Getting HELOC for 200k. Buy expensive local or out-of-state?

[James R. Copeland]

So I've got two units up here in Vancouver, WA. I've lived in both at one point over the last several years but now have a pretty nice equity cushion built up in both. (150k in one, 200k in my primary which is house-hacked). I've applied for a HELOC and it looks like it's gaining traction. Now though I'm torn between two seemingly great strategies. Any help would be greatly appreciated!

Strategy #1

My wife is a new realtor up here in Vancouver so one strategy is to use the the HELOC as a down payment on a multi-plex in our nearby market with her as the buying agent. We also have a pretty good property manager here in this area that is very helpful that I'd like to add more units to at some point since their commission drops with added units. Cons? It's gotten expensive up here, a multiplex of good quality will probably start around $600k in Vancouver, less if we go out a bit further, but our property manager only services Clark County. Still, might be a good way to go.

Strategy #2

This one's gutsier, but might lead to greater cashflow, which I'll need when I retire in 6 years. Strategy 2 is to use the HELOC to buy cashflow properties out of state. I'm hesitant to buy fixer uppers out of state so I'd likely look at turnkey properties and property managers in growing markets where "1% Rule" cashflow properties are more prevalent. If this strategy is the clear winner, then the follow-up question is which market to start studying?

Any help would be greatly appreciated, and if further details are needed just let me know. Just thinking big picture at the moment though.

-Jim

[Jeremy Taggart]

@James R. Copeland I would caution against using the HELOC as a down payment. You don't want to use the HELOC for long term funds. You are much better using that for short term funds that way you don't have to continue to pay interest on it. I would just look out of state and do the BRRRR strategy. You could really do some damage in a short amount of time with that capital. Use your increased earnings and equity you've gained from your expensive market to do more volume out of state. I wouldn't be scared of buying fixer uppers out of state, you just need to find a team that you can trust to get the job done for you.