Buy a Nice Property For More or a Not-So-Nice Property for Less

Buy a Nice Property For More or a Not-So-Nice Property for Less

Cleveland, OH · Member since 2022 · 811 posts · 578 votes

Hey BP, 

I wanted to bounce a couple of thoughts off of you. 

At my current state, I could buy a cheaper multifamily in an area that is less desirable to live. Since my plan is to house hack, it likely wouldn't cashflow but cashflow would be solid after I moved out. It's more likely that this investment would have tenant issues and deferred maintenance. I also have a significant other and I'm not sure how living in some of these areas would go down with her.  I don't necessarily like this route but it's a way to get into investing quicker. 

On the other hand, I could buy a more expensive house in an area that has more rent growth, potential for appreciation, job growth, hangout spots in the area, grocery stores, parks, and places people actually want to live near. 

This would require me to save up probably close to 3-4x the amount that I have now (to have enough for down payment, closing costs, and reserves) . This property absolutely would not cashflow while I live in it but my living expenses would drastically decrease and I'd be building equity at the same time. I'm super frugal and I'm strict to a budget so this likely wouldn't take much more than a year to accomplish. Almost all the money I spend goes towards my rent, student loans, and basic necessities like food. 

I know people have made both options work and I'd love to get thoughts from other investors. 

Thanks for any advice! 

Ben 

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  • Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
    2y

    nicer! always- less tenant risk with higher rents, more rental increases and more appreciation in better areas. 

    After working with out of state investors for over a decade, the one consistent thing I see over and over again is regret not buying in better areas- you usually spend more time & money vs a nicer property in a better area- now you can still have risks in a better area but at least you have more value in it and can exit if needed. 

    Best of luck! 

  • Cleveland, OH · Member since 2022 · 811 posts · 578 votes
    2y
    Quote from @Melissa Nash:

    nicer! always- less tenant risk with higher rents, more rental increases and more appreciation in better areas. 

    After working with out of state investors for over a decade, the one consistent thing I see over and over again is regret not buying in better areas- you usually spend more time & money vs a nicer property in a better area- now you can still have risks in a better area but at least you have more value in it and can exit if needed. 

    Best of luck! 


     Melissa,

    Thanks so much for your insight!! 

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