New investor strategy question

[Jason Rose]

Hey everyone!

My name is Jason and I’m new to the forum. I’ve read The Book on Rental Property Investing and am super excited to begin my investing journey. As I’ve been looking through the forums, I’ve seen a ton of awesome insights and figured I’d try to sanity check my strategy against the experts here.

Here’s my situation:

• Mid 20s, based in NYC. Love it here and don’t want to leave.
• My price range is 250-350K, and I can afford 20-25% down on a conventional 30y loan. Want to buy in next 3 months.
• Demanding full time job, so will use property manager.
• Would like to invest in Northeast (proximity to me), Southeast (family nearby), or Midwest (family nearby).
• Right now my focus is on cashflow. Want to buy SFR with solid enough cashflow to buy another one in 5 years.
• Ok with having to do light reno of kitchen/bathroom
• In about 10 years, I would like to either trade up and break into the luxury real estate market or liquidate those two for a nest egg in the mid 6 figures. I understand I will rely on appreciation for this bc of mortgage amortization.

More Context:

I want to buy a house in the next 3 months because I know it’s not as competitive as it will be when rates eventually go down, and I’m generally eager to get involved in investing in this asset class. I think about it all the time and I love the analysis process.

I was originally going to invest in the coastal Georgia area (Savannah, Richmond Hill, Pooler) because I have some family down there that could help me keep an eye on the property and I have reason to believe the prices will appreciate faster than average in coming years.

This said, when I've been looking at that range in those markets, the cashflow seems pretty thin (Mortgage + Monthly Expenses would be around 2600, rent would be around 2950 at best). The market is also pretty competitive (properties typically go AT list price, regardless of when they were built). Not a lot of good deals from what I can see, and I can't do any door-knocking to find anything off-market because of my distance from the area. The advantages of staying in that area is that I could have family help me with the investment (check on it and make sure things are looking alright, etc). I worry that an extended vacancy or unforeseen large CapEx could turn the investment sour, though.

These risks have opened my mind to pursuing other markets.

Key Questions: 

Does my strategy sound realistic? 
How sound is my analysis? 
Is it going to be possible to find better deals in other markets, or is it better to stick with an investment around my family since it’s my first one?
What else should I be thinking about/is there anything I'm overlooking?

Thanks in advance for any thoughts, and let me know if you need more clarification to inform your response!

[Nicholas L.]

@Jason Rose

the only thing you might be missing on house hacking is that a lot of new investors think you're supposed to cash flow positive on a house hack.  nope.  you're supposed to substitute a mortgage payment for a rent payment since you have to pay one or the other.

say you're paying $2500 for rent, but you could house hack and you'd still need to pay $2800 toward the mortgage net of rent payments.  great!  house hack.  you're building equity and only paying a little more than you would renting.

i hear you on how expensive small multis are in NYC, but maybe expand your search radius and property type?  or buy one that's in a good neighborhood but a little run down?  go look at 50 or 100 properties.  that may be the kind of work it takes.