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Young couple buying first home / Looking to develop rental properties...

Hello, I am 24, recently married to my gf of 5 years. We both rent and are looking to purchase a home and start building equity. With our careers we may or may not stay in the area over the next decade, but certainly for the next 5 years or so. Together we have $30,000 saved for the purchase, good credit (750), and we make 50k and 40k respectivley. We currently live in Tampa, FL where there are a plethora of empty homes for sale. I have had members of my family own rental properties as a side business which has been great for them financially over the years. We would like to do the same. We intend on purchasing a home to live in with the goal of eventually moving on and making it a rental property in the future. I am seeking feedback as to the best way to go about this and things to consider. I figure we have paid about $1000/mo in rent over the last few years. If we put $30,000 down on a house and maintain our current payments of $1000/mo for a range of 3-5 years, that puts us in the $60k to $80k price range. Somthing like: http://www.zillow.com/homedetails/3028-Pinon-Dr-Holiday-FL-34691/46478053_zpid/ OR http://www.zillow.com/homedetails/11240-Corey-Pavin-Ln-San-Antonio-FL-33576/46353043_zpid/ Its a business decision. We don't need a "dream home" right off the bat, but we do want a halfway decent place. 3-5 years later, we move, rent out the place, generate income. Thoughts? Advice?
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September 12 2012 - Tampa
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Answers (2)

Interview several real estate agents and find one that you feel comfortable with as a person and that also owns rental homes! 
Specific advice that works for us in California:
3 bedroom and 2 bath - most popular home and if one toilet backs up in the night there is another to use!
A home you would be comfortable living in - and a comfortable neighborhood.
Newer than 1978 - stucco siding and tile or composition roof. 
Close to shopping and travel routes - and in a good school district.
Good luck and you are making a good long term decision.
Steve
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September 12 2012
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You need to find an agent that understands what you want and knows how to pencil a rental out for positive cash flow investment. If you choose the right property, you can build equity while you live there, rent it out if you do not want to sell or cash it out as your primary residence and use the money to purchase another house or rental.

Hate to say it, but some agents will not understand your plan at your age. I did the same thing when I was starting my family and agents that "got it" were few. You need to look at house the house would be as a rental and try to target areas that are on their way up or are at least stable. Do not buy a super cheap house that you hate or would not feel comfortable living in. It is a pitfall. Buying an ugly house in a great neighborhood has always worked well for me and the current IRS rules that allow you to keep 500K per couple on the sale of a primary residence is terrific over a 2-5 year time table.

You have to make sure though that any house you buy with this strategy can be used as a cash flow positive rental if you do not want to sell when the time comes to move. That gives you the most financial freedom and allow you to follow family, employment or ... as you want while your tenants build equity for you.
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September 12 2012
 
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