Rent + Invest Out-of-State or "Invest" Locally via House Hack

[Nathan Yee]

Hello BP Community! I'm based in Los Angeles and am looking to purchase my first investment property with about $50K allocated. After attending local BP events and REI clubs, it seems overwhelmingly apparent that investing in out-of-state markets is  a good way to put my dollars to work when it comes to cash flow/appreciation, etc. I believe in the long run this is something I should strongly consider/do.

Currently, I'm battling the idea of whether I should rent in Los Angeles and invest out-of-state or if I should house hack in my local market (where I'd take a negative cash flow hit due to higher purchase prices, but may be able to benefit from appreciation). What would you do?

All feedback is welcomed and appreciated!

[Ali Boone]

Hey Nathan! Well I'm also in LA and I do your first option- I rent my apartment and buy all rental properties elsewhere. Here's why-

https://www.biggerpockets.com/renewsblog/2014/01/1...

Similar applies for house-hacking. Especially in LA...the cash flow hit you'll take, yes, but then don't forget that if you have a mortgage on the property, you'd have to see so much appreciation to actually profit...enough appreciation to not only make up for your losses every month but also just the mortgage interest alone will be huge.

I would run numbers on the two different options and see what you come up with. I'm happy to show you out-of-state properties I work with to give you an idea on the cash flows they get so you have something to compare back to the LA house-hacking. Message anytime!