House Hack or Buy & Hold out of state while renting?

Question

I am located in Long Island New York where everything is expensive and I am debating the pro's and cons of house hacking a 2 family house or just continuing to rent and purchase out of state rentals. Any input is greatly appreciated!

Patrick Drury · Answer

@Michael TotinoIf you are looking at investing out of state, I would definitely recommend Columbus OH. It's a solid hybrid market of cash flow and appreciation. Columbus has lots of job opportunities and population growth. If you want pure cashflow Cleveland OH would be a great market.

Laura Shinkle · Answer

The reason house hacking is so great is it takes your largest expense (living expenses) and decreases that significantly. Thus freeing up your regular W2 income to invest, save, etc as you want to.

The other significant pro with house hacking is you get the lower interest rate and lower down payment. Most lenders do require 10-15% down for a multifamily property like a duplex, though, where a single family home (you could house hack with roommates) you can do 3-5% down.

Lastly, it looks like you're a contractor, so it'd be a shame to waste that tool in your toolbelt on out of state investing where you're realistically not able to do the work yourself.

Is there a different location that's near Long Island that's more reasonable in prices that you'd be willing to do a commute for a year or so? Or perhaps focus on properties that you could rehab yourself and add value/force appreciation into?

I would start with looking into a househack in your area. If the prices are just not realistic for your situation (ie couldn't save up a down payment within the next couple years), then maybe start investigating a different market.

Harrison Chow · Answer

Hey Michael! Both options have their benefits and drawbacks, so it's important to consider your financial goals, investment preferences, and comfort level with managing rental properties. Below are pros and cons you'd have to consider:

•

• House Hacking a 2-Family House

Pros:

• Live in one unit and rent out the other to generate rental income
• Have greater control over the property
• Enjoy potential tax benefits

Cons:

• May require a larger initial investment
• Have to manage tenants and handle maintenance and repairs
• Potential for vacancies, which could impact cash flow

• Investing in Out-of-State Rentals

Pros:

• May be able to find properties with better cash flow and returns
• Diversify investment portfolio across multiple markets
• Can hire property management companies to handle the day-to-day operations

Cons:

• Less control over the property and the rental market in another state
• May require more due diligence and research to find the right properties and markets to invest in

•

Hope this helps and let me know if you'd be willing to explore the Midwest particularly Ohio. Would love to help out with managing the cons that come with OOS investing. Best of luck on your investing journey!

Eliott Elias · Answer

The difference is night and day, investing out of state, requires a deep understanding of your strategy and a solid team in place. You can afford to make a lot more mistakes house hacking.

Dave Skow · Answer

@Michael Totino- if this will be your first  endeavor - I  recomend  the local  duplex  scenario .....this will provide a  plcae for you to live  plus invaluable  experience  learning the  ropes  /....if you are  already a  property owner - the out of state  idea is  OK as long as  you are  able to  get  soem local  contacts  in place   to help  ( prop mgr..realtor ...handyman ...real estate attorney ...title / escrow  etc...

Doug Spence · Answer

@Michael Totino Lots of great responses already. I would house hack until you run out of capital for down payments or you just can't get any more mortgages in your personal name. Then I would start looking out of state.

I'm guessing the long-term appreciation in Long Island will be better than whatever out of state market you're looking at (which is probably a high cash flow market, rather than an appreciation market).

Do you plan to be in Long Island for the long term?

Laura Shinkle · Answer

Yes, thank you! It feels like every time I see someone running numbers on buying house hack vs rent, they forget that rent is 100% interest. You get none of that back. Purchasing a property will start building your equity position AND lowers your monthly expenses.

Marc Rice · Answer

Househacking should be a very solid low money down option that should outweigh out of state investing in my opinion. Your CoC return on a house hack is only matched to a BRRRR.

Lloyd Preece · Answer

Do both, start with the HH if you can and make sure you consider the amount you’re saving in lack of rent and loan pay down in your numbers. You won’t live for free in LI but likely live for cheaper. Then take that extra saved capital and find an out of state market. Also, worth considering landlord tenant laws and if you want to deal with NY tenant rights in the long term . You don’t have to go too far out of state, anywhere in the US will have cash flowing rentals within a couple hours drive. Know for a fact Lehigh Valley and New Haven both have cashflow if that’s what you’re after.

House Hack or Buy & Hold out of state while renting?

Most Popular Reply