Long Overdue... 1st Home Purchase

Long Overdue... 1st Home Purchase

Member since 2018 · 3 posts · 5 votes

Hey guys I have been in the market for 2 years now across US/Japan. I've primarily taken past 8 months off as I was dealing with moving to new city/company. 

Now life is settled down and I am looking to reembark on the journey. I would like to buy SFH (haven't really looked into anything else) that I could see myself living in down the road --unlikely to happen in the next 15 years. If I could find something that was close to cash flow neutral.. I would be looking at something up to $2.5million. I have spoken to lender and amount is fine. The main issue I've come across is that everything in this price range would be cash flow negative. I would be comfortable to some degree as this would just be a saving plan of sorts. But depending on the magnitude that home price range would have to go lower.

I would love to hear everyone's thoughts. Some of the main questions I would have are:

1. Are there any markets that will have SFHs in the $1.5-$2.5mln range that would be cash flow neutral or close to it? I have preferences but not set on any market in particular. I do have preferences ie close to beach/lake, no state tax (limited but if possible). 

2. Given the general importance placed on cash flow, is my line of thinking incorrect and therefore should buy something cheaper or look more into duplex etc?

3. More broadly, would be great to connect with local experts on this forum. 

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  • Rene HosmanPro Member
    Rental Property Investor · Denver, CO · Member since 2024 · 583 posts · 655 votes
    1y

    Thank you for sharing your situation & welcome to BiggerPockets!! Sounds like you're in an exciting position to start your real estate journey again. Lets go over your questions one by one and provide some general thoughts based on your goals

    1. "Are there any markets that will have SFHs in the $1.5-$2.5mln range that would be cash flow neutral or close to it? I have preferences but not set on any market in particular. I do have preferences ie close to beach/lake, no state tax (limited but if possible)."

    This price range makes cash flow neutrality challenging, especially in desirable areas like beach or lakefront properties. These markets tend to have higher appreciation potential but are often cash flow negative unless you make substantial down payments. That said, I’d recommend exploring states like Florida or Texas, where you could find some properties meeting your criteria, and there's no state income tax. Take a look at the BiggerPockets Market Finder tool to start looking at different markets based on your goals - https://www.biggerpockets.com/markets

    2. Should I prioritize cash flow more and look into duplexes or other types of properties?
    If your priority is building wealth sustainably and positioning yourself for long-term financial independence, I’d strongly recommend considering properties like duplexes, triplexes, or even quadplexes. House hacking—a concept we discuss often—could allow you to offset your housing costs while still owning a property you could live in down the road. Plus, multi-units tend to cash flow more reliably than SFHs in high-price markets.

    3. Connecting with local experts
    This forum is a fantastic place to start, and you’re already doing the right thing by engaging here. I’d encourage you to search for BiggerPockets members in your preferred markets. You might also consider using the BiggerPockets Pro tools to analyze specific properties and connect with investors who have experience in those regions.

      Additionally, networking locally through real estate meetups or investor groups in your target area can be invaluable. Check out Meetup.com or local Facebook groups to find like-minded individuals, you never know who you'll meet, or who they'll connect you to!


      Your goals seem to balance future personal use with investment potential. If you’re okay with moderate negative cash flow as a "forced savings plan," that’s fine, but I’d advise setting clear boundaries on how much loss you’re comfortable with per year. A "neutral" cash flow property will likely wind up negative many months/years because there's always something unexpected! Have a robust cash reserve to handle unexpected vacancies, repairs, or market shifts.

      Good luck, and I’m excited to hear how your journey progresses!

      BiggerPockets
    1. Real Estate Broker · Member since 2024 · 134 posts · 62 votes
      1y

      @Bryan K. I'm confused, are you wanting to buy an investment property in another state that you will rent out, or are you wanting a property that will be your primary residence?

      I'm going to assume that you're wanting to buy an investment property.  If so, I would recommend to think not as a homeowner, but rather as an investor.  Typically $2m+ homes don't cashflow due to high taxes, high insurance rates, and low rental demand.  That being said, if you're wanting to build a portfolio, it's best to buy smaller properties that would all appreciate and cashflow.  

      I work in the Birmingham, AL market which is known to be a great market for OOS investing, due to the median price and the high rental demand.  Feel free to reach out if you have additional questions.  

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