College Grad Looking For Advice

[Julio Rivas]

Hello!

I recently graduated and now have a stable six-figure income with unusually low fixed housing costs (~$500/month), allowing for an aggressive savings rate. However, entry-level investment properties in California require large upfront capital, making local real estate investment less feasible in the near term.

Because of this, I’m considering purchasing an out-of-state townhome in Homestead, FL (approximately $200k–$300k), where I have family nearby and could reasonably save a 15–20% down payment within a year.

Given this context, what are the primary risks and tradeoffs of using an out-of-state property as a first rental investment (particularly around financing, property management, and taxes), and how do these compare to alternative strategies such as leveraging specialized loan products to invest in-state?

[Travis Timmons]

I would house hack a single family home (rent by the room) or a 2-4 unit before investing on the other side of the country. 20% of 300k = 6% of $1M. I'm not saying to max out leverage, and your debt to income ratio is going to determine what you can borrow, but a 5% down owner occupied loan on a higher quality asset that you have your eyes on at all times is the better long term investment. 

I also hate anything with an HOA. If the HOA decides to stop letting owners rent, you're stuck. It's just one more entity that can tell you what you can and cannot do with your property.