To invest in a hot Seattle market...or out of area

[Russell Pitts]

Hello my fellow BP followers.  I'm wondering if I can get some advice from those with some experience.  Before asking, let me set you up with my goals/situation.  My wife and I have been on this track of "financial independence" for a couple years now.  The plan is to cut expenses, increase savings rate, and "invest".  Doing this, our plan is to achieve financial independence by 2025.  "Invest" in this case means socking money away into Vanguard index funds and letting the stock market make money for us. By the time "enough" is saved, we should be able to invoke the 4% rule and coast on dividends and gains.  We've thought a lot about this, pro's/cons/etc, and are following this well.

However.... I have always been interested in real estate investment, going back 10 years now but never jumped in. I want an additional buffer of income by the time 2025 rolls around, or earlier, to secure this financial independence. FYI, "financial independence" for us means I can choose to work a W-2 job or not, but really gives us the flexibility in our life to do whatever we want, and it doesn't mean sitting on a beach drinking margaritas every day! So, I've been doing the reading, podcast listening, forum discussions, beginning to network so that I can jump into this world of REI.

Now to the part where I'm looking for advice... 2025 is ten years away. Initially, I've been looking for properties that will cash flow from day 1 with a good ROI, do a buy and hold strategy, and "hopefully" I can move up my 2025 date to something earlier. Acquiring enough of these would get me to the point that I could move the date up. I've been looking around my area, Seattle, but prices are astronomical and cash flow from day 1 will likely not happen (I don't intend to go to auctions, or do any major rehabs, as I have a full time job and other commitments). In addition, even if I accepted no/negative/little cash flow, the initial down payment for this type of property in a good location in Seattle area is quite steep (at least $100k+). So, I've put that option aside for the moment and now I am looking out of state, specifically via turnkey provider companies that claim cash flow from day 1 and double digit ROI. I'm a little leery of buying out of state as I'd prefer buying close to me and potentially doing the PM myself, and for sure I would due my "due diligence" for any turnkey provider so that part I'm not worried about.

So... the dilemma is: do I bite the bullet and invest in a good location in Seattle, putting lots of money down and sucking it up with no/negative/little cash flow and count on appreciation to assist me? Or.. do I make the most of the cash I have available to REI and invest outside of Seattle area? Or... both somehow...

Humbly looking for your opinions...

[Account Closed]

@Russell Pitts the wife and I have put the majority of our eggs in investing here in our local market. We sucked it up and put down "large" down payments on cash flowing 4+ unit properties in Everett. We chose Everett for many reasons but mainly because it has a nice mix of cash flow and appreciation. We began investing in 2013 and our net worth and annual salary has skyrocketed. We are always looking first and foremost at cash flow but the majority of our wealth has come from appreciation. We just put a seven unit building under contract and if that closes we will be up to 35 units. All places have been value add type properties but nothing major.

My personal (and bias) opinion is investing out of state strictly for cash flow is like buying a stock with high dividends. It is not creating much wealth beyond the cash flow and you can't actually force any value yourself.

That's my two cents.