Invest in my own backyard or another state?

Homeowner · DMV · Member since 2023 · 28 posts · 25 votes

Hi! New to this site as well as investing. I recently inherited $200,000 cash and thinking about investing in a STR. I live 24 minutes from the White House and within a 3 hour radius from many viable tourist area options. However, beach towns down south that I would have to fly to if I wanted to check on my property are really pulling at my heart strings. What say you? Invest in my own backyard since I'm new at this or go grab my " cheeseburger in Paradise"?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

Invest locally. It reduces your risk greatly, no matter where you are located.

[email protected]301-893-4635 Podcast Guest on Show #192

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Gabrielle VanCopeland
Interior Decorator · Charleston SC Region · Member since 2023 · 10 posts · 3 votes
3y
I'm a certified STR Stylist, Co-hosting properties in North Charleston, SC & Ft Washington MD. It all depends on the STR laws in the areas you're looking for. Those that allow STRs vary from issuing limited permits per year to requiring the property to be the owner's primary residence. I believe DC proper (Baltimore, for sure) is one of those owner residence areas.
Here in coastal SC, you have a variety of regulations. This is why the area my property is in has exploded in rental properties. It's definitely worth the research. This is a great place to start, though some are slightly outdated. https://www.proper.insure/regu...
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
@russellbrazil is local to your area, and I bet could provide some good info as to investing in DC...
but I think I would want to head south just for the fun of it..
4 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
Buy both and put a 100k on each.
2 Reply
Stephanie Walker
Realtor · Charlotte, NC · Member since 2023 · 245 posts · 231 votes
3y
If it were me, I'd do both! However, I know DC can be quite expensive and I'm not sure what laws you might have around STR there or in your possible beach property. That would be the first thing I would research as well as how competitive the area might be.
1 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
For me, it’ll be one or the other straight cash. No loans, no high interest rates, no mortgage! I don’t even have a mortgage on my own residence. Lol
3 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
3y
Invest locally. It reduces your risk greatly, no matter where you are located.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
6 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
Quote from @Russell Brazil:

Invest locally. It reduces your risk greatly, no matter where you are located.

Your advice lines up with everything I’ve read or seen online so far. I just have to cut the heart strings that are tied to the seashells and separate business from pleasure.
0 Reply
Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
3y
Being near a lot of major airports having one where you want is not as crazy as it seems. We are in FL and 80+% of our clients are out of state or even out of country. It depends on your personality and tolerance, however.
[email protected]813-563-0877
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2 Reply
Jack Seiden
Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
3y
Quote from @Chelsea Price:

Hi! New to this site as well as investing. I recently inherited $200,000 cash and thinking about investing in a STR. I live 24 minutes from the White House and within a 3 hour radius from many viable tourist area options. However, beach towns down south that I would have to fly to if I wanted to check on my property are really pulling at my heart strings. What say you? Invest in my own backyard since I'm new at this or go grab my " cheeseburger in Paradise"?

I’d probably stay away from short term rentals (fwiw you really can’t do them anywhere in the dmv with execption of Alexandria unless it’s owner occupied) I’d probably use like 100k of that as a down payment on a property somewhere in the vicinity of dc, say front Royal or the eastern shore (I have a rental there) but the rest in an index fund and bonds and diversified putting all your money in a str in area you don’t know is pretty risky.
2 Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
3y
@Chelsea Price My vote is the LTR. Feel STRs are over flooding the market and the long term play is better. Recommend staying local as you will know your market better and will maintain better control. Also your local markets should continue to appreciate well as time passes.
There are lots of headaches to consider with STRs such as finding the proper team to manage it and the chunk of your profit that will take.
If you're really set on the beachside STR visit the areas you are interested in to get a better feel for the area and location that will be best for your investment. It's just too much money to not spend the extra effort doing so. (It's not like buying a $35K house in the Midwest. You're looking at a BIG investment).
2 Reply
Brandon Wagner
Real Estate Agent · Northern Virginia · Member since 2021 · 106 posts · 50 votes
3y
I always recommend getting started closer to home as well. You'll probably find yourself wanting to check up on the property from time to time since it's your first one.
Here is a potential option for you. Not too far out from DC. (1 hour) It's coming on the market soon. Multiple units so you can help hedge your risk. Putting down 200K or so on this will cashflow you for sure. Somewhere around $1,000 per month conservatively.
https://www.zillow.com/homedet...
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
3y
There's quite a bit more that you'd need to uncover about yourself before answering that question in my opinion as it depends on your risk tolerance of investing in an area you dont entirely know for higher yield v investing more locally with a trusted team and resources. I would interview people who have executed in different ways and find the right match for you!
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1 Reply
Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
3y
Quote from @Chelsea Price:

