House Hack in CA or Invest out of state

California Real Estate Q&A Discussion Forum

House Hack in CA or Invest out of state

Glendale, CA · Member since 2021 · 3 posts · 7 votes

Hi All,

I'm extremely new to the real estate investing world and would like some insight from more experienced individuals. I'd like to know which of these two you'd think is a better first time investment property. House hacking in the extremely expensive market of Los Angeles? Or finalize my first deal in real estate through an out of state property. My budget is around $40,000 for down payment. Any feedback will be appreciated!

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Rory Coyle

Rental Property Investor · Los Angeles, CA · Member since 2020 · 43 posts · 45 votes

Hey @Hratch Avedissian! Congrats man - you're in a great position. I picked up an OOS property last year (in Ohio) and just closed on my first house hack here in LA. Happy to connect and share my experience.

What is your long-term goal?

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Brad HammondBusiness Member
Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
5y
Hey @Hratch Avedissian, my thought is that since you live in a very expensive and appreciating market, you can probably get a better ROI on your down payment through a house hack. While you might need to pay more in living expenses, after 3-5 years, you would be able to sell that property for a lot more than the cash flow you would receive from a cash-flowing market.
However your situation is your own and if you want the proceeds now, you should invest out of state. I hope that helps!
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James De Leon
Real Estate Agent · San Diego, CA · Member since 2020 · 69 posts · 32 votes
5y
Hi @Hratch Avedissian,
Househacking is a great way to get into the real estate game especially in an expensive market. Depending on how risk tolerant you are and what goals you want to accomplish is what route you should go on. If you want to live rent free or cheap in the LA market and then turn around and rent it out after a year then househacking would be the way to go. If you want to acquire assets that you will cashflow right away then out of state investing is the way to go, although it involves different risks. With the start-up capital that you have, you can buy a SFH or small multi for less than $30k down and use the rest towards closing costs. Obviously it is property dependent, but with the money you have you can definitely get a good househack in. Good luck!
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Rory Coyle
Rental Property Investor · Los Angeles, CA · Member since 2020 · 43 posts · 45 votes
5y
Hey @Hratch Avedissian! Congrats man - you're in a great position. I picked up an OOS property last year (in Ohio) and just closed on my first house hack here in LA. Happy to connect and share my experience.
What is your long-term goal?
4 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
5y
Originally posted by @Hratch Avedissian:
Hi All,
I'm extremely new to the real estate investing world and would like some insight from more experienced individuals. I'd like to know which of these two you'd think is a better first time investment property. House hacking in the extremely expensive market of Los Angeles? Or finalize my first deal in real estate through an out of state property. My budget is around $40,000 for down payment. Any feedback will be appreciated!

You should try to house hack. Your cash-on-cash return will be amazing! That is what I did in Columbus, Ohio.
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Zeke Liston
Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
5y
Originally posted by @Hratch Avedissian:
Hi All,
I'm extremely new to the real estate investing world and would like some insight from more experienced individuals. I'd like to know which of these two you'd think is a better first time investment property. House hacking in the extremely expensive market of Los Angeles? Or finalize my first deal in real estate through an out of state property. My budget is around $40,000 for down payment. Any feedback will be appreciated!

Hi Hratch, if you can invest in your local market, I would do that. If the numbers don't work, I would consider looking out of state. A $40K down payment will get you something around the $125K range. There are some good opportunities in that range in Columbus, OH.
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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
5y
I personally house hack here in Los Angeles (on my second one). As mentioned before, your cash on cash return can be really high here in the LA market because of the appreciation rates. Plus, even though you are investing out of state, you are still paying rent here, which is money thrown away.
I've had clients who have thought through the same scenarios and came to the same conclusion of house hacking.
Happy to chat if you would like.
-Rick
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Matthew Powell
Investor · Savannah, GA · Member since 2019 · 66 posts · 35 votes
5y
@Hratch Avedissian
My gut would say invest into your own backyard first. Renting out of state can be difficult but still achievable. On the other hand, California has so many restrictions, rules, and laws that you’ll have to do extra due diligence. In the end, just get your first deal under contract and get the ball rolling!
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Jane Nnaji
Los Angeles, CA · Member since 2020 · 16 posts · 13 votes
5y
Hi, i started recently as well. Closed in November last year and i'm househacking in North Hollywood/Toluca lake area. My goal is to househack for a couple years then rent it out as i acquire another property. You can't go wrong either way, however, if you do it's a learning experience. Keep us updated on your choice :)
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