Stretch Budget or Keep Money in Reserves

[Derek DeLong]

Hello BiggerPockets, first post here.  I've been listening to the podcasts for almost a year now.  

As I just moved to the Knoxville location, I am looking to buy a house hack.  Is it better to buy in the best neighborhood and stretch your budget for appreciation? Or should I buy in a B class neighborhood with reserves and fix the property up (paint/flooring/force appreciation) I will be using the house hacking strategy 3.5%- 10% down. Knoxville TN. 24 years old. 

If you are familiar with the area I am looking at Maryville and Farragut.  Would love to hear your thoughts.  I know there not a ton of building going on in Farragut as space is limited and not too many more homes can be built.  Whereas Maryville, there is a lot of room for development and a new amazon warehouse is going up and soon to be completed and the city continues to grow.

I just moved to Knoxville and looking to connect with like-minded people that love real estate.  All feedback would be greatly appreciated. 

[Mateo Gomez]

Hi Derek,

If I were you, I would get into the B class property and force appreciation through rehabs while completing your required 1 year of residence for the owner occupied loan. You will also have much more peace of mind having reserves on hand should anything go awry. Additionally, forced appreciation is reliable, while market conditions are not (at least in the short term). 

Spending less on the property will also allow you to quickly save for another house hack so in 1-2 years you could move into another one and repeat the process!