Starting out! MF Investing. How did you start?

[Jerell Edmonds]

Hello everyone . I just have a quick question . Now I want to invest OOS but everyone says buy in your own neighborhood first which I understand. My question is say I do buy my first MF rental and house hack it could I use another loan say a conventional loan and purchase one OOS with a 20% down payment would that be doable? Or is there restrictions and would this have a great impact on my DTI. Still in the New England area which is pricey an I know I said cash flow wasn't the most important thing we def would not like to be cash flow negative either. Because the houses we ran numbers on would more than likely cash flow negative unless i'm doing something wrong but then again I know this area is very high so that's why we're looking more towards investing OOS.

[Ian Halter]

If you want to scale quickly, I would not house hack at this time. Labor and materials are very expensive and with rates where they are, net operating income/cash flow (unless you put 20% down) will be slim unless you can find a steal in a B/C neighborhood or grab a home on the East Side (where competition is still high). House Hacking a MF into 2-3 separate condos will require the buildings be up to code and inspected, requiring permits, zoning, repairs, utility splitting and renovations. House Hacking, from what I've read, ultimately it comes down to hidden costs. A good overview can be found here - https://andysirkin.com/subdivi...

Finding a deal locally is more advantageous than OOS for many reasons, which I won't cover here. You need to prioritize your financial goals. If scaling is more important, then spreading capital over multiple OOS deals makes more sense; however you will be more exposed to more variable costs. Investing here allows you to control cost better, but with higher capex.

Ultimately you can be more diversified in OOS (like Ohio you were looking at), but more susceptible to unexpected high costs. Good boots on the ground can help you here.

You can be more savvy and learn fast investing here, however more of capital will be tied up. A great agent and contractor will go further than anything else for your first MF.