Thread: horse before cart?

hey guys,

thank you to everyone who posts here, im learning so much. My question is would it be counterproductive to own a rental before you own your own home? so in my situation im a renter who wants to get into real estate, bad idea to have a rental property while i personally pay rent?

thank you

Selfmade,

Welcome to the forum! This is a great question. Here is what I think: If you are making payments on a home, this might hinder your ability to save or obtain a decent amount of capital for rentals or any other income producing asset for that matter. Does your current rent allow you enough room to have extra money left over each month to invest? If so, then make an informed decision on where to invest it (rentals) and start small.

PS: I am renting and have renatal income from real estate. It's not at all a backwards way to invest.

I also rent and have rental real estate. The only problem I could see with doing this is if you end up moving somewhere far away from your properties. Of course you could hire a property management company, but make sure you DYODD on locating a reputable one.

I also think the amount of rent you pay could be a factor. If you can pay a mortgage for less than you rent (don't forget taxes, insurance, and maintenance!) it may be worthwhile to build some equity. I personally only pay $275 mo. in rent so it's clearly a no brainer to rent at this time. Plus, we are not sure where we want to end up and don't want to be tied down per se.

I say go for it! Now is as good a time as any to get into real estate with record low mortgages, foreclosures, and a strong rental market.

Originally Posted by danoodle

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I say go for it!

how about first time homeowner financing? ive heard that lenders are not taking less than 20% down payment. how do i learn more about requirements?

thanks

Hmmm...I suppose it really depends on your bank. I don't know too much about "conventional" loans as I have the hookup with a banker who basically flies me in under the radar when it comes to loans. Just last Wednesday he pushed a small loan of 30k for me and got me the money in a few hours. I'm pretty sure that is not normal, but, like I said, that's all I know.

Do you have any money saved up as of right now? I'm not surprised by the 20% requirement, but it seems that unless you get creative, you do need to front some money these days. Mortgages are at record lows; I personally believe now is the best time to get into RE. I am still a relatively new investor, but if you have any questions, let me know!

Originally Posted by Qjet50

You may want to consider a 2-4 unit property, with you living in one of the units. IIRC, up to four units still qualifies for a private/residential loan, so you could still benefit from any homeowner tax deductions and should qualify for low owner/occupant mortgage loan rates, and your tenants will help you pay down the loan.

If you don't mind living so close to your tenants, this is a good way to start RE investing.

Hello Selfmade, I'd goe this route, as it provides the best possible entry, while the rent that you would be paying could be saved for your second property. In terms of living with your tenants, you could hire a property manager and you act as a tenant/resident manager yourself. Just a few options.…

Let's us know how things go.