Should I buy a rental property or put more money down on my primary residence?
I just sold my house in California (thankfully) and have about 150 grand to spend. I’m looking at moving into a new 125k house, but I’m thinking of getting a rental property and allow that to help offset my mortgage. Taxes are 2.7% here for real estate. I make about 100G’s a year, 42 and I live alone. Not sure about the hassle of rental property though.
Best recommendations are:
(1) Do your homework about owning rental property – its not for everyone. Some people love it and others hate it.
(2) Decide what your long-term goals are, if its to retire soon, then maybe you want to start getting comfortable and buy your primary home, if you intend on working for about another 20 years, then maybe rental property is surely the way to go
(3) Speak with your financial planner, current rental property owners, this will help give you some more expert perspective.
Best of luck to you!
Read a couple of books on land-lording before you do it. Some people are not cut out for it. Make sure if you are buying a home to rent that you are in an area that is desirable for renting (if there is a college or large corporation that relocates people in the immediate area). Mortgages on investment property can be up to 2% higher interest than primary residences.
Spend 30K on new home 20% down + closing costs. Keep the other $120K fairly liquid for a while in the even of unemployment unless you have a very very healthy Emergency Fund already.
I recommend you keep a small mortgage on your primary residence for the deductions. See an accountant for your other questions. It sounds like you have the right idea, though. Good luck..