For me, it’ll be one or the other straight cash. No loans, no high interest rates, no mortgage! I don’t even have a mortgage on my own residence. Lol
If you use debt correctly it can be leveraged to your advantage, and you'll go a whole lot further in your real estate journey and cash flow to financial freedom!
[email protected]330-557-3021
1 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Hey @Chelsea Price, it is always nice to start closer to home when you do your first STR.
The only thing I am wondering is if 200k will buy something outright in the Washington DC area.
0 Reply
Jared Boundy
Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes
3y
@Chelsea Price, I tend to agree that it's likely smoothest to start closer to home. That being said, if this is a business decision, you should try to take out as much of the "heartstrings" emotion as possible. Make sure it makes sense before you allow yourself to fall in love with any property or idea. And if you would be using a beachfront STR for personal vacations, definitely factor that into your analysis! Good luck.
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Sarah Kensinger:

Quote from @Chelsea Price:

For me, it’ll be one or the other straight cash. No loans, no high interest rates, no mortgage! I don’t even have a mortgage on my own residence. Lol
If you use debt correctly it can be leveraged to your advantage, and you'll go a whole lot further in your real estate journey and cash flow to financial freedom!

She's right ^^..... Use debt wisely and make it work for you. You use it, it doesn't use you...
If you talked to most of the veteran investors on here, you'd find that most of them use debt to their advantage.
One reason it is considered unwise to have rental properties that are free and clear is that some lawyers will be more likely to sue you for nothing when you have all that equity available for them to go after....
1 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y

She's right ^^..... Use debt wisely and make it work for you. You use it, it doesn't use you...
If you talked to most of the veteran investors on here, you'd find that most of them use debt to their advantage.
One reason it is considered unwise to have rental properties that are free and clear is that some lawyers will be more likely to sue you for nothing when you have all that equity available for them to go after....
I don’t want to get too far off topic if this needs to be a different thread…
I appreciate everyone’s replies, but not sure I understand them since I am completely new to investing. I don’t understand what you mean about a lawyer suing me. What lawyer? Sue me for what? Lol
I also don't understand why I would want to go into debt to buy a rental if I'm already experiencing financial freedom in my life. Isn't the point of this to have financial freedom? Well, I'm already there in this stage of my life and have been since age 41, which is when I retired. I want a STR because I like meeting new people and offering my hospitality to them, not because I'm trying to amass wealth. Yes, I know it will be a headache and lots of hassle, but I am ready to tackle that head on.
I hope I’m not offending anybody. I just am trying to be honest with my situation. I would be scared to death to “make my debt work for me” knowing that I’m not smart about that kind of thing. I’m not a “veteran investor” nor is that my goal. Again, as background, I am retired with no W-2 so I doubt I could get a loan for a bigger house or two houses anyway.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Chelsea Price:

#2 - I also don't understand why I would want to go into debt to buy a rental if I'm already experiencing financial freedom in my life. Isn't the point of this to have financial freedom? Well, I'm already there in this stage of my life and have been since age 41, which is when I retired. I want a STR because I like meeting new people and offering my hospitality to them, not because I'm trying to amass wealth. Yes, I know it will be a headache and lots of hassle, but I am ready to tackle that head on.
I hope I’m not offending anybody. I just am trying to be honest with my situation. I would be scared to death to “make my debt work for me” knowing that I’m not smart about that kind of thing. I’m not a “veteran investor” nor is that my goal. Again, as background, I am retired with no W-2 so I doubt I could get a loan for a bigger house or two houses anyway.
#1 - I know you are new to investing, but although it is a generally fun industry, there are scammers like everywhere else. People 'fall down your stairs' more frequently if your house has equity worth going after...it's just the way it is.

#2 - Meeting new people and being a hospitality hostess is all well and fine until you meet your first partier or just unpleasant guest...and you will. Guaranteed. Just search and read on this forum.

Even if you're not going to go big-time with this, you are still running a business and it is critical that you remember that.
1 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
@Bruce Woodruff Gotcha. Glad I have you good folks to help remind me that I’m running a business here. I’m sure it’s not all glitter and hearts. I have a lot to learn, and I appreciate everybody’s input!
And as a reply to my own original post, I’ve decided to find a home locally. West Virginia is within just a 2 hr drive from me and I’ll start my search there.
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Chelsea Price:

@Bruce Woodruff Gotcha. Glad I have you good folks to help remind me that I’m running a business here. I’m sure it’s not all glitter and hearts. I have a lot to learn, and I appreciate everybody’s input!
And as a reply to my own original post, I’ve decided to find a home locally. West Virginia is within just a 2 hr drive from me and I’ll start my search there.
We're all glad to help...

