Question: How bad is it to buy a house with little savings?
There are two aspects to this question. How does the loan side work? How does the life side work?
From a lending standpoint, you typically on need two months reserves after the purchase. You can buy a home for as little as nothing down if you are a veteran, or 3% - 5% for a conventional loan. We offer a 2% down payment assistance for FHA loans reducing the total down payment to 1.50%. You’ll just have to be able to document the source of the down payment and closing costs. So you could use up every penny of your available cash with your purchase, and as far as the lender is concerned, you’d be okay.
Question: When is it a good idea to buy a house to rent out to others (using them to pay off the mortgage) as an investment?
Real estate has historically been a good investment. This is because it can provide cash flow (in the case of rental income property) and appreciation. While some will correctly point out that homes after 2008 declined in value (some by a great deal), most areas have recovered and have returned to pre-crash values.
To your question: before investing in rental properties, you should have an excellent idea of what your expectations are. This includes the cash flow (which could be negative at times). Here is how you might go about doing that analysis.