Originally posted by @Jeremy Leech:
Hey BP community! Cant express how impressed I am by the BP community!
So I posted before about being a newbie real estate investor, Im very excited and cant stop thinking about my options. As of now, I am renting with my wife but we are at the point where we are ready to buy. My dilemma is, do I use my capital I've saved to buy a primary residence, or continue renting and start buying rental properties. I live in Oceanside, which is a small city in North County San Diego where property values just keep going up. Im worried that if I don't buy now / soon, I will have to keep chasing the market.
My question to all of you is, did you start investing while you were still renting or did you buy a primary residence first before starting your investment journey? Is it a smarter decision to build equity in my own home then pull out the equity in a year or two and start investing then? or start investing now, continue renting and buy once I've built a small portfolio.
Any comments or suggestions would be greatly appreciated!
Welcome Jeremy,
I was on the same boat in April of this year so I can provide a little bit of insight as to what steps I took. I couldn't decide whether it was right to buy a SFH for my primary residence, or start my rental portfolio while still renting. Believe it or not, a majority of the people I spoke to were telling me to buy a SFH for myself which would have been a huge mistake (for me at least). My question to you would be, Why not do both?? As both of these gentlemen said, Multifamily homes are one of the best investments a new investor can make, i stand by it, I swear by it, and no one can convince me otherwise. House hacking is easily the best way to build equity while essentially living for free (or very little) while also getting landlord experience and saving cash. Here's a little bit about how I started with my first investment.
I bought a two unit property in a popular area of Baltimore City (Unit A: 1BR 1 BA - Unit B: 3BR- 2BA). I purchased this property for 260,000 with zero down (VA loan). My mortgage, to include all of my expenses (minus electric) is $2,000 a month. I occupy Unit A, the 1BR APT. The upstairs unit is renting for $1850, which only leaves $150 a month for me and my girlfriend to cover. Both of us have fulltime jobs and are able to work a lot of overtime to save extra cash. This by FAR has been the best building block for me to start my investment portfolio because not only am I saving a ton of money to re-invest, when I decide to move on to another multifamily property, I believe this will cashflow a total of $1000-$1100 a month when I rent out the unit i'm living in. This is all because I started house hacking instead of buying a single family. Not every deal works for every person but I find it very hard to argue against buying a multifamily for your first property.
Hope that helps, best of luck.
Eric
