Alaska vs Tennessee

Alaska vs Tennessee

Anchorage, AK · Member since 2015 · 7 posts · 0 votes

Hello there. I'm in an odd situation where I'm currently working and living in two separate states, and I'm looking to invest in my first house, owner occupied for the first year then renting it out, and I'm having trouble figuring out which way would be the best route. I'm looking for something that will be able to allow me to quit my current job and mostly survive on the rental income. The two separate areas I'm looking at are Knoxville, TN (where I'm from) where I can find a house or duplex for around 100k, and probably bring in a monthly rental income of around 800, and the other is Anchorage, AK where I work, and there it's much more expensive, say 300k for a duplex but it would bring in around 2500. Knoxville seems the safer bet since it's less in case something were to go wrong like maitenance issues or not finding a tenant, I could still afford the mortgage while Anchorage would bring in more cash flow but would be incredibly difficult to foot the full mortgage if I didn't have tenants. I'm currently making about 65k a year and I'll have about 30k for a down payment towards the place. Of course these are all ballpark numbers and specifics could vary greatly but I was just curious what you guys would recommend. Thank you! 

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Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
10y

@Christopher McIntosh where will you be in 5 years? If your plan is to head back to TN it would make visiting your property in Alaska very expensive. Typically when good management goes bad it will involve getting out there to assess the things they lied to you about. Plus, you may want to check up on the property yourself simply because you own it and want to feel secure.

Nowadays, there's an app for people to go by and check up on it for you, but some people are not comfortable with that either. Since it is owner-occupied financing, you can't really buy 3 in TN or 1 in AK, so if you are very comfortable with that I would lean towards Alaska first. Again, this will depend on your specific scenario, time horizons, exit strategy, teams, etc.

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  • Orlando, FL · Member since 2015 · 76 posts · 35 votes
    10y

    Hmm. That's a toughie. It really boils down to what you think would be best for you. Yes, it is much more expensive in Anchorage (I lived in Alaska for 4 years until less than a year ago), but people are used to that up there and if the place you have available is quality with good, responsible property management you should have no trouble keeping your unit rented. My experience with rentals in Alaska was that the housing was typically substandard but you still had the very high rents. If you were providing clean, standard housing with competitive rates then you should be all set!  

    That's my 2 cents. I hope you have a wonderful weekend!! :-)

  • Realtor · Hermitage, TN · Member since 2014 · 125 posts · 93 votes
    10y

    My first question would be, is there a large enough market of people wanting to rent? I have a preconceived notion that Alaska is this huge (wonderful) wilderness and very few people. If there is no one to rent to, it would not be good to have a rental there.  I may be wrong. I would check the local paper, real estate mags, craigslist (for rent & want to rent), etc. to see if there is a need for rentals.

    The flip side, Knoxville is one of the top rental markets.

  • Anchorage, AK · Member since 2015 · 7 posts · 0 votes
    10y

    Thanks for the advice, Natalia. I am leaning more towards a purchase in Alaska but the only thing that makes me a little uneasy is how the housing market in Anchorage will be affected if oil prices remain this low. 

    And Roger, your assumptions about Alaska are correct for about 95% of the state, but Anchorage is quite the opposite. Knoxville has a vacancy rate of about 7% and Anchorage is at 5.10%, so it's slightly better. I'm just mostly worried about the worst case scenario while toting a larger mortgage like not being able to find tenants after I quit my current job while something in Knoxville would still be manageable if the same situation. 

  • Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Christopher McIntosh where will you be in 5 years? If your plan is to head back to TN it would make visiting your property in Alaska very expensive. Typically when good management goes bad it will involve getting out there to assess the things they lied to you about. Plus, you may want to check up on the property yourself simply because you own it and want to feel secure.

    Nowadays, there's an app for people to go by and check up on it for you, but some people are not comfortable with that either. Since it is owner-occupied financing, you can't really buy 3 in TN or 1 in AK, so if you are very comfortable with that I would lean towards Alaska first. Again, this will depend on your specific scenario, time horizons, exit strategy, teams, etc.

  • Chico, CA · Member since 2016 · 18 posts · 4 votes
    10y

    @Bryan O. you mentioned an App for checking on your properties. Could you share what that is please.  I am currently a hands on investor in my local community however I am starting to investigate out-of-state investment space. The aspect of not being able to check on my properties has me gun shy.

  • Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Hi @Tina Peters. The one I know of is WeGoLook. They'll go out, drive by, take pictures, do inspections, etc. Just keep in mind these people may or may not have any idea what they are looking at/for outside of what you tell them.

  • Chico, CA · Member since 2016 · 18 posts · 4 votes
    10y

    @Bryan O.. Understood, and thanks for the quick reply!

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