For many years I've longed to be involved in real estate, but didn't have vision, knowledge, and frankly
the money to pursue those dreams and put action into it. Within the last couple years I've been able to position myself to have these dreams be much more tangible.
While researching and trying to invest my time in my own financial and real estate education I found bigger pockets, and for that I'm so very grateful because it's reinvigorated my drive and sense of purpose and given me the tools and confidence to pursue it. The podcasts, webinars, and forums have consumed most of my time sense I've literally become obsessed with pursuing my first deal. This is my first post on the forums and I'm hoping to get some sound advice and encouragement to get myself started with the right trajectory.
I'm trying to be savvy but not allow myself to get analysis paralysis.
Currently I want to start by house hacking into my first deal using an FHA to purchase a multifamily in the Lexington, KY area. I've moved here from Huntington, West Virginia and love the idea of minimizing or completely eliminating my cost of living expenses. Usually I travel back to Huntington on the weekends. I have money saved for my down payment closing costs and possibly some of the renovations and would ideally like to try the BRRRR strategy to gain equity faster and allow for more property acquisition in a shorter time frame. Luckily I have a home in Huntington with about $75,000 in available equity through a HELOC and a very strong income that should allow for easier access to lending.
The market in Lexington right now is very strong and finding deals within the 2% rule are basically impossible in a multifamily, most are listed on the MLS around the 1% Rent to Purchase. Huntington however (
which has a much less thriving economy) has several deals within that criteria but has and will likely continue to experience population decline. There is a pretty descent rental market there though mostly catering to students for Marshall University.
I know I need to eliminate my own rent and stop wasting money because through the week I need a place to stay where any money I spend can be building equity or wealth, but it's tempting to pursue my first deal in Huntington where for one I have a more profound understanding of the market, but also better relationships with contractors, and a much lower cost for property to get started. I could certainly achieve more doors faster in Huntington but I want to have longevity as well.
I'm looking for any advice to what could give me the best trajectory, and allow me to achieve financial freedom sooner.
Should I pursue the better market or the cheaper market, both really are home to me and within an hour and a half drive (of which I make weekly regardless)?
I'm currently working on converting the single family home in West Virginia to a duplex so I can cover the mortgage there and utilities and keep the smaller basement unit for myself when visiting.
Sorry for such a long post but there are a lot of moving parts, most of which are pertinent to any sound advice.
Really want to sink my teeth into my first deal just need some reassurance and some guidance. Thanks in advance.
Just make sure the market you buy in has jobs and a reason for people to stay not leave. Look at the census bureau and the cities history to see if there will be population growth or at least stable population. Smaller markets tend to struggle with sales and rent increases. Lexington is a strong market and will continue to be one. Look at the history of Lexington and the city has had population growth every year since 1860 and looks to continue that growth. It is a slow and steady 1-3% growth every year and is projected over the next decade to grow 1.8%/year
CONGRATS ON STICKING TO IT!!
I know how hard it can be to stay motivated to keep an interest in real estate especially when you're in a slow growing city and do not have much funds, I applaud you for your tenacity and consistency. Lexington has deals but you will struggle to find them like you said, Especially a multifamily property.
With the Toyota plant committing $1.3 bill investment to the Georgetown plant it will raise the economic tides keeping that 1.8% population growth steady for many years to come and maybe even increase it. More businesses will arrive, more jobs for UK grads (keeping them in state), more people relocating from out of state, more franchises etc, etc so its a good time to get into the market with the potential expected growth (but nothing is guaranteed).
Why don't you try and work both markets at the same time? Procure a buy and hold here in Lexington and flip a house (or more) in WV if you're in both states anyways? short term inventing in the cheaper state and long term investing in the growing one. What do you think @Todd Dexheimer ?
@Rob Shilot , just my opinion... I'd pursue a house hack and future deals in Lexington and limit exposure in Huntington to completing the conversion of your SFR to a duplex. Sounds like Lexington has the fundamentals to support the longevity you're looking for. I haven't researched Huntington, but your comments raised a couple concerns. Declining population, of course, is a red flag, and I'm leery of properties that seem too profitable or too affordable. Best of luck in however you decide to proceed! We're rooting for you.
You bring up a lot of good points and mentioned some great data to consider. Just driving around Lexington (to me atleast) it's apparent that there is steady growth there and certain areas in the city really seem to be thriving and have steady development.
There's no doubt Lexington offers a better quality of life, and it's certainly where I would want to raise a family.
Right now I'm trying to find a fourplex there because I want to have as much potential upside to cover the cost of me living in one of the units. So my standards are set a bit higher because I want to inhabit one of the units and I'm looking for locations convenient to myself, but also considering want areas my target tenants would want.
I had some issues with the app and this actually posted three times and I appreciate all the great feedback I've received.