Getting into RE Investing, Focus on Out of State Opportunities

[Judd Meng]

Greetings all, 

I'm just getting started in the world of RE investing in my 40s, and would love some advice or insight into out of state opportunities to open up more possibilities and flexibility for portfolio expansion. I've read multifamily millionaire, and i'm currently reading Long Distance Real Estate Investing. I know that house hacking is a very common first step into investing, but from what I understand so far, that's not possible for out of state opportunities due to occupancy requirements of the various low/no money down loans such as FHA or the VA loan (which I can get). Due to that fact, one would need a pretty significant amount of cash for a down payment to secure a more conventional loan...which I don't really have.

Is out of state investing not really in the cards for me right now? Should I look more into more creative financing such as subject to? Should I just suck it up and house hack in CO for awhile, despite really not wanting roommates or similar (I know, boo hoo)? 

Thank you for your time! 

[Jordan Malara]

@Judd Meng I think the best strategy for you to pursue depends on your goals. Without knowing those, here is what I would say...As others have mentioned, you have options for trying to creatively finance an out of state deal due to your limited capital, but this is going to be difficult and take time. Pursue this, but also pursue an easier investment strategy at the same time so you don't miss out on valuable time IN the market. Maybe just start simple and try to get a good deal on a new primary residence, maybe even one you can add value to, that you can rent out in the future.

I agree with @Joe Garretson that house hacking is not a catch all solution as it is not a good fit for everyone, however, it is one of the simplest and most effective ways to get started. If there is one thing I have learned during my investment journey, it is that sacrifices yield results. I have grown from 1 unit to 12 units in the Springs over about 4 years. I didn't do anything special, I was just willing to move every year and house hack in different ways. Doing these things wasn't easy or convenient for me or my family, but we're doing it now so we can reap greater rewards in the future. My personal goal was to soft retire before I turn 30, so that is why I made the sacrifices that I did. I don't know what your goals are, but if they are aggressive, then you're going to need to take an an equally aggressive approach and step out of your comfort zone.

Hope that insight is helpful for you!