How to decide what city to do your first house hack

Member since 2023 · 48 posts · 11 votes

Good morning to all,

I'm a traveling operating room nurse from FL originally...my girlfriend and I plan to make a perm location somewhere in the greater south/southeast. Possibly, Savannah, Charleston, NWF (If I can convince her). Question is this. I browse zillow, redfin, realtor.com, etc. to see how many listings and how big a market is. I LOVE the idea of our first property/home (first time homeowners for us also....likely to be in 2024, market depending). However, I want to then begin the journey of transitioning from healthcare into real estate (not a quick transition I know), but while we love smaller, more charming, charismatic cities, I am curious if they'd be too small for investing. Would we be better off in say Tampa, suburbs of Atlanta, or outskirts of a Nashville/Knoxville, or Birmingham like location? I/we don't want to be in huge cities (we're early 40s and value quality of life vs crazy traffic), but want to be proximate to options and accessibility. To summarize, how do we decide what is the better option....smaller town we'd love, or something slightly bigger. I also like the FHA 3.5% down approach

Thanks so much everyone.

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Kyle Spearin

Real Estate Agent · Boston, MA · Member since 2016 · 450 posts · 214 votes

@Mitch Walker it sounds like you have a lot of experience traveling throughout the south for work. I'd personally think about where YOU want to live and work backwards from there. You can find houses in any market, so you might as well enjoy where you're living if it's your primary residence.

Don't worry about being in a trendy market if you have a desire to be in a certain place over another-- there are successful real estate investors in every part of this country. That's why real estate is so awesome!

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Kyle Spearin
Real Estate Agent · Boston, MA · Member since 2016 · 450 posts · 214 votes
3y
@Mitch Walker it sounds like you have a lot of experience traveling throughout the south for work. I'd personally think about where YOU want to live and work backwards from there. You can find houses in any market, so you might as well enjoy where you're living if it's your primary residence.

Don't worry about being in a trendy market if you have a desire to be in a certain place over another-- there are successful real estate investors in every part of this country. That's why real estate is so awesome!
3 Reply
Michael K GallagherBusiness Member
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
3y
@Mitch Walker I'd have to agree with @Kyle Spearin As long as you like it there, you'll be able to find a house hack that works for you. I'd say generally I get some of my best deals from the tertiary areas around a major metro. I really find the smaller town markets that are about 45 mins outside a major metro to be a great buy and hold market. One of my favorite markets like that around here is Delaware OH. Its like 45 mins from downtown columbus, and the rents up there are damn near the same as in columbus but the houses cost way less.
At the end of the day there is a rental market everywhere in this country right now and as long as you are able to offer a product that is high quality you'll find a good occupant for that house hack.
[email protected]614-362-2231
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Kevin Bartlett
Realtor · Member since 2023 · 177 posts · 41 votes
3y
Welcome to the forums Mitch! Have you ever considered Southwest Florida?
1 Reply
Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Michael K Gallagher:

@Mitch Walker I'd have to agree with @Kyle Spearin As long as you like it there, you'll be able to find a house hack that works for you. I'd say generally I get some of my best deals from the tertiary areas around a major metro. I really find the smaller town markets that are about 45 mins outside a major metro to be a great buy and hold market. One of my favorite markets like that around here is Delaware OH. Its like 45 mins from downtown columbus, and the rents up there are damn near the same as in columbus but the houses cost way less.
At the end of the day there is a rental market everywhere in this country right now and as long as you are able to offer a product that is high quality you'll find a good occupant for that house hack.

Thanks Mike. I agree I/we want to be somewhere we'll be happy (again, quality over quantity kind of mindset). I was only hesistant, thinking smaller markets would have less available properties. But I do appreciate the foresight and would agree with you after reading your comment.
1 Reply
Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Kyle Spearin:

@Mitch Walker it sounds like you have a lot of experience traveling throughout the south for work. I'd personally think about where YOU want to live and work backwards from there. You can find houses in any market, so you might as well enjoy where you're living if it's your primary residence.

