Home owners- at what stage u buy investment property?
I live north of Seattle. I put 10% down on my first house and I’m paying debt (mortgage + HELOC + property tax) monthly which is 23% of my base pay (before taxes) and 13% of my total comp (before taxes). Bought the house less than a year ago and its my primary residence. No other debt. Now in a savings account I’ve accrued cash that is 10% of my house. The simple approach seems to be to pay off the HELOC that’s at a 5.25% interest rate. However given the HELOC payment is a couple of hundred dollars per month I’m not too worried. However, I was wondering what the community’s opinion is on whether an investment property can be considered at this point? What would be the target price point be for a feasible investment house or apartment or condo? Based on reading online and other posts, there seems to be some room to take on additional debt / maintenance cost. Or, at what equity in primary residence would you recommend that I even start thinking of investment property? In terms of total funds available for investment property- as mentioned I have 10% of primary residence and to show funds for getting a mortgage I have around 20% of the primary residence (included a 4 month runway for emergency). Actual numbers concealed -sorry about that but hopefully theres enough info to make sense of the situation.
From my perspective an investment property makes more sense when you can throw down enough cash to make sure your mortgage payment will be less than what you can earn from rent + buffer for times when it goes unoccupied + expenses. I haven’t run the numbers but I have some intuition to say you might be better off waiting until you’ve got +35%
Would it be fair to say that the price of the investment property could be adjusted so that what is 10% of the primary residence is about 35% of the investment property?