Live in Flip or Rental Property

9 Replies

Hello everybody, Been on the RE learning train for about a year now and I'm excited to get started with it. Here is the situation: I recently graduated as a mechanical engineer and got a good job in Huntsville AL. My entire family is in Texas so I definitely plan on moving back down there in a couple of years so I'm a little torn on how should alter my real estate investing strategy. Ideally, buy-and-hold rentals makes the most sense to me but I'd like to avoid buying long term properties in Alabama knowing I won't be here long. Long distance investing scares me. I know there is no right answer here but I'd like some feedback on whether I should try and get my feet wet with a live-in-flip(this might be a worse idea than buying a rental property) or just keep saving cash to safely increase my liquidity for a buy-and-hold strategy when I settle in Texas. In any case I KNOW I won't be in Alabama for more than three years, possibly as little as 1.5 years. My initial thought is to just save save save but I think it would also be good to jump in with something even if it doesn't align with my precise buy-and-hold rental goals. Any feedback appreciated! Lance

I like what @Chris Ellis said. You should also consider buying a 2, 3 or 4 plex and house hacking for the next 1-3 years. Then decide if you want to long term invest once you move away. There are lots of those in the Huntsville market, and it is in high demand! Good luck, sir!

Originally posted by @Lance Middleton :
Hello everybody, Been on the RE learning train for about a year now and I'm excited to get started with it. Here is the situation: I recently graduated as a mechanical engineer and got a good job in Huntsville AL. My entire family is in Texas so I definitely plan on moving back down there in a couple of years so I'm a little torn on how should alter my real estate investing strategy. Ideally, buy-and-hold rentals makes the most sense to me but I'd like to avoid buying long term properties in Alabama knowing I won't be here long. Long distance investing scares me. I know there is no right answer here but I'd like some feedback on whether I should try and get my feet wet with a live-in-flip(this might be a worse idea than buying a rental property) or just keep saving cash to safely increase my liquidity for a buy-and-hold strategy when I settle in Texas. In any case I KNOW I won't be in Alabama for more than three years, possibly as little as 1.5 years. My initial thought is to just save save save but I think it would also be good to jump in with something even if it doesn't align with my precise buy-and-hold rental goals. Any feedback appreciated!

Lance

 Are you good with construction? A lot of people get in over their heads on projects and those projects just sit.

 do you might dust?  IE I don't think I would have a baby in a 60 year old house where you might be raising dust.

If you are just putting down a little tile, have multiple bathrooms where you can work on one at a time, or maybe you just need to do a little painting, that is a lot different.

For the most part we have just gotten either ourselves and/or our contractors in to get work done before we move in.

@Chris Ellis @Kris Reeves I guess I didn't completely consider that option. I think I just need to consider my timeline in more detail. I probably won't have the liquidity to purchase anything for at least a year and if I do find a property worth hacking I just assumed it would take a few months to get it ready to rent/live in. And at that point I'm already 1.5 years in and would be starting my job search in Texas. I'm also about 30k in student debt(~6.4% interest) and if I were to follow @Scott Trench 's advice it might be wise to focus on just paying that off first before entering the RE scene. Although I know that 6.4% is not all that high. I'm interested in buy-and-hold simply because of the cash flow so if I'm only able to house hack for 6 months to a year is that really worth it? I know I'm not considering any forced appreciation, but what scares me is becoming stuck with a half rented property that is stuck on the Huntsville AL market while I'm starting a new life in Texas. After writing all this I think it's obvious that I'm over thinking a lot of this and should just jump in with a house hack and see where the future takes me. Who knows, I could be in Huntsville longer than expected. Thanks for the feedback guys! And for what it's worth I'm a SINK(single income, no kids)

Hello @Lance Middleton , I am computer engineer here in Huntsville and moon light as a real estate investor.  My family currently lives in Texas and when I first got here I thought that would only be here two -three years so that I could finish my masters.  Well I finished my Master's five years ago and I am still in Huntsville.  The place could easily make you comfortable with the low cost of living and decent salaries.

To that end, I still bought a house within the first year of me living here because I hated the idea of paying money for rent when I would never get any returns on it.  Plus, I HATE living in apartments.  Anyways, when shopping for a property I made sure that I could find something that I could sell in hurry without losing my shirt.  To do this I looked for SFRs that other people would like.  I eventually found a foreclosure with close proximity to Research Park.  I then started "house hacking" one of the rooms on AirBNB and that was enough to pay most of my mortgage.  In the end the decision is up to you, however just know that I have been in your shoes before. 

Thanks for the response @Tim White . It's nice to know you like Huntsville and bought a house down here! I've only been here a couple of weeks and it's growing on me. After more thought, I think I will plan on purchasing something within the next year. I also hate the idea of throwing money away. Do you mind me asking how you found the foreclosure? Do you recommend any agents? It be nice to start a relationship with someone early on. On a relevant note, do you know any good local banks I can befriend? Sorry for so many questions!

@Lance Middleton , If you're going to have out of state investments there probably isn't a better way of going about . I mean if you can get to know an area over 1.5-3 years and the property(s) during that time you're going to be way ahead. Other people are buying across the country in areas they have never lived in, at best visited once or twice, and are far from being familiar with the local intricacies, which you will be at 1.5 years. Besides, like @Tim White said you never know what the future has in store for you. There's a ton of options, you could always house hack a regular SFH with roommates from work and then if you leave you could keep it going like that or sell it if that seems like a better deal. My only real advice is don't paint yourself into a financial corner, having life dictate when you sell is a good way to loose money and if you keep out of that predicament you have a good chance of riding out a storm and avoiding losses.

Best,

Good advice @Zachary C. I understand that Huntsville/Madison area is great for families and with the gowth in the area I don't think I could go wrong with a SFH. I have debated on the whole roommate thing for years, but I truly do love my privacy and having a place of my own. For me, roommates are not worth the headache. I have always liked the idea of AirBNB a room but just didnt think Huntsville attracted that kind of tourism. But there are tons of hotels in the area and seeing that @Tim White has had success with it I will consider it if I do end up purchasing a SFH. And as long as I factor in property management into my calculations, the possibility of me renting it out as a long distance rental shouldn't be too much of an issue. But the decision of renting vs. selling is a long time away and I will make that decision when the time comes. At this point, a SFH purchase in about a year seems like a very safe option as opposed to a duplex or quadplex. I'm also still debating on pursuing a RE license but that's a whole other discussion 😅.

Lance,

 You might consider just intensely working to pay off your $30K student loan debt in 2-3 years, since your a SINK person, and then throw that same intensity into saving up a down payment for a property purchase/rehab in a place you may actually want to live in for a few years. Then you'd only have the property costs/mortgage to pay, not a student loan on top of it. Nothing wrong with renting in the short-term while you're knocking out student loan debt. Besides, you might want to get married at some point, and you DO NOT want to drag a $30K debt into a new marriage if you can avoid it. Just my 2 cents worth.