House hack on Oahu vs. long-distance multifamily?

Question

We've spent the last couple years following Set for Life and have stashed more than the 100K. We've been waiting for an opportune time to get into real estate investing and have done a good amount of education and focused on building a solid foundation.

We are looking at our options for our first real estate investment.

Since we live on Oahu, we'd ideally love to house hack here, but we're looking at million dollar properties being the norm for a duplex. There are some deals to be had (likely more in the next 6-9 months because the economy is tanking here), but it does not compare to the number of opportunities and returns that can more easily be found in Northwest Indiana.

If we started in Northwest Indiana, we have the "hassle" of long distance investing. We have some trusted "boots on the ground" there already, but we expect there to be travel costs/time and other expenses to consider.

What would YOU recommend based on your experience? Open to opinions, ideas, suggestions - and questions we should be asking ourselves!

Twana Rasoul · Answer

@Mindi Rosser definitely try to do a house hack that makes sense if you can. More initial cash cashflow doesn’t necessarily mean a better investment or more total return.

Lane Kawaoka · Answer

Long distance for cashflow is my vote but if you want to gamble on appreciation locally (in the face of declining tourism) that is up to you 😁

If you net worth is under 500k... stick to 1-4 unit for now and get some experience first.

Rob King · Answer

@Mindi Rosser I am based in Honolulu and have successfully househacked three properties in Makiki so it can be done but the entry price can be staggering.  You are right that COVID will present opportunities but with our island's unemployment topping 32% and market news outlets suggesting that 77% of sellers are holding off until the stay at home orders are lifted you are also going to see less inventory (though likely very motivated sellers).

If you haven't read David Green's BP book on out of state rentals it provides a good foundation and strategies for building a team.  Having people you trust in the market is a huge advantage and may mitigate some discomfort associated with long distance investments but it all comes down to numbers and goals.

My better half and I are considering a property in Makakilo or Idaho so we try to analyze 3 properties a night while weighing them against our long term goals.  I believe that with that continuing education we will know the markets well enough to strike when the numbers make sense with our goals, either here or on the mainland.

Have a great week.

Rob

Doug Nordman · Answer

Mindi I'd suggest that learning how to build a team in Indiana is cheaper and less risky than trying to find a bargain here.  From The Mail Buoy: Hawaii Investment Rental Properties

House hack on Oahu vs. long-distance multifamily?

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