This is my first post here. I apologize for its length. My future posts will probably not be this lengthy. I constantly read posts from this and another forum and have been doing so for weeks, if not months. I know there is a wealth of information on this site that will be beneficial to me and others for years to come. I look forward to any ‘general’ advice you can give me regarding my situation.
I say general advice because I am months away from my first purchase and undoubtedly, I will aim to acquire more specific advice later. For right now, I could use assistance regarding two areas: a) when to start and b) what to purchase.
WHEN TO START
I will be graduating school in May and will of course have student loans to repay. The total student loan is $80,000 (approx). Because $20,000 of that is a personal loan from a friend, it doesn’t show up on my credit report. There’s also no interest associated with that loan. The remaining loan is entirely from the Government. Monthly payment on the $20,000 personal loan is $300 minimum (again, not reflected on my report for any debt-to-income analysis, though the inclusion of it in any such analysis would of course be sound policy), and I expect monthly payments on the student loan to be another $300 per month.
While I own a car, it’s already paid for, and therefore the only payments I have associated with my car are insurance payments and costs of maintenance. I virtually have no credit card debt (less than $1000) and I try to keep my balance at or below 30%. I have ‘good’ credit rating with a middle score of 670.
Upon graduation, I expect to earn $50,000 for the first year where my employment will be in D.C. I live in Virginia now. After the first year, There is the distinct possibility of relocating to any one of the following areas for a permanent job (at least three years): Florida (Miami), New York, or Georgia with a slight possibility of remaining in the District. My income then would like not exceed $50,000 greatly.
Question: Since I know that I’m going to be here for another year, do I a) continue to rent while ‘aggressively’ paying down on loans (specifically that of the personal loan) and begin saving for the purchase of my first property, or b) purchase a home with as little down as possible while having my job as a cushion for any emergencies - while also ‘unaggressively’ paying down on my loans? If i exercise option-b, I would attempt to live with roommates for the year to help with the mortgage payments (or otherwise have tenants if the property is a multifamily home - see below).
Part of the reason why this question have some difficulty for me is the realization that I don’t know where I’ll be after the first year. One possibility is to purchase a home now and rather than selling it before moving to another state, I would simply hold the property as an out-of-state property (probably a no-no for someone just starting out).
WHAT TO PURCHASE
Assuming I decided to stop paying rent and start paying a mortgage, the next question for me to decide is what I should purchase. Specifically, do I a) purchase a single family rental or b) a multi-family property up to 4 units.
Having preliminary reviewed various investment strategies, e.g. foreclosures, lease options, etc, I have determined that the buy-and-hold strategy fits best with my long term goals of owning real estate coupled with the demands of my full-time employment. One thing I was contemplating is to make my first property a fourplex (if possible) so that I could live in one of the units and rent out the others. Ideally, my income from my job would be able to cover the mortgage even if I had zero tenants.
The one thing that concerns me about purchasing a fourplex is the exit strategy, since it’s not as easy to sell or get rid of as a single family rental. However, I feel that the relatively small size of a fourplex, triplex, or duplex, would provide the dual benefit of having an owner occupied property as well as the opportunity to gain valuable management skills.
So basically, that’s where I am right now. I don’t want to make this post too long and I’m sure I could have simply ask my question more concisely. However, I felt that since this was my first post that a little bit of information might be helpful to you in order to provide me with some guidance.
PS: I will of course join my local Real Estate Investment Club.