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Should I buy an investment property or a home first? The answer may surprise you!

Should You Buy an Investment Property or Home First

So you’re thinking of buying an investment property or your first home? Well, the answer may surprise you! Because the better question you should be asking yourself is Which one should I buy first? It’s not an easy question to answer. There are so many factors involved, but we can help you look at the situation from all perspectives and make the best choice for your particular situation. So without further ado, let’s take a look at when it makes sense to buy either an investment property or your first home.

Why You Should Consider Buying an Investment Property First

It doesn’t matter if you invest in property or a home first. So long as your financial plans are geared toward the long term.

In the long run, purchasing your own home will not improve your current cash flow since you will own the property outright.

Homeownership, like the home you live in, is considered bad debt, unlike owning an investment property, which is good debt.

Investment properties are considered good debt because they create income (rent), provide tax deductions, and increase in value more than their costs.

In the absence of an owner-occupied home. You would have little or no income, no tax deductions, and little capital gain. You can be crippled by bad debt as an investor since it takes your financial life away from you on paper and in reality.

Regardless of if you buy an investment property or a home first. Bad debt needs to be handled before a bank or lender will take your application seriously.

How to Know if an Investment Property is Right for You

How to Know if an Investment Property is Right for You

The answer to the question of buying an investment property or home first? This is different for everyone and depends on what your goals are. However, some questions can help determine if this is a good idea for you.
Let’s consider three common real estate investors and how they can best decide if buying an investment property is right for them.
Josh has the following thoughts: I have never owned a home before. So I’m not sure about which direction to take in terms of my housing needs. In this case, buying an investment property could be a good way to experience real estate investing without jumping into something too quickly with no knowledge. He might also find that it is a great opportunity to explore whether he likes real estate investing and figure out if it’s worth trying out as his full-time career.
-Dana has rented for quite a while and knows that she wants to start building equity by owning a home but she isn’t sure if she will be able to afford one. In her case, buying an investment property could be helpful. Since it would allow her to save up for a down payment on her own home to purchase it without any money out of pocket.
Jake has owned his own home for several years and loves that he has been able to build equity in a property. He is tired of being tied down by owning a single-family dwelling. And he would instead find properties with rental units so he can create more income from his investments. In Jake’s case, buying an investment property could be advantageous. Since it will allow him to invest in different types of real estate that have higher return potential than what he owns now.

Tips for Finding the Perfect Property To Invest

Investing in real estate can be a great way to put your money to work for you. But the question is should you invest in a property before buying your own house?
Here are some tips for finding the perfect investment property:

  • Make sure it has at least two bedrooms, and one bathroom and is close to public transportation. This will give the tenant more options and reduce the amount of maintenance required when they move out.
  • Don’t forget about taxes and insurance costs.
  • Try not to focus on finding a perfect location. You should be more concerned about whether it will attract and keep good tenants.
  • Also, keep in mind that it’s not only about being cheap. You want to ensure you get your money back as quickly as possible, so avoid investing in a property that needs major repairs and renovations. Instead, go for something that will fix up well and make it stand out from other available units.
  • Determine how much profit is possible. Find out how much comparable properties have sold for in your area and what kind of rental income they have generated. Doing so will give you an idea of what to expect. Then look at comparable properties that have been on sale for some time and try to determine why those sellers haven’t had success selling their units yet. Think about any changes that could help their situation, like lowering prices or investing more money into repairs, and then make a decision from there.
    -If you’re considering buying an investment property, don’t do it alone. Hiring a professional who works for you is the best way to find your next lucrative opportunity.

So should I buy an investment property or a home first?

Buying an investment property first is a smart move if you have the funds and the time to properly manage it. Why? You can make money on the rent. But, if your goal is to buy a home. Then buying one first will put less of a strain on your finances.
I should start by mentioning that there is no simple right and wrong answer to these questions. There are many factors that influence your decision and at least a little research can help you find your best path. If you are finding this difficult, We are here to help you.
Feel free to contact us!

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