House hacking or out of state investing?

Question

Hi, I'm just about ready to seriously look into real estate investing. I live in Brooklyn, NY and have saved up a good amount of money. We live in a rent controlled apartment so the rent is quite low. I've been trying to decide if the first property I buy should be a house in New Jersey as a house hack, or if I should purchase something cheaper in another state. What do you guys think would be the better first purchase? Any advice is appreciated.

Melissa Justice · Answer

@Roman Kevilly,

Hey!I’m originally from the Bronx and grew up in New Jersey myself and know that market pretty well. It’s a tough place to get strong cash-flowing deals, especially with high taxes and competition driving up prices. A house hack in NJ can still be a great learning experience if you’re set on being local and hands-on—but if you're open to other options, investing out-of-state can open up much better returns.

One path a lot of investors (myself included) have looked into is turnkey rental properties. These are fully renovated & professionally managed. It’s a solid way to start building passive income without having to swing a hammer or manage a renovation from a distance.

You’ve got a strong foundation with low rent and some savings—perfect setup to either house hack or go turnkey. Happy to share more if you're curious about that route!

Best of luck,

Melissa

Samuel Diouf · Answer

Hey Roman, I'd say house-hacking is one of the best ways to get into real estate investing. You’re able to learn the basics of a real estate investment with lower risk and build equity at the same time.

Being able to purchase a property with only 5% down means you can leverage your money way more effectively. When you’re investing with leverage, I  think it makes more sense to do it in a market that’s showing plenty of signs for growth.

Kerlous Tadres · Answer

If you're living in a rent-controlled apartment with low overhead, you're in a great position to start investing strategically. A house hack in New Jersey could be a strong first move. It keeps you local, gives you hands-on experience, and allows you to take advantage of owner-occupied financing. However, if the numbers in NJ don’t offer strong enough returns or the price points are too high, buying out-of-state in a more affordable market can give you better cash flow and potentially allow you to scale faster. The best choice depends on your long-term goals: if you're focused on learning and building locally, go with the house hack; if you're comfortable building a team remotely and want better returns, consider an out-of-state rental.

Rick Borgo · Answer

House Hacking in NJ is a great idea because multifamily in NJ will almost always have stable rent due to it being a "commuter state" - I worked with two separate clients that house hacked in Harrison, NJ and Rahway, NJ that both took advantage of Fannie Mae's 5% down Multi Family House Hack loan.

As long as you buy in an area that will rent (because in house hacking, this is not a long term residence for you), I think you will be good. Feel free to reach out if you'd like to talk more about the mortgage aspect of it.

Mike Paolucci · Answer

If you can afford to invest locally, then I'd suggest doing that with a duplex or a triplex to get your feet wet and learn what it's like to own / manage a property. You'll learn A LOT from your first buy and should do the best you can to start your investing on a good foot.

If that's not a feasible option then out of state might be a good substitute. I'd target a landlord friendly state where the numbers make sense and you're able to have all of your expenses covered while building equity. Lot will also depend on your overall strategy (cashflow vs appreciation).

Happy to answer any OOS investing questions since that's how I got started back in 2021! Good luck with your investing journey!

Carlos Marin · Answer

I would choose house hacking for my first deal, every time. Way less risk, learn without braking the bank, more options. Good luck!

Nicholas L. · Answer

@Roman Kevilly

house hack.  there's just not even a comparison.  every day there is a post like this:

ROUGH start. Sewer line repair plus forced added second water line for duplex?

House hacking or out of state investing?

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