Is it better to invest in state or out of state?

[Ian Rivera]

Hi everyone,

I hope you all are having a great day! I wanted to ask for your input. Just like a lot of others on here, I'm new to the real estate world and I'm looking to buy some property. I currently live near Orange County, CA, and am looking to buy a 2B/2B condo for around $450k. I have a little less than 10% for a down payment so I would have to do a PMI. Lately, I've been discouraged to continue looking because properties around this area are ridiculously expensive and the HOA's are around $250 monthly. So I feel my mortgage payment in total would be pretty high. I was planning on renting out the 2ndroom so that would help with the payments.

I also have plans to move to Portland, OR, within the next 3 years and plan to live out there for about a year or two. The market is a lot more affordable and I can buy a home now with no HOA. So my question is, would you think it's better to consider buying now in CA or invest out of state? Essentially, I am looking for a property I can eventually rent out. Any input would greatly help.

Thank you very much,

Ian

[Jon Schwartz]

Originally posted by @Ian Rivera:

Hi everyone,

I hope you all are having a great day! I wanted to ask for your input. Just like a lot of others on here, I'm new to the real estate world and I'm looking to buy some property. I currently live near Orange County, CA, and am looking to buy a 2B/2B condo for around $450k. I have a little less than 10% for a down payment so I would have to do a PMI. Lately, I've been discouraged to continue looking because properties around this area are ridiculously expensive and the HOA's are around $250 monthly. So I feel my mortgage payment in total would be pretty high. I was planning on renting out the 2ndroom so that would help with the payments.

I also have plans to move to Portland, OR, within the next 3 years and plan to live out there for about a year or two. The market is a lot more affordable and I can buy a home now with no HOA. So my question is, would you think it's better to consider buying now in CA or invest out of state? Essentially, I am looking for a property I can eventually rent out. Any input would greatly help.

Thank you very much,

Ian

Ian,

Three years is a pretty short timeframe to bank on appreciation or market rents catching up to the mortgage on a Socal property. What's your rent payment now? If you're in a comfortable situation with a low rental rate, I'd hold tight and save your money for Portland.

Are you handy? If you can find a slightly distressed condo to buy at a discount and improve, I think you'll be fine on a three-year timeframe. You can sell the condo on your way to Portland or probably rent it at a profit.

Renting out the second bedroom (ie, house hacking) will definitely help the numbers! Factor in principal paydown. If you buy and rent out a bedroom, how much out-of-pocket will you be each month? How much principal will you pay down? If you sell in three years with no appreication, how much equity in principal paydown will you recoup?

To put it another way, owning with a roommate might cost more per month now, but when you sell in three years, you might gain back more than you put it -- even without any appreciation gains.

Best,

Jon