First off I just wanted to say that I am happy I found this site. Lots of great information here. Here is my situation.
I am the sole bread winner in my family. My wife is a stay at home mom and that is not likely to change anytime soon. I have a long-term steady job with decent pay but am looking for supplemental income plus with the way pensions are being eliminated I want to have a backup plan for the future. I am not looking to get rich quick but want to be able to have some extra time and money for travel, family, etc, I guess I feel now is the time to take action. I am 43 years old and ideally would like to retire from my current job at age 55. We will be purchasing a single family home in the $100,000 range in the next few months with a down payment of only about $5,000 or so (we dont have a lot in the savings account). This will be a home for us to live in for a few years and will probably be a 3 bedroom ranch fixer upper type. My wife and I both have credit scores of 736+ and currently have zero debt. Within a year or so of purchasing the house I would like to buy an investment property and add more down the road as opportunities present themselves and my knowledge of the subject expands. I was planning on starting with a duplex, 3 unit, etc. Again I wouldnt have a lot for a down payment. However I could divert some of my cash going to my jobs 401k plan (no company match)and put it into a savings account for a year which would result in approximately $8,000 for a down payment. With all this being said I have recently had some concerns about the area I live in. I reside in mid-Michigan. Specifically the Bay City/Saginaw area. There has been a lot of jobs lost here recently and possibly more coming due to closings of auto manufacturing plants. A couple of realtors have told me it is a home buyers market right now in this area but that rental units are in demand because many people cannot afford mortgages or have poor credit. I have seen a few 2-4 unit rental properties listed in the $80,000 range. However after some quick calculations on the “gross income” listed in the multiple listing guide books VS. my estimate of “expenses”(with a low down payment thus a high monthly mortgage payment) there would be no way I could offer their asking prices. One thing I am fairly certain of is that I probably should avoid a negative cash flow situation in this specific market area. I was hoping some folks could chime and offer some advice to help me get started on the right path. Do lendors typically require a certain % for a down payment? Typically how much higher are the interest rates for an investment property compared to a home mortgage? Considering the job market situation here do you think I might be better off waiting to purchase a rental property? Any advice you can offer is greatly appreciated. Thanks all. Mike