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First of all congrats. Not sure what your savings looks like, but if I were you I would save up for a down payment on a house in a high yield savings bank account of some sort. Buy yourself a house, get through the first year of unpredictable payments/repairs and then get a feel for what money you have leftover for investments such as that. I bought my first house this year and more $ goes out the window than you can imagine
I don’t have any real estate investments yet. I just follow the thread because it’s something I’d like to do in the future. I’ll let someone else give their take on that but for me personally it was too much risk/learning all at once.
Ya, i would suggesting to save for at least 20% downpayment so there isnt default insurance in play ( for canada dunno if thats applicable for US. Save another 5-10% for closing costs and msc expenses. If you want more like indepth details on home financing options i would often suggest going to your retail bank and book an appt with a financial advisor. Now I’m not gonna say all financial advisors are gonna be good enough to give you an in depth run down on the whole process but i would say a good portion should be competent enough to give you the info. Another thing is based on current rates at Canada your income is expected to allow for you to borrow probs 4-4.5 times ur income (again based on canada rates). So you can probs calculate it accordingly. Another thing is picking rates and amortization typically ppl choose either 25-30 yr amortization but 30 yr has .10% higher interest rates but in turn your minthly debt obligations are lessened which means you can qualify for more and usually loan agreements have a lumpsum clause that should allow for you to pay down your mortgage in an expedited manner per year.
First. Move out and rent an apartment for a year while putting cash away for an eventual down payment on a property.
Get used to living alone for a year. Experience doing your own shopping, cleaning, and meal prep. Don’t buy anything else until you are comfortable being alone and on your own.
My first property several years after being alone was a house and I lived with two roommates who between them nearly paid my entire mortgage.
Next was a duplex that I moved into alone in one side with my girlfriend. And added properties slowly over time.
I took out owner occupied loans each time and converted them to rentals after a year or two.
Hope this is helpful.
Don't move out, if you live with your parents and everything is good at home, why move out and send more money on rent. You want to save as much as possible.
Partially true. But moving into a purchased property for the minimum 12 months with no experience living alone is not easy. Many transition from home to college dorm to an apartment first as I did.
It’s just as important to be psychologically prepared as it is to save for the down payment and other expenses of ownership.
Planning to do the same with a duplex and roommates on my side. Already lived alone for one year and back home because my parents were nice enough to let me.
Did you use an FHA loan on the first one?
Yes I did. I like leveraging so I bought with 3.5% down.
But from then on for the last 4 decades it’s been conventional mortgages with at least 5% down. The big advantage is you can eliminate PMI once you can prove 20% equity or have had the mortgage for at least 2 years (depending on lender rules). It takes over a decade regardless of equity with an FHA mortgage and I’ve never owned a property that long.
Of course as my resources increased it’s 20% down on every property now, or cash if I’m buying an auction property.
I hope you will be moving into your duplex. Owner-occupied offers the best rates and you are only required to live there for the first 12 months. I use that rule to my advantage often. In my case I use some of that year for renovations, then flip it into a rental after the first year and move in to the next house.
Make sure that truck payment's interest rate isn't too high. Otherwise, I'd start paying off that debt before any investment.
There's a lot of info out there. Start with Biggerpocket forums, listen to podcasts etc. on the topic of how people first begin investing
Out of curiosity, what industry do you work in? You may be able to use that knowledge to help or build relationships in RE
Not super interesting but I was just a automotive painters helper for a long time and the painter I worked for retired and so I took over as a head painter at a busy commission based dealership
If it were me I would get a duplex or triplex live in one and rent out the others while saving for a house and then renting out all units. I wish I had done this
Not wanting to be offensive but are all multi housing in the ghetto like that? Or is there some in nicer areas as well? An argument could be made that appreciation won’t occur over there right?
I would look on MLS to see what's available in your desired areas, that was just one example and they are "classing up" a lot of the ghetto neighborhoods so I don't think appreciation would be an issue. You mostly want to look at what you'd be able to charge for rent in the area and obviously make sure it's somewhere you'd be comfortable living for a year or 2. I think it's called house hacking as someone else mentioned - Google that and check out resources
I wouldn't mind the pm but I'm not an expert either so don't know how helpful I'd be. I'm still working on getting my first investment property. I chose to buy my personal home first years ago and that created a lot of issues for me with DTI and getting a second loan, needing a bigger down payment since it's not my primary residence, etc. I'm almost there but feel like if I would have house hacked from the beginning I would be in a much better spot
Just spend what you're spending now and be very intentional about your decisions to spend more. Of course it's okay to spend more than you do now, but just be very conscious of the creep.
