Ready to Buy Investment Property?

Christina and her husband are considering buying an investment property. They have the money to pay cash for it, but they aren't sure they should buy the property before paying off their house.

QUESTION: Christina in Idaho and her husband are considering buying an investment property. They have the money to pay cash for it, but they aren’t sure they should buy the property before paying off their house. Dave agrees that paying off the house first is the best move.

ANSWER: I love real estate, but I wouldn’t borrow on my home to buy investment real estate. I am not going to put my personal residence at risk to get the opportunity to own investment real estate. It’s a great time to buy it, but here’s the thing: If you buy a piece of property that’s paid for, and your home is paid for, it changes your whole deal.

You’ll get there pretty quick. You’ve gotten to the point that you’re paying off the house as young as you are. In another year you’ll be able to buy some stuff because you don’t have a house payment anymore. I’d pay off my house before I start buying paid-for residential real estate or retail or any other kind of investment property.