Dear Dave: I’ve been out of college for a few years, and I have no debt. I’d like to start investing, so I’m thinking about buying a triplex, living in one of the apartments, and renting the other two. Should I get an interest-only loan for this?
Dear Chad: Never, ever get an interest-only loan! If you can’t make this idea happen on a 15-year, fixed-rate mortgage that takes no more than 25 percent of your take-home pay, then you can’t afford this project.
Think about this too. If you buy a complex and live on the property, you’ll have to set down and enforce some strict renter’s guidelines. Living with renters can be tricky, because they’ll have access to you 24 hours a day, and some of them will abuse the privilege. Then again, you’ll have that kind of access to them as well. Not exactly a bad thing when you have people living in a complex you own.
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Here’s an option. What if you just bought a nice, inexpensive single family home for yourself? You wouldn’t have the cash flow, but you will have the appreciation and a better chance of reselling down the road. Plus, if you want to invest further, there are always mutual funds.
Real estate plans work out just like you want them to only about half the time. Don’t discount the risk and expense either!
Dear Dave: I have to make a four-day business trip to Hawaii soon, and my wife would like to go along. It’s okay with my boss, as long as we pay her way, and I would love to have her along. It will cost about $1,500 for her to join me, and I make a little over $100,000 a year. We’re also debt-free, except for our home, and we’re working hard to pay that off as soon as possible. What do you think?
Dear Michael: If I were in your situation, and I told my wife I didn’t think it was a good idea or we couldn’t afford it, there’s a good chance I’d be sleeping on the couch for a month. Take your lady with you!
You guys have a six-figure income, and you’ve got no debt but your home. So, a four-day trip to Hawaii for $1,500? Yeah, I’m definitely doing that. It sounds to me like you two have done a great job with your money. That being the case, you deserve a little fun — like a trip for two to Hawaii for $1,500. Even if you have to work, you’ll still have lots of time together, and she’ll be able to relax on the beach, swim and sightsee while you’re taking care of business.
Have a great time, you two!
Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.