What would you do?

Question

I'm getting started in the real estate investing world and am almost ready to buy my first rental.

I’m debating between two different investment strategies and would love to hear advice from experienced investors here.

Would you a) buy a two unit and house hack with 5% down (all cash in around 40k) in an appreciating area with a little bit of cash flow every month or b) start BRRRR strategy right away out-of-state in a C neighborhood.

And a third option, if you have the ability to do both concurrently, which one would you start with first?

I appreciate you taking the time and to help me.

Ryan Porter · Answer

I would choose A. If you are starting out investing in real estate, you will have a lot less chance of failing by keeping your eyes on your investment. Out-of-state investing can be risky. Half of the homes I look at where someone is upside down are an out-of-state investment gone bad.

Good Luck!

Wale Lawal · Answer

@Mojgan Azar

House hacking with a low down payment can help save money on living expenses and even make some extra cash. However, it might not work as well in expensive areas and dealing with tenants can be tough. Another strategy to consider is the BRRRR method in a less expensive neighborhood in another state, which can help you grow your investment portfolio. Just make sure to do your research and find reliable partners. Before diving into BRRRR, try house hacking first, look into out-of-state markets, and use the profits from your initial property to fund future investments. It's important to do your homework and think about your personal risk tolerance and long-term goals.

Good luck!

Wale Lawal · Answer

My pleasure!

Keep learning and growing.

Jacopo Iasiello · Answer

I suggest studying everything first considering the risk and your resources.

Mojgan Azar · Answer

Thanks @Samuel Diouf!!

Allan Smith · Answer

Start with house hacking. Reduces your living costs a ton. Will Accelerate whatever you do after that.

Jim K. · Answer

I would choose A as well. Out-of=state BRRRRing is a really tough place for a beginner to meet with consistent success. I have done two moderately successful local BRRRRs and it would have been impossible to do them the way I did it out-of-state.I also house-hack my own residence and I can't recommend it enough for a beginner if everyone you live with is on board.

Samuel Diouf · Answer

House-hacking is one of the best ways to get your foot in the door of investing. You're able to learn the basics of a real estate investment with lower risk and build equity at the same time. I'd start with the house-hack and then venture to OOS investing when you're ready for the next purchase.

Alecia Loveless · Answer

@Mojgan Azar Second the opinion of Option A where you get to stay hands on with your investment. I believe keeping an eye on my own investments is one of the most important things I can do.

Once you get some experience under your belt then if you still want to invest out of state then try one OOS rental and see where it goes.

Mojgan Azar · Answer

I will definitely consider the risk tolerance. Thanks for the tips!

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