My wife and I are young professionals who live in an extremely expensive city. We have been able to pay off our $45k student loan/car debt over the past few years and have scored a great deal on an affordable rental. Now, we are maxing Roth IRAs, saving money and looking toward the future which might include graduate school for me and having our first kid.
A few years ago, my wife and I discovered a lovely walkable, diverse city near her hometown that is seeing a renaissance of sorts in its downtown areas (as a lot of cities are). We stop by every few months when we are visiting family and often remark how fun it would be to buy a small home there. Being that interest rates are (still) so low, we have been discussing the idea more seriously the past few weeks. Homes range from $70k-120k, and rental income should cover the mortgage with a $200-$400 margin, depending on the property. The question is, do we take the 20% required for down payment (not primary home, so investment property) out of investments/savings to purchase? Net worth now is still fairly low at around $85k, but we have very steady jobs and low expenses for at least two more years (expenses around $2200/month income around $5700). I see it as giving up something now (when markets are up) in order to reap benefits later as 1) interest rates will rise in the future 2) I really do think that millennials and others want better, urban communities, and we want to be on the front end of that trend if possible. 3) it is a way to diversify and create a small positive cash flow outside of regular employment.
Anybody have thoughts or a different perspective?