BTW - West Virginia is not what we would call local if you live in DC. :-)
0 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Hey @Chelsea Price, so you are retired but want to do a STR just to have something fun to do?

I don't think that is bad idea, but like @Bruce Woodruff said, it is a business. It takes time, expends resources and can cause you headaches.
If you really don't want to become an investor, may look around for a co-hosting gig. You get to help owners host their STRs and are not on the hook for expenses.
Maybe look at starting a property management company. That will take work to get setup and get clients, but it is what you want to do. Create great experiences for guests.
Most of us here are looking to expand in order to create more wealth and independence for ourselves. You are ahead of that game.
2 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
Quote from @Bruce Woodruff:

Quote from @Chelsea Price:

@Bruce Woodruff Gotcha. Glad I have you good folks to help remind me that I’m running a business here. I’m sure it’s not all glitter and hearts. I have a lot to learn, and I appreciate everybody’s input!
And as a reply to my own original post, I’ve decided to find a home locally. West Virginia is within just a 2 hr drive from me and I’ll start my search there.
We're all glad to help...

BTW - West Virginia is not what we would call local if you live in DC. :-)

LOL! Ok, so not exactly local local but my original post did allude to within 3 hours. I think up to 3 is a reasonable day trip if I wanted to check on my property in person.
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Chelsea Price:

Quote from @Bruce Woodruff:

Quote from @Chelsea Price:

@Bruce Woodruff Gotcha. Glad I have you good folks to help remind me that I’m running a business here. I’m sure it’s not all glitter and hearts. I have a lot to learn, and I appreciate everybody’s input!
And as a reply to my own original post, I’ve decided to find a home locally. West Virginia is within just a 2 hr drive from me and I’ll start my search there.
We're all glad to help...

BTW - West Virginia is not what we would call local if you live in DC. :-)

LOL! Ok, so not exactly local local but my original post did allude to within 3 hours. I think up to 3 is a reasonable day trip if I wanted to check on my property in person.

Ah, so you mean check in as in drive by? Not do repairs, cleaning, or deal with guests that have issues? But I thought you wanted to interact with guests, no?
0 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
Quote from @Michael Baum:

Hey @Chelsea Price, so you are retired but want to do a STR just to have something fun to do?

I don't think that is bad idea, but like @Bruce Woodruff said, it is a business. It takes time, expends resources and can cause you headaches.
If you really don't want to become an investor, may look around for a co-hosting gig. You get to help owners host their STRs and are not on the hook for expenses.
Maybe look at starting a property management company. That will take work to get setup and get clients, but it is what you want to do. Create great experiences for guests.
Most of us here are looking to expand in order to create more wealth and independence for ourselves. You are ahead of that game.

Fair question, Micheal. I think I want to do this, so that I can STAY retired! 😅 If my husband were to die today, where would that leave me? Not stranded in debt but also with not a lot to live on, even if I sold our home. So I gotta get a plan together and I think STR would be something I would both enjoy and could build a little nest egg. I have no experience but I did used to be a house manager for a person on the legal team for Obama. I know how to run the inner workings of a home like a tight ship so I think this is right up my alley.
0 Reply
Chelsea Price
OP
Homeowner · DMV · Member since 2023 · 28 posts · 25 votes
3y
Quote from @Bruce Woodruff:

Quote from @Chelsea Price:

Quote from @Bruce Woodruff:

Quote from @Chelsea Price:

@Bruce Woodruff Gotcha. Glad I have you good folks to help remind me that I’m running a business here. I’m sure it’s not all glitter and hearts. I have a lot to learn, and I appreciate everybody’s input!
And as a reply to my own original post, I’ve decided to find a home locally. West Virginia is within just a 2 hr drive from me and I’ll start my search there.
We're all glad to help...

BTW - West Virginia is not what we would call local if you live in DC. :-)

LOL! Ok, so not exactly local local but my original post did allude to within 3 hours. I think up to 3 is a reasonable day trip if I wanted to check on my property in person.

Ah, so you mean check in as in drive by? Not do repairs, cleaning, or deal with guests that have issues? But I thought you wanted to interact with guests, no?

A 3 hour driving radius will give me a good mix of interacting with guests ( greeting them at check-in), driving by simply to check on the condition of the house, and also having a hands off mentality. I’m just in the beginning stages of researching all this so I’m not sure exactly how it will work. But I do know I will hire cleaners, a handyman, and a contractor when big problems arise. I don’t have all the answers yet…

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