Currently Struggling on Choosing a Market

[Thomas O'Donnell]

What's up BP family,

I'm currently facing some tough decisions. My original plan to get started in real estate investing was to move out of California, and house-hack a MF property in San Antonio, TX. Unfortunately after doing a lot of deal analyzing, I found that whether I was living in the property or it was fully rented out, I'd still owe a chunk each month out of pocket. I know these properties won't really cash-flow as they are more appreciation markets, but it seems I can't even come close to breaking even. This has started to push me into looking at other markets in different states. I've really wanted to move to Texas for a few years now, but the numbers just aren't making sense where I want to go. I have found good deals in the north, but I am not a huge fan of living in/dealing with snow and winter storms. Any advice you guys have for me? I 100% want to get started before the end of this year, but the markets are tough right now and I'm not too sure where else I should be looking that might be similar to Texas. Thanks for any responses!

[Evan Polaski]

@Thomas O'Donnell, the hard truth is no matter where you go, prices are outpacing rents.  2010-2012 I used the 3% rule, 2014-2017ish - 1% rule, 2018-202 - .75% rule, today - not being cash flow negative will be nice.

If you go to crappy areas, in nearly any market, and put enough down, you can find cash flow, but you are taking a lot of risk.  Particularly with a house hack, how much do you value your own happiness and safety?  Happiness for broad market, safety for submarket.  

You also have to look at the tradeoffs of cash flow and appreciation.  Having owned properties for over a decade now, most all of my money is made in appreciation, even from my properties bought in the financial crisis.  These properties currently cash flow about $1,000/mo (and admittedly I have not refi'd out my equity), but they each have over $150k in equity now, or roughly 13 years worth of current free cash flow.  Point being, if you are not investing in areas that are proven to show high appreciation, you are destined to make far less money, hence the reason people still invest in CA with negative cash flow.