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What would you do?

1,894 Views | 8 Replies | Last: 4 yr ago by HouAggie2007
sockdoctor
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Wife and I will have roughly 150K to put towards a house downpayment late fall of this year. This will be our primary home. House cost will be around $500K. We hope to eventually get into the real estate market to generate some passive income.

A few questions:
Should we throw all 150K at the house downpayment? We are weighing doing a 15-yr vs 30-yr mortgage.
Should we reduce our downpayment to just 20% and save the rest towards the rental properties.
We should be able to save roughly $50-75K/year towards rental properties.
752bro4
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AG

Quote:

Should we throw all 150K at the house downpayment? We are weighing doing a 15-yr vs 30-yr mortgage.


You do not get any more favorable of a rate by putting down 30% vs. 20%. Stick with 20%, and use the additional $50k as a downpayment on your investment.

15 vs 30 year - depends on what you're comfortable with cashflow-wise. It's also possible to do a 30 year and make additional payments to amortize at a 15 year, and if something changes in your life and money is tight, you don't have to make the additional payments. Downside is a slightly higher rate.


Quote:

Should we reduce our downpayment to just 20% and save the rest towards the rental properties.


IMO, yes

Quote:


We should be able to save roughly $50-75K/year towards rental properties.


Good, buy one a year or every other year, leverage the hell out of them, (75/25 debt/equity, if possible) and enjoy the life of a landlord. There are several on this site who have done this or are currently doing it. There is a wealth of information available online (and here) that would be a great resource about being a landlord, investing in the right deals, and scaling up your deals from single family homes to duplex/4-plex, to small apartments to syndication investing.
Rasslin Cheesehead
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AG
If you have good credit, consider a conventional loan. Make sure you put at least 20% down. Possibly look at living in one side of a duplex for a couple of years until you have enough to purchase a second house and make that your home. Make sure you know a good handyman though.
permabull
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AG
EcoZapp.AC&Air.Purifiers
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Heres a thought . Buy a 4 plex with a 30 year mortgage and move in a unit for 6 months or a year? Than use tiny profits to pay for your home that doesn't earn revenue.

But You get 4 renters and 4 renter headaches to start a portfolio
Bobaloo
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This suggestion might be worth noting:

Monthly payment (including taxes and insurance) should be no more than 25% of your take home pay on a 15 year fixed rate mortgage.

- Dave Ramsey
diehard03
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I would buy the least amount of house I could stand to live in and upgrade later when you're on the other side of the success curve. 500k seems high to me, personally.
sockdoctor
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Good options to consider but I don't think we want to buy something where we'd share a wall with anyone.

We are in Denver where the median home prices are just north of 450K.
HouAggie2007
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HouAggie2007
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Yeah 500 on the Denver area is hard and potentially on the low end.


Also ignore the Ramsey's, this conversation is for grown ups
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