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First purchase saving up strategy advice

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    First purchase saving up strategy advice

    I've got a full time job and have no plans on leaving anytime soon but I want to get into the buy and hold rental market in the greater seattle area.

    My question going forward is how did you guys acquire your first property? Did you save up until you had the 20-25% down and then get a conventional loan?, did you borrow from family? Hard money lender? I have just recently paid off all my debts (car, student loans, CC, etc) and am trying to figure out my game plan of entering the real estate game and if its advisable to simply sock away money for the next 2 years or so until I get to that 20-25% which would prob be in the area of 40-50k in my area for a decent 3b SFH, thoughts????

    #2
    Originally posted by MarcJoe View Post
    its advisable to simply sock away money for the next 2 years or so until I get to that 20-25% which would prob be in the area of 40-50k in my area for a decent 3b SFH, thoughts????
    Of the options you presented, this is your best one. With that said, I feel obligated to also ask about the rest of your financial situation, because buying a home, especially if it is not planned to be your own primary residence, is a significant financial undertaking. Do you have a solid cash reserve, on the order of 4-6 months of anticipated expenses (including added costs of future homeownership)? Are you saving at least 10-20% of your income toward retirement? These are just a couple of immediate concerns... Buying & owning a home (or multiple homes) can be a great financial boon. But if you aren't adequately prepared for it, homeownership can be the biggest mistake in your life.

    To answer your immediate question, yes... I saved up about 30% of my home's purchase cost before buying, and used a conventional 15-year mortgage to buy it.
    "Praestantia per minutus" ... "Acta non verba"

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      #3
      Clarification please, are you wanting to buy a SFH as a property to rent or 'flip' ? How fast can you save 20% ? Mortgage insurance is extremely expensive and offers you no benefit at all. What skills and tools have you acquired to buy a fixer-upper in a decent community or community being gentrified? How much risk can you tolerate? How much time are you willing to devote to this project?

      What experience or skill sets have you to become a landlord? Are you a good judge of people? How do you identify liar? How detailed a person are you? Do you naturally follow up employment details, references, past landlords etc? Can you drop everything and go fix whatever is not working at the tenant's convenience?

      A bad tenant can wreck your rental and if that's not bad enough, the rules to evict are very much skewed in favour of tenant, not landlord. You will need to be able to make mortgage, municipal tax and fire insurance payments to cover those months of vacancies or deadbeat tenants.
      Last edited by snafu; 10-23-2014, 08:39 AM.

      Comment


        #4
        Originally posted by kork13 View Post
        Of the options you presented, this is your best one. With that said, I feel obligated to also ask about the rest of your financial situation, because buying a home, especially if it is not planned to be your own primary residence, is a significant financial undertaking. Do you have a solid cash reserve, on the order of 4-6 months of anticipated expenses (including added costs of future homeownership)? Are you saving at least 10-20% of your income toward retirement? These are just a couple of immediate concerns... Buying & owning a home (or multiple homes) can be a great financial boon. But if you aren't adequately prepared for it, homeownership can be the biggest mistake in your life.

        To answer your immediate question, yes... I saved up about 30% of my home's purchase cost before buying, and used a conventional 15-year mortgage to buy it.
        Actually, My goal (at least at this point) is to slowly acquire several paid off rentals, and then down the road consolidate into a larger multi family at Some point (8+ unit). As juvenile as it sounds but I kind of like the monopoly idea of get 4-5 houses then upgrade to a larger multi fam. Is the strategy for conventional financing basically 1. Put your down payment together 2. Get pre- approved with lender 3. Find property that matches what your looking for, and make an offer?

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          #5
          Frugal Question and Answers

          Small investment properties and earn the respect of resident, SFH is the good thought to cover up the rental issues, the strategy to invest is little harder if you are new investor for house owner ship, slowly but any one should take step for the future insurance, whether buy a house or multi houses, you need to be very careful about the tenant; you have mortgage, municipal taxes, and many more for as the insurance.

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