Hello all,
First off, I would like to say that BP is such an amazing community. Before a friend told me about BP, never in my wildest dreams would I imagine such an amazing resource exists, where experts in real estate give sound advice out of joy in helping others. Incredible.
I'm getting myself ready to embark on a journey in real estate, and currently I am gathering as much information as I can (before I can even get to the "analysis paralysis" stage). I've already read a few books (including the BP books), read a lot around BP, and I am waiting for the BRRRR book to come out. Here's my novice question if anyone would care to pass on some wisdom: $70K (hypothetical) to invest: would you rather buy and BRRRR in Midwest / southeast or would you rather use this as downpayment for a multi or SFH locally in my area (seattle)?
A little bit of background. I currently live in an expensive market (Seattle / Bellevue, WA). My long term goal is to buy and hold (and hopefully through BRRRR strategy - as I see it as a very efficient way to build equity and portfolio). Through time I hope to 1031 into larger properties until a certain "number" is reached. Hypothetically if I have $70K per year to invest, what would you rather do:
1. Buy OOS (Midwest/south east) with cash and BRRRR (and the headache that potentially comes with OOS - building a team u can trust - hello Clayton Morris..?, lack of appreciation potential, harder to sell / 1031, etc...).
2. Use it as downpayment locally each year and hopefully through value-add properties as well as appreciation can create equity for me to cash out refi and scale that way. And keep in mind that locally, investment amount would probably need to be higher than $70K... more like $100K for SFH or even more for multi...
I see the pro for OOS is higher cash flow, ability to perhaps scale a bit faster. But the downside is that often I see people post that buying “cheap” houses comes with “cheap” value - C properties are C properties, no way around it. People tend to poo-poo it. Appreciation will be low, and it would be harder to sell when / if the time comes (again, people point to that often times cheap houses sits on markets for months at a time, versus in seattle it sells like hot cakes)
Upside of local investment is that it appears “safer” - I know the market, I can drive to it to make sure no one “Morris”ed me, and when the time comes to sell / 1031 - hey, it’s easy, and it most likely will come with good appreciation (I know, appreciation is not guaranteed; it’s icing on the cake).
What would you guys do? I often see frequent flyers like Jay Hinrichs post on here, and I say to myself, hey, one day I would like to be like that guy, and give back to newbies. I already do that in various aspects in life - helping others without expecting anything in return. And hopefully one day I can do the same in the RE world. Thanks a lot guys!
