To many Decisions! Continue Investing in a Higher Priced Market?

[Ryan Blanchard]

Good Morning Bigger Pockets Community! 

I believe the old saying when it rains it pours is true, but not always a bad thing. Sometimes its a storm of options that you receive after your certain you have chosen the right path. Here's the situation and I would definitely appreciate any feedback you have!

Currently we own one rental property townhouse in the Capital Region of New York, soon after purchase (Less then 6 Months) we were contacted by the owner of the other half of the two townhouse structure asking if we wanted to purchase it at the same price as the one we had already bought (the person owned both halves originally). Graciously we agreed and drafted a letter of intent which is currently on file and bound by a $1k Deposit. The total purchase price is $269,000 of a Two Bedroom-Two Bath with a full basement identical to the one we already own. Rent in the area for like units is in the neighborhood of between $2,000-$2,500 If we are to purchase the other half of the building I believe there are numerous options we could implement to make the building cashflow. For starters; 

-I would like to attempt to merge the lots together since the building shares a wall and attempt to reclassify it as a multifamily rather then two stand alone single families, if possible. Hoping to both identify the property as a single entity and to drop some of the taxes.  

-In addition to merging (or separate from merging the properties) we plan to finish the basement of both properties into One Bedroom-One Bath apartments. This should increase the value and cashflow with the ability to sustain an additional tenant, the area is already zoned for Multi-Family use.

There other option I am weighing which is slightly less favorable due to the connections we have already made and the image of faulting on a Letter of Intent this early in our investing career is to cancel the agreement and invest the money into a different market which exists in Vermont. There are numerous incentives to buy properties and grants available for properties needing repair due to the current housing scarcity in the state. Between Zillow and Mailed out flyers we have been in contact with numerous single and multifamily properties for less then $100,000 renting in the range of $1250-$1500 as long as it has a cleared Occupancy statement from the City. 

Therefore we are on the having the argument of Cashflow vs. Equity, New York will yield more equity and will eventually return additional funds for investment over time, but Vermont will be able to Cashflow sooner with the ability to increase equity through repair, but it may be several years before it reaches the value of the New York property if ever. Currently I am hoping to be able to purchase the New York property and still be able to enter the Vermont market later in the year, but I do not want to over leverage or miss an opportunity. Any feedback would be a huge help and honestly just typing this out helped a fair amount!

Thank you in advance,

-Ryan B.