first property advice

[Carrie Brauninger]

Hello,  I am wondering what ppl's thoughts are on this scenario.  I live in Denver metro area and can't afford to buy a property as an investment property as the down payment will take awhile to save due to cost of homes.  I am toying with 2 different scenarios.  1) buy a home and live in it for 2 years so I can put less down and then use my current home as a rental, or 2) invest our of state where I know less about the area.  My initial thoughts are Michigan, where I am from, but I hear it isn't landlord friendly or Florida where I spend some time but I'm worried about cost of insurance after hurricanes etc.  Would love to hear ppl's thoughts if you have the time for a first time investor.  Ultimately, I see myself investing not necessarily for cash flow (although that would be a bonus) but more so for appreciation where I can then sell it closer to retirement.  Essentially, real estate being a place I can park my money.  TIA.

[Konstantin Ginzburg]

@Carrie Brauninger

Since this is your first step into real estate investing; my advice is to stay in the area you are currently living in or at least are within a commutable distance. Out of state investing can definitely work but it requires you to have a set team that is that location to real allow the system to flow smoothly (essentially you need boots on the ground). This means you would need a team of realtors and property managers (along with some other team members) that you completely trust. Have you looked into house hacking in your area? If there are multifamily (4 units and below) properties available near you, you could look into purchasing one of those. As long as the property is 4 units or less; the financing works the same as with a single family home and if you plan on moving into the property for at least a year; you should be able to qualify for primary residence financing options such as an FHA loan (among other programs) that would qualify you for lower interest financing. By living in one unit and renting out the remaining units; you could potentially build equity, gain value through appreciation, and still cash flow all at the same time. You would also gain the experience of how to manage a property so you will be better able to manage from long distance if you do want to try out of state investing down the road.