New Investor Looking to House Hack and BRRRR!

[Kirsten Crotts]

Hi everyone, my name is Kirsten and I am beginning my journey into investing! I am looking to do my first house hack in the Seattle area (specifically purchasing a single family property and renting out the other 3 rooms) and then BRRR out of state where prices are cheaper.

For anyone who has done long distance investing, did you find that it was easier start with a house hack in your home market and then jump into the out of state market? Or did you jump straight into it? I ask because I originally felt that I needed to house hack closer to home in order to have some experience under my belt when talking with hard money lenders, however this is just an assumption so I would love to hear from anyone who has done it!

Thanks in advance!

Kirsten

[Michael Haas]

As @Neil Henderson mentioned, your experience BRRRRing out of state will be highly dependent on your team, especially the Contractor. I know plenty of folks with 7 BRRRR's under their belt locally get hosed on their first BRRRR out of state. I'd say two things:

1. Househacking is an absolute no-brainer in my opinion. There are few reasons I can think of for NOT househacking, the main two being you don't understand how the math works and just don't know how good househacking numbers are, or you value your privacy to the tune of $20,000 a year or more. Remember, if you househack an SFH with ADU or a Duplex it really isn't different than living in an apartment complex or town-home with neighbors that share a wall, so even that privacy argument is a little flimsy.

2. Unless you're buying through a turnkey company (where a lot of the work and due-diligence is done for you) I think buying and/or selling a primary residence in your home state is the absolute minimum experience I'd recommend before venturing out of state. If you were a friend asking me for advice I'd tell you that I'd really rather see 3+ deals locally before venturing OOS. 

Remember - you can buy house-hacks for 1-3% down if your income is below DPA (down payment assistance) program thresholds, or 5% down if it is not. If you can afford a $100,000 property OOS, that means you can likely afford a $500,000 - $1,000,000 house-hack. Although you shouldn't count on appreciation as a rule, when it does happen (and it almost always does) you'll be happy that you sprung for the $500,000 property rather than the $100,000 one with the same downpayment.