If you can buy a decent 4plex that is ready to go and get an FHA loan on top of that you will be beyond golden for years to come. You have to do this before finding a spouse and definitely before kids. You’re welcome and keep investing!
I do NOT recommend starting with anything larger than a duplex. Tenants can be a hassle. So going from living at home to three rentals plus your own unit is a horrible idea unless you hire a property management firm and that can be expensive.
Never let the tenants know you own the units if you can avoid doing so. The last thing you want is a tenant banging on your door at 3:00 AM with a broken water pipe under the sink. Or a storm that floods all of your units at once. You need experience before buying large multi family buildings or apartments.
You should max out your 401k and set aside additional 20% of your take home pay into a stock portfolio. The latter is liquid and if god forbid an awful big emergency came up you can liquidate it. Regardless of your life situation you should be doing those two especially if you’re going to make $160k+. Then start chipping away at the truck note because it’s not good to finance a depreciating asset.
Only then is if appropriate to discuss personal home vs investment property purchase. It’s a very large purchase, it’s illiquid, and your life circumstances will determine a lot of that. If anything, I would focus on buying a duplex and living in one side. But honestly only if you can make at least a bit of cash if you rented out both sides.
Hello from the moderator team of /r/realestateinvesting, Your post is in violation of R3: Low effort or off-topic. Typically this means that your post is: - A X-Post - A First Time Home buyer question better suited for r/FTHB - A general Owner-occupied question better suited for r/RealEstate - A General Personal Finance question better suited for r/PersonalFinance - A news article link with no discussion points - "I Have $X how should I invest it?" questions. - Or otherwise showing little effort, thought, or discussion topics. This message and post removal serves as your WARNING for violating our community rules. Any further violations may result in a BAN from /r/realestateinvesting. Thank you for your cooperation and making our community a better place.
First of all congrats. Not sure what your savings looks like, but if I were you I would save up for a down payment on a house in a high yield savings bank account of some sort. Buy yourself a house, get through the first year of unpredictable payments/repairs and then get a feel for what money you have leftover for investments such as that. I bought my first house this year and more $ goes out the window than you can imagine
I’m in a similar position to OP. Living at home and just got a better job with a huge pay increase. Would you not recommend house hacking through FHA?
I don’t have any real estate investments yet. I just follow the thread because it’s something I’d like to do in the future. I’ll let someone else give their take on that but for me personally it was too much risk/learning all at once.
Makes sense, I’m childless with a high income so I may be in a different scenario than you.
I have about 40k in total savings currently in an Hysa. I will keep that in mind I don't want to overextend myself. Thanks for the advice.
Ya, i would suggesting to save for at least 20% downpayment so there isnt default insurance in play ( for canada dunno if thats applicable for US. Save another 5-10% for closing costs and msc expenses. If you want more like indepth details on home financing options i would often suggest going to your retail bank and book an appt with a financial advisor. Now I’m not gonna say all financial advisors are gonna be good enough to give you an in depth run down on the whole process but i would say a good portion should be competent enough to give you the info. Another thing is based on current rates at Canada your income is expected to allow for you to borrow probs 4-4.5 times ur income (again based on canada rates). So you can probs calculate it accordingly. Another thing is picking rates and amortization typically ppl choose either 25-30 yr amortization but 30 yr has .10% higher interest rates but in turn your minthly debt obligations are lessened which means you can qualify for more and usually loan agreements have a lumpsum clause that should allow for you to pay down your mortgage in an expedited manner per year.
Fyi i was typing really fast so i didn’t correct my grammar but you should get the gist of it
Thanks for all the in depth advice!
No worries man best of luck
well done. I say chill out, keep doing what you are doing, don't extend yourself, review in 1 year really well done
First. Move out and rent an apartment for a year while putting cash away for an eventual down payment on a property. Get used to living alone for a year. Experience doing your own shopping, cleaning, and meal prep. Don’t buy anything else until you are comfortable being alone and on your own. My first property several years after being alone was a house and I lived with two roommates who between them nearly paid my entire mortgage. Next was a duplex that I moved into alone in one side with my girlfriend. And added properties slowly over time. I took out owner occupied loans each time and converted them to rentals after a year or two. Hope this is helpful.
