Hey BP, so I'm fairly new to the real estate game but I am extremely eager to learn any and all information possible. I am having trouble seeing the big picture when it comes to deal analysis so any help would be much appreciated. I am currently in a situation where one of the markets/areas I am looking in, I have enough cash (private lending/line of credit) to purchase properties with all cash offers. This area is not necessarily the nicest area but it does have success as rental property. Another area I am interested in, a little bit more up scale, has great sfr and multi-family duplexs, however, these deals are looking like they would be more of the conventional 20% down situation due to the higher priced market. My goal right now is to generate a long term portfolio of Rental properties so I am trying to decide if it's better to do an all cash purchase, which could lead to potential BRRRR style growth, verses going the traditional route with the possibility of house hacking as an option with the duplexes. Any advise is welcomed and if more details are needed I can provide those, thanks!
Hey Cameron, welcome to the game! It seems like you may be having less of a hard time with the deal analysis, and actually grappling with what type of property you may prefer to invest in. Over time, as you purchase different properties you may find what you purchase appealing, and stick with it, or appalling, and move on to a different type or asset class. Check out a response I gave to another aspiring investor on purchasing in lower asset class areas: https://www.biggerpockets.com/forums/669/topics/49...
House hacking isn't a bad idea, I am doing that myself, still, even having been in the house for 10 years, and now I put it on steroids...I own a 3 unit, a flat and SFH on one parcel. I rent out the two flats, live in the SFH but also rent a room to a long term tenant, and run AirBnb out of my house as well (3bd/2bath).
I know many successful investors who started in lower asset class areas and eventually worked up to the higher asset classes, then I know those investors who started in the higher class and stayed there. You just have to know how much time and money you are willing to put in, because regardless of what you buy, you will either be putting the money in up front or over the long haul. Yes, higher asset classes may require a larger down payment, but they are probably in better condition overall, which means less time coordinating maintenance requests and fielding tenant phone calls and less large capital improvements (depending on the age of the building and how well it was taken care of by the previous owners). Lower asset classes may have older buildings which may require more frequent upkeep, however the cash flow could be much greater than a higher asset class just due to the lower capital injection at the start of the process.
Just make sure to account for all of your numbers when running a deal, and don't forget to add in number for maintenance and capital expenditures, because most people who don't account for those things are just fooling themselves. I hope this provides some direction!