Primary residence downpayment or PMI it and buy a rental property?

[Volatov]

Just joined but have been a long time lurker. I'm stuck in a bit of a predicament. I'm currently considering moving to a new location based on a new job opportunity and will be buying a house. Let's say I buy $200K house and put a $40K downpayment (20%) but will not be able to buy an investment property since my cash will be all tied up. Or I could put down $10K (5%) and end up paying PMI on the main property but at the same time use that $40K to buy 2 investment properties each worth $100K. Is this a good idea and what are your thought?

 

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[biophase]

Just joined but have been a long time lurker. I'm stuck in a bit of a predicament. I'm currently considering moving to a new location based on a new job opportunity and will be buying a house. Let's say I buy $200K house and put a $40K downpayment (20%) but will not be able to buy an investment property since my cash will be all tied up. Or I could put down $10K (5%) and end up paying PMI on the main property but at the same time use that $40K to buy 2 investment properties each worth $100K. Is this a good idea and what are your thought?

Buy the 2 $100k investment properties and rent where you live.

 

[Volatov]

Buy the 2 $100k investment properties and rent where you live.

Why rent instead of purchase with minimal down and pay PMI? With the purchase at least some of the monthly payment will go to build equity or am I missing something. I can also have a lower monthly expense with a purchase even including insurance and taxes.

 

[jon.a]

Why rent instead of purchase with minimal down and pay PMI? With the purchase at least some of the monthly payment will go to build equity or am I missing something.

Sometimes where you want to live is too deep into the market cycle to make buying make sense.

 

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[Volatov]

Sometimes where you want to live is too deep into the market cycle to make buying make sense.

Do you mean appreciation on the property will not overcome the expenses associated with purchasing/closing etc?

 

[jon.a]

Do you mean appreciation on the property will not overcome the expenses associated with purchasing/closing etc?

I mean don't buy high, unless you plan on staying there for decades.

 

[biophase]

Why rent instead of purchase with minimal down and pay PMI? With the purchase at least some of the monthly payment will go to build equity or am I missing something. I can also have a lower monthly expense with a purchase even including insurance and taxes.

BTW, your math doesn't make sense as you need $50k to buy 3 total properties.

If you have only $50k and want to be over leveraged in monthly payments and on 3 properties I guess that would be fine. You are just asking for trouble if a downturn comes along.

Sometimes you can rent a much better home than you can afford to buy in many neighborhoods. So that's why renting the home you live in is desirable in this case.

 

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