MFR in Sac starting out or live in a SF and buy out of state?

Question

Hello Sacramento BP contributors!  I am listening to Brandon's book on Audible and became encouraged to engage!  I have quite a bit of research to do build my knowledge but wanted to pose a question regarding my first purchase.  I am currently renting (ugh) and would like to purchase a home for my family to move in.  I recently thought a duplex, possibly a triplex with a FHA loan would give me a good starting point.  Stay in the property one to two years and move on continuing to rent the duplex with future investment purchases in other states where the numbers make more sense.  Is this a good strategy or should I forego the duplex instead purchasing a single family for our residence and purchasing rentals in the future out of state?  Thanks for the help!

Stevie Mobley · Answer

Hey there Chris welcome! Like yourself, I originally planned to house hack using an FHA loan to purchase a pair of duplexes and had my heart set on this strategy. After analyzing deals and comparing strategies, I've now changed directions and have chosen to invest out of state for my first purchase. I personally plan to continue renting in Sacramento for my primary residence and I'm in the process of bringing in a partner to get started pursuing an OOS duplex or other multi-family that nets at least $500 a month. It all really depends on what deals you find locally and if they align with your personal priorities (monthly cashflow, long term appreciation, both, other?, etc.). I've noticed that a lot of the deals here in Sac just don't make sense for me and my goals which is why the costs and pros/cons of entering OOS markets is more attractive in my eyes. Long-Distance Real Estate Investing by @David Greene is also on audible and I highly recommend! Best of luck!

Chris Cruz · Answer

@Kim Stofan I appreciate the info. !  I will look in the meet up by David.

Kim Stofan · Answer

@Chris Cruz, welcome to BP!  I echo the sentiments of the other commenters on getting out to a meetup and start chatting with other investors in the Sacramento area.  There's a great meet up in Roseville organized by David Oldenburg which meets monthly.  Househacking is definitely a great way to get started.  It really depends on your goals and how hands on you want to be in your investments.  If you want to get a good foundation managing your rentals, a duplex or triplex would be great.  It will offset your living expenses and allow you save up money faster for your next purchase.  If you want to go out of state I'd recommend you read David Green's book: Long Distance Investing.  Good luck!

DJ Dawson · Answer

double post

DJ Dawson · Answer

Hey Chris!

Congrats on your development on your "game plan". Few questions I want to propose....1) have you attended any RE meet ups throughout Sacramento? I suggest doing this as it allows you to surround yourself with those who are doing the VERY thing you are looking to do, better to follow the path of least resistance than bash your head into walls to create your own lol. 2) Are you aware of your current FICO and DTI? These are big as they ( and a few other factors) will determine your ability to get a loan, and for how much, this may be able to provide some clarity what you really can do on your first move. You may already know all this but if not I suggest starting there, in my experience the most learning and progress i've gained in REI is through meet ups and simply stepping out the house to meet with the very investors I want to emulate. If you would like me to suggest a meet up simply PM me but you will find there are more than a few in the greater Sac area!!

and the more research you do you may find that @stevie Mobley suggestion on David Greenes OOS real estate investing is what you're looking for !

BOL!!!

Gordon Cuffe · Answer

@Chris CruzEither one could work great for you. It all depends on how much you pay for rent now. If your rent is real low then it makes sense to stay there and buy out of state. If your rent keeps going up then buying owner occupied has a lower down payment compared to buying an investment property. Buying a duplex will probably give you the lowest payment out of pocket because of the rental income. All you have to do is look online to get an idea of the average price of properties in the areas you would like to live in and use an amortization calculator to figure out payments.

If you buy out of state, the properties are much cheaper in the right states but you have to put down 20% so if you buy a 70k house that rents for 900 per month, you need at least 15k down. If you have that much of a down payment, you will need to figure out what city and state you want to buy in and a good property manager.The property manager is the key to succeeding with out of state properties.  I am on my third property manager in Kansas City just to show you that you really have to keep an eye on your pm until you know they work well.

Ali Boone · Answer

Thanks!

Chris Cruz · Answer

Great article @Ali Boone!

Ali Boone · Answer

Depends... what are the numbers on the duplex? Compare those numbers to out-of-state. That's the first way to start deciding between them- takes the emotion out.

If you do decide to househack (watch out for those FHAs on the numbers), considerations-

https://www.biggerpockets.com/renewsblog/considera...

Chris Cruz · Answer

@DJ Dawson I will PM regarding meet ups.  Definitely would like to get more involved!

MFR in Sac starting out or live in a SF and buy out of state?

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