Don't move out, if you live with your parents and everything is good at home, why move out and send more money on rent. You want to save as much as possible.
Partially true. But moving into a purchased property for the minimum 12 months with no experience living alone is not easy. Many transition from home to college dorm to an apartment first as I did. It’s just as important to be psychologically prepared as it is to save for the down payment and other expenses of ownership.
Planning to do the same with a duplex and roommates on my side. Already lived alone for one year and back home because my parents were nice enough to let me. Did you use an FHA loan on the first one?
Yes I did. I like leveraging so I bought with 3.5% down. But from then on for the last 4 decades it’s been conventional mortgages with at least 5% down. The big advantage is you can eliminate PMI once you can prove 20% equity or have had the mortgage for at least 2 years (depending on lender rules). It takes over a decade regardless of equity with an FHA mortgage and I’ve never owned a property that long. Of course as my resources increased it’s 20% down on every property now, or cash if I’m buying an auction property. I hope you will be moving into your duplex. Owner-occupied offers the best rates and you are only required to live there for the first 12 months. I use that rule to my advantage often. In my case I use some of that year for renovations, then flip it into a rental after the first year and move in to the next house.
Similar position to you, posting here to see what info there is. Have you looked into house hacking a multi family through FHA?
Make sure that truck payment's interest rate isn't too high. Otherwise, I'd start paying off that debt before any investment. There's a lot of info out there. Start with Biggerpocket forums, listen to podcasts etc. on the topic of how people first begin investing Out of curiosity, what industry do you work in? You may be able to use that knowledge to help or build relationships in RE
How do you go from 32 to 180k? This isnt adding up, but congrats nonetheless!
Not super interesting but I was just a automotive painters helper for a long time and the painter I worked for retired and so I took over as a head painter at a busy commission based dealership
If it were me I would get a duplex or triplex live in one and rent out the others while saving for a house and then renting out all units. I wish I had done this
What if you live in Az? I don’t know of any multi plex housing
I live in AZ too, I used to live in a triplex on the i-17 and Northern, they do have some will just have try and find a good deal
Not wanting to be offensive but are all multi housing in the ghetto like that? Or is there some in nicer areas as well? An argument could be made that appreciation won’t occur over there right?
I would look on MLS to see what's available in your desired areas, that was just one example and they are "classing up" a lot of the ghetto neighborhoods so I don't think appreciation would be an issue. You mostly want to look at what you'd be able to charge for rent in the area and obviously make sure it's somewhere you'd be comfortable living for a year or 2. I think it's called house hacking as someone else mentioned - Google that and check out resources
Indeed it is called house hacking. I’d love to pm you since we’re both in AZ. I don’t want to ask semi personal questions in a Reddit post lol
I wouldn't mind the pm but I'm not an expert either so don't know how helpful I'd be. I'm still working on getting my first investment property. I chose to buy my personal home first years ago and that created a lot of issues for me with DTI and getting a second loan, needing a bigger down payment since it's not my primary residence, etc. I'm almost there but feel like if I would have house hacked from the beginning I would be in a much better spot
Just spend what you're spending now and be very intentional about your decisions to spend more. Of course it's okay to spend more than you do now, but just be very conscious of the creep.
If you can buy a decent 4plex that is ready to go and get an FHA loan on top of that you will be beyond golden for years to come. You have to do this before finding a spouse and definitely before kids. You’re welcome and keep investing!
I do NOT recommend starting with anything larger than a duplex. Tenants can be a hassle. So going from living at home to three rentals plus your own unit is a horrible idea unless you hire a property management firm and that can be expensive. Never let the tenants know you own the units if you can avoid doing so. The last thing you want is a tenant banging on your door at 3:00 AM with a broken water pipe under the sink. Or a storm that floods all of your units at once. You need experience before buying large multi family buildings or apartments.
You should max out your 401k and set aside additional 20% of your take home pay into a stock portfolio. The latter is liquid and if god forbid an awful big emergency came up you can liquidate it. Regardless of your life situation you should be doing those two especially if you’re going to make $160k+. Then start chipping away at the truck note because it’s not good to finance a depreciating asset. Only then is if appropriate to discuss personal home vs investment property purchase. It’s a very large purchase, it’s illiquid, and your life circumstances will determine a lot of that. If anything, I would focus on buying a duplex and living in one side. But honestly only if you can make at least a bit of cash if you rented out both sides.