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Question for the Money Doctors

Question submitted on Jan 3, 2013.

Question

My wife and want to buy a house, but prices in the area we want are $450,000+ and very competitive (we will not go elsewhere). She just finished school and we are making $115,000 a year, we have about $20,000 available for a down payment but would like to be at 20% down.

Should we rent and save until we have 20% down plus reserves and closing costs, or should we buy a condo and save , then keep the condo as an income property?

Answer

Sometimes it pays to keep things simple. If I were you, I would rent saving money until you have enough for a down payment. Turning a condo into an income property can be risky AND being a landlord is sometimes a hassle unless you have a good long-term tenant. This will give you the flexibility to move quickly if you find the house your really want.


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