need touched up. Everything else should be ok. Property is around $200k and I have no mortgage history and would have difficulty putting $40k down before anything else. I believe I would like to have 7.5%-10% ROI per year and I think that is doable. I don't have much money to put in, maybe $30k-ish, but i am really trying to get started. What is the first step?!Thanks for any and all input.

[Walter Key]

It's never a good idea to be house poor. Don't buy what you can't afford. Have you considered house hacking? Use your money as a down payment on a 2-4 unit property that you intend to live in. Get a FHA loan for 3.5% down. With $30,000 to work with, you could potentially buy something in the $750,000 range if need be. Live in one unit, rent out the other 3. The cash flow from the 3 units should cover all your mortgage expenses and put money in your pocket each month. Just food for thought.