New REI looking to house hack vs. out of state invest

[Alex Kantor]

Hi BP community! I'm looking to start out as a REI on long island. I've been reading many books, attending weekly webinars on BP and LIREIA, and browsing the forums the past few months but this is my first post. My girlfriend and I were originally looking to house hack on long island so we can move in together as well as generate extra income, but with prices as high as they are, a lot of the ROI's I have calculated are either very low or negative percentages. One idea we've had is buying a SFH on long island that could potentially be a long term rental when we move out, as well as invest into a multifamily property in Connecticut that provides a higher ROI as well as generate cash flow while we are still living on the island. The caveat is that I will be attending medical school in 2022 and I'm not sure where I will be, so we would want to live in a house that calculates as a good ROI in case we can no longer live there while I go to school and decide to rent it instead of sell. Our goal is to purchase our first property by new years and then purchase our Connecticut multifamily property a few months after that.

Has anyone thought of a similar strategy/ have any thoughts? 

Looking forward to getting to know everyone and thank you for your time. 

Alex 

[Angelo Pozzuto]

Hi Alex, I'm living in a very similar situation, my girlfriend and I actually purchased a duplex as a house hack up in Connecticut. We used an FHA loan, so we didn't put much money down originally and when we ran the numbers, we didn't break even renting the one side and living in the other. But on a positive note, since we are going to live together anyway, its much more affordable buying a duplex as compared to, say a sfh, to live in. What is even better is that once we move out, we will cash flow more than $1,000 a month, plus your paydown and all the tax advantages we get as a landlord for half our house. I guess what I was thinking was that even if a house hack doesn't get you a positive result on a cash flow basis every month, its still better than having a place to live that will only cost me money until I sell. In Long Island where RE is pretty expensive upfront, just like in Connecticut, you probably are going to have a hard time, like I did, finding something move in ready that will cash flow enough to make money and still live in it. I don't know how handy you are or how much you would want to put into a remodel upfront, but that may still be something to consider.

Alternatively, if you are comfortable renting where you are, there are many places you can invest and cash flow, even out of state if your comfortable with that. OR you could also rent out rooms of a sfh which you would also live in (live in house hack), which can net you more monthly cash flow then renting one half of a duplex in the same market. I would run some numbers and see if you would be better off and what works for you. I feel as though every strategy in RE works, its just that some strategies are better for certain situations. A lot of it has to do with what your more comfortable with from a risk or living situation. But believe me, all three of these suggestions will make you money. All you need to do is focus on a strategy and execute to the best of your ability. The rest takes care of itself.