Anyone Rent In an Expensive Area & Buy Cheap Elsewhere?

[Mary Ann]

I've been trying for almost a year to buy a 2 fam house in Brooklyn, NY. Something always comes up, or my private money has moved on by the time I find something.  I'm leveraging myself alot here and wondering if there's a better way to do this. I didnt want to succumb my savings to renting an apartment, because it feels like I'm giving up the dream of my first property.  But I'll be leveraged to the tilt with no funds if I buy a house now despite getting a downpayment asisstance program. Still hard.   I'm thinking rent now and buy somewhere I can afford, even if just for cashflow.  Can that work? Anyone doing that? Any advice appreciated thanks!

[David Faulkner]

Originally posted by @Mary Ann:

Ok this makes me feel better. In expensive markets like NYC, San Fran, Chicago, this sounds more common than I thought.

Just because it is common, doesn't necessarily make it a good idea ...

Run a little simulation for yourself ... look at what a property would sell for and rent for 20 years ago in your expensive area and cheap elsewhere area, then project that forward to what they sell for and rent for today ... which one would've performed better for you (estimating cashflow + appreciation, calculating IRR)? How long and consistent has this trend held? ... what if you go back 30 years? 40 years? I actually don't know the answer since I'm not familiar with the markets you are referring to, but think the exercise will be helpful either way.

That is if you bought and sold at retail market ... now riddle me this, which of those markets can you more easily find a below market property? Which of those markets can you more easily force appreciation? Which of those markets can you self manage? Which of those markets are you more familiar with? In which of those markets do you have more control over your investments? That will tilt the analysis above and should also be considered.