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Updated over 4 years ago on . Most recent reply
New investor curious on best way to purchase 2nd property
I’m a new investor with 1 property under my belt. It is a 1b1b condo I took out a loan for and purchased November of 2019. The loan came to 65,000$. I lived there for a short while and rented it out in February of 2020. In March of 2020 I put 10,000$ towards the principle bringing my loan down to 55,000$.
My initial goal was the Dave Ramsey approach. Pay down ASAP and than mortage a second property. However after doing some reading I’m curious on some other ways of going about it and wanted opinions of other more experienced investors.
One thing I can’t do which I know is a popular and good option for immediate cash flow is take out a 2nd mortage. I’m only 21 and I want to take it slow. I have 17k in my savings right now and here’s what I am considering ....
1-Continue to pay down my condo and have the loan paid off and than take a loan out for a second rental.
2-Save my money and let my principle and interest be the only payment on my condo that I make. Purchase 2nd property in cash and rent that out.
Now it's important to note my 1b1b is rented at 1,000$ a month with the mortage and HOA coming to 690$ a month. My Interest rate for this loan is 3.9%.
So what would you do!
Most Popular Reply
@Emily Lauren boulden - given that you're borrowing at 3.9%, it makes no sense to pay the place off quickly. You have $17k in the bank right now (which is great considering you're 21 and own one place)....imagine if you had $27k in the bank. As @Joe Villeneuve stated above, the tenant is paying it off. If you want to pay it off faster, put $200 each month into an account for that condo (repairs, vacancy, etc) and add $110 to the principle every month.
Meanwhile, you'd be looking for your next property. $27k will present more options than $17k. You might consider a small house for your next purchase and house hack it. After a year or so when things are going well and you've been saving up because your roomies are paying the mortgage, you go to the third home. Make sense?