Hi,
So I am looking to buy a rental property in a HCOL area. There is a condo that is on sale for $316K and has a $330 HOA. Has great schools (10/10, 8/10, 9/10 from greatschools.org if it matters). If I put 20% down @ 3.625 my PITI+HOA comes to around $2000 per month maximum. It's 1BHK condo. I plan to rent it out at $2100 (Roughly the market rate) so I can cover the extra $100 as a maintenance fund and to cover taxes from rental income etc. Managing is not a big deal as it is just 2 miles away from where I live currently and my wife is a stay at home mom so she can take care of it.
Now, I have about $28K invested in Vanguard, $11K in Wealthfront, $50K in savings to cover 1 year worth of expenses including my current mortgage in case I lose my job and another $160K in 401K.
My gross salary is $175K per year + 20% bonus. So putting down 20% means effectively emptying my emergency fund but I can replenish that in a year. Not a problem.
You think it's a good idea? What are the tax implications? I heard interest rates are higher if it's not a primary residence? If so, how big is it going to be?
I want to make sure I am doing the right thing and secure my future at the same time and rental property in a HCOL is very lucrative.