All Forum Posts by: Wei Zhao
Wei Zhao has started 1 posts and replied 3 times.
Post: House Hacking in appreciate area VS Out of State investment for cashflow to pay rent?
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Thanks for your insight @Travis Biziorek! Pretty helpful!
Post: House Hacking in appreciate area VS Out of State investment for cashflow to pay rent?
- Posts 3
- Votes 4
Quote from @Nicholas L.:
there won't be any 'cash flow' in option 2 for several years. think about it:
-when you buy a property, you'll have a down payment, closing costs, rent-ready costs, costs to get set up with a PM, a commission to place a tenant... maybe some light repairs after the tenant moves in...
-your first few years after a purchase are typically a stabilization period, and you IN-vesting your money into the property. think about how long it will take to recoup all the costs i just mentioned.
-therefore, there won't be any net 'cash flow to cover rent' for years.
to be clear, i say this not to say "don't invest out of state." investing out of state is fine. it's just not something that gets you 'cash flow' for, probably, 5-10 years.
on the other hand: house hacking is a great way to get started. and the point of house hacking is not to 'cover the mortgage,' it's to help defray the cost of the mortgage. say for example that you could rent for $2500, or you could house hack, and if you house hack, you still owe $2200 net to the mortgage after rent. house hacking is still better. why? several reasons, not the least of which is that you're building equity in a property.
and house hacking doesn't mean you can't invest out of state. they're not mutually exclusive.
food for thought - hope this helps
Thanks @Nicholas L. that's pretty helpful! appreciated it!
Post: House Hacking in appreciate area VS Out of State investment for cashflow to pay rent?
- Posts 3
- Votes 4
Hi everyone,
I live on the east side of Seattle, where almost no cash flow can be found. I’m currently renting and haven’t bought my first house yet, but I’ve decided to start investing in real estate. I’m in my late 20s and not in a rush to retire, but my goal is to achieve financial independence in the next 10 years through real estate.
I’m considering two options:
Option 1: House Hacking with a Multifamily Property
I probably have to use all my cash for the down payment, and the rent income won't cover the mortgage. Besides my current rent, I still have to pay an additional $1~2000 for the mortgage, etc.
Pros:
- Better financing rates than for investment properties
- can manage it myself to save the PM fee
- having my own place without worrying about rent increases
Cons:
- May only afford a small townhome or apartment, not sure if I still want to live there after 5 year
Option 2: Investing in Out-of-State Multifamily Properties
I could use my cash to invest in several multifamily properties out of state and use the cash flow to cover my rent.
Pros:
- Potential to spread risk across multiple properties
The cashflow can cover my rent, maybe have extra left
Cons:
- Additional costs for property management
- Limited potential for appreciation
- Have no experience in managing OOS property, and I am afraid it will be annoying
I’d love to hear your thoughts or any advice you might have.
Thank you!