House Hack vs. Out of state investing

[Tyler Markvluwer]

Hello all. Looking for some opinions here. I've been reading for a while and listening to the podcasts. Im about to finish the book on rental property investing today! I am 23 and have saved up 80k for a down payment. I live in Seattle, WA and have enough for a downpayment on a house nearby so that I could house hack. On the flip side I could also invest back in my home state of MI and buy 4-plexes for 200k. I am planning to move in ~2 years (maybe TX?), so house hacking would be short term.

So here is the question. As a first time investor, am I better off house hacking and putting all of my eggs in 1 house which I can learn to manage (with poor cashflow), or buying multiple properties back in my hometown where cashflow is significantly better and using a property management company. What factors should I consider, when deciding between the two. Either way, my 80k is going into houses of some sort. Just have to decide where, and how many to start with. Thanks in advance!

[Steve K.]

Originally posted by @Frank R.:

What did you end up deciding?

@Tyler Markvluwerundefined

I am in a similar position in the Denver - Boulder Metro area. I have an OOS rental in indy that brings me about $250/month cash flow after all expenses including PM. I live with room mates in Boulder and have cheap(for here rent $695/month).

Still weighing the options on another OOS property in the indy area, or house hacking locally. Which would 'save' me $695/month in rent, but factoring opportunity costs of missing out on $250/month also carries some weighting.

I would go for the house hack in this area. For one thing, "missing out" on $250/month is not an opportunity cost when if you can live for free in a house hack you'd be reducing your monthly out of pocket expenses by $695. 695-250=you're still ahead $445/month. On top of that, $250/month cash flow is nothing compared to building actual wealth from life-changing 6 figure appreciation. Appreciation is not guaranteed of course, but with so many people moving here, and both natural and self-imposed limits to development, it's fairly obvious which direction real estate prices are going in this area. Appreciation has been 6% for the greater Denver area for the past 40 years. The average price for single family home in Denver is currently just under $500k. $500k X 6%= $30,000/yr.= $2,500/month= a lot better than $250/month. If you buy right anywhere in the Denver market, you are highly likely to make more in appreciation in 5 years than you will make in 30 years with an out of state rental. If you can come up with a down payment on a Boulder property, I'd do that: properties here are currently appreciating at an average rate of $300 PER DAY. I'd take $300/day over $250/month, all day, every day.