Relocate and House-Hack, or Invest Long Distance?

Question

So I’m currently in a dilemma. I have about $13,000 that I can use for my first rental property. I have been strongly considering moving to a cheaper more affordable market and house-hacking (I currently live in the CA Bay Area and do not work in tech).  I had previously chose Columbus, OH and was planning to move and use a FHA to get into a duplex or a SFH. However, moving expenses would be about $3,000-$4,000 which would cut into the cash that I have, and I would be making less income after the move. I wish I could house-hack in my own market but it is way too expensive.

Very recently I have been considering the idea of staying here, where I currently live with my parents rent free, and getting a new higher paying job (if I can). Then, using my cash I have saved and new income to put 20% down on investment properties in cheaper markets that might need to be fix and flips or fix and holds. If I was to do this, I would probably need to invest where properties are below $75k and I am able to add value through a rehab (with possible use of a HML).

So I guess the question is, should I move now, eat the moving costs, make less money and house-hack whatever I can…. Or should I stay here, up my income, and try to invest long distance with flips or fix and holds (will be a lot more difficult to do).

After a flip or 2, I feel I could potentially have enough to move to a market that I would want to stay in with more money. I really want to get my first property and never look back as I start my REI career. I am just curious if any of you can share some insight on a similar dilemma or maybe have some advice. Thank you all!

Johann Martinez · Answer

Wow, I am legit in the same situation as you. I have around 15k saved and expect to have 30k saved up by the end of the year. I am also looking into Ohio to invest for my first deal. I have been wondering how I would get around the cash situation; as you said, either house hack the property or make a long-distance investment in Ohio. I have no problem making a long-distance investment, but I would definitely visit the market for a couple of months and create a team to manage the property. Also, before making any decision, you should question yourself if you have a solid business plan once you get there and if you have found the right people to help you get the seal the deal since you would be on a very tight budget and have a limited time frame before you run dry. It sounds like we could potentially help each other out if you're interested.

Alicia Prokos · Answer

I think David Greene of the Bigger Pockets Podcast might be a good one to ask this question. He lives in the Bay Area and also had to start in real estate dealing with the challenge of an extremely expensive market. He currently buys rental property in the Bay Area and long distance, so he might have some insights for you. He takes questions on his show, and I think you can write in your question on YouTube, where they post a video version of the podcast. Myself, I live in Columbus OH and run a land development company. I would be more than happy to help you in any way that I can, and it is true that living here is significantly less costly than CA. What is your line of work? Perhaps I could help with the names of potential employers.

Andy Rousch · Answer

It wouldn't be a bad experience to move for a little bit to get into cheaper properties with low money down. Keep in mind though if you move to another location, a lender is going to want to see a job offer and a first paystub before moving in, OR if you are able to work remote they will just need a letter showing that you are allowed to work remote.

13K will be touch to get into the CA market of course, try to think of maybe a family member who would help out,if you have funds in a IRA/401k, or any other types of money you may have that you may need to get creative to get. Refinancing a car that doesn't have a car loan, etc. while of course watching your debt to income limits

Noah Yoder · Answer

The way I see it, (at least in Columbus) is that the longer you wait, the more you will be kicking yourself for not buying here.

However, it sounds like there are some decisions you will have to make on your own in order to take the calculated risk you are comfortable with. Obtaining a buy-and-hold duplex while you have no living expenses and then moving into one side when you decide to come to Ohio might be an option to consider. That way, you have passive income and a place to live/house hack when you get here.

You sound motivated and eager to start your portfolio! Best of luck!!

Alicia Prokos · Answer

Keep in touch, and I will try to check my Bigger Pockets inbox more frequently. Yikes- sorry about that.

Thomas O'Donnell · Answer

Thanks for the reply! Also, I don’t think I have enough for 20% on a property in Columbus. I could only afford to house-hack. It’s been super hard trying to get a job out there for me not already living in the state.

Relocate and House-Hack, or Invest Long Distance?

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