100k to invest. Buy fixer-upper for cash or use as DP on STR

[Jason Rosser]

Hi all,

My wife and I have recently begun the process of familiarizing ourselves with 
real estate investing.  This site has been immensely helpful.  Thank you for that.  

We have long considered buying a STR in Panama City Beach. We've considered 1br on the gulf (condo) or a 2 bedroom townhouse walking distance to beach (Edgewater Golf Villas.)

We are looking in the 3-400k (our prequal number) range as an initial investment, and have been in contact with a local realtor while we work out the numbers we are shooting for (fall in love with the numbers, not the property). 

We’ve been doing research for months and learning all we can, however, it only occurred to me today that maybe we’d be better off buying a distressed property locally (we’re in north Georgia) for cash and repair and rent it as LTR. 

I keep crunching the numbers on the (admittedly limited—about 20) properties in PCB, and after accounting for expenses, I'm struggling to find anything with positive cash flow. I think a big part of this is the enormous listing prices (and the significant PITI and HOA that goes with it).

So I’d like to ask opinions on if it’d be better to buy a more modest property locally with cash, renovate it, and rent it out.  There are properties of this type available in the local area, and I’m fairly skilled at doing a lot of the work that would be required in renovating.  

I can’t help but think that the combination of rising interest rates and massive market growth in PCB makes a ~100k cash property a less risky first-timer investment.  

The flip side is that if that market continues to appreciate as it has since ~2020, we’d be walking away from a lot of equity. 

So many ways to go but we’re committed to making the best decision possible.  Much work still to do, but I am optimistic that the good folks here can throw out ideas/advice. 

Thanks for reading!

[Greg Kurzner]

Hi Jason, the thing I notice about PCB and really anywhere along the panhandle is that they are building everywhere. Supply is thus likely rising and as recession likely approaches, STR's are likely to soften as they are discretionary. Buying a rental in your area is smart in my opinion. LTR is stable versus the bigger economic swings as rent is only negotiated yearly and slower moving both up and down. While you might not see the same % of appreciation locally you might in a resort location, your cash flow will be significantly better and your risk lower. Additionally, with your available cash, you could possibly buy more than one LTR property as long as the leverage is workable.