Don't worry about being in a trendy market if you have a desire to be in a certain place over another-- there are successful real estate investors in every part of this country. That's why real estate is so awesome!

Kyle, I actually mostly traveled out of the south. It's been 7 years since I left FL (living/working full time) and only recently have I come to find I only want to live back south. I know we will figure out the location. I just feel/felt like a smaller market would have less overall options, both as a HH and long term investor. You and Mike Gallagher (also commented in this question) both had similar opinions so I appreciate both perspectives.
Thx!!
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Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Kevin Bartlett:

Welcome to the forums Mitch! Have you ever considered Southwest Florida?

Kevin,
Rock and a hard place there. I grew up in Tampa, have lived in all corners of the state, except SE FL (and no desire to). SW is ok. I like the idea of a Tampa/Orlando/Jax more because they're slightly more bigger city of a locale, with outskirts communities and still in a greater regional area. Why do you ask about SW? Curious.
Thx!
1 Reply
Andrew Fair
Real Estate Agent · Birmingham · Member since 2017 · 6 posts · 7 votes
3y
Hey Mitch, I have lived in Birmingham for the past 7 years and it is a great medium sized city. If you like to be close to downtown the Crestwood area on the east side of the city would be perfect for you. In my opinion, it is one of the best placed cities in the southeast. We can enjoy Atlanta (2 Hours away), and Nashville (3 Hours), Destin (4 hours), Chattanooga (2 hours), New Orleans (5 hours).
Birmingham has an excellent food scene with many award winning restaurants, great breweries, a thriving downtown, beautiful parks and nature areas, and concerts/entertainment. We have many of the perks of bigger cities without the high cost and traffic. There is also a huge medical community due to UAB. I know it may not be your top choice but I wouldn't overlook it. Reach out to me if you ever have questions about the city.
1 Reply
Jacob GomesBusiness Member
Real Estate Consultant · Nashville · Member since 2020 · 70 posts · 22 votes
3y
I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

615-968-9539
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Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
3y
@Mitch Walker, if you’re looking to be in the Tampa Bay Area definitely reach out to @Josh Green! He works with a lot of investors in the area.
[email protected]619-456-8311
Helm Mortgage Corp.5126 Reviews
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1 Reply
John Mathew
Real Estate Agent · Member since 2019 · 143 posts · 74 votes
3y
Hi there! It sounds like you and your girlfriend are planning an exciting transition and considering different options for your future in real estate investing. Here are a few tips to help you decide which location might be best for you:
1. Evaluate the local real estate market: While smaller cities may have a more charming and charismatic feel, it's important to evaluate the local real estate market to determine if it's conducive to real estate investing. Look at factors such as the number of available listings, the median home price, and the overall market trend.
2. Research the local economy: Consider the strength of the local economy and job market, as these factors can impact the demand for rental properties. Cities with a diverse and growing economy can be ideal for real estate investing, as they offer more stability and potential for growth.
3. Look at population growth and demographic trends: Investigate the population growth and demographic trends in the area, as these can also impact the demand for rental properties. Cities with a growing population and an increasing number of younger residents may be more attractive to real estate investors.
4. Consider the proximity to amenities: Look at the proximity to amenities such as shopping, dining, entertainment, and transportation. These can be important selling points for potential renters and can impact the overall desirability of the area.
5. Evaluate your personal priorities: Ultimately, the decision of where to invest in real estate should be based on your personal priorities and lifestyle preferences. Consider factors such as quality of life, traffic, accessibility, and community when making your decision.
Overall, there is no one-size-fits-all approach to real estate investing. Take the time to evaluate your options, research the local markets, and consider your personal priorities to determine the best location for you and your girlfriend. Good luck with your transition and your future in real estate investing!
1 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3y
@Mitch Walker if the plan is to house hack than here are the priorities in my mind when picking a location:
1.Can you afford to live there?

2. Do you want to live there?
3. Find a house that will work to rent out bedrooms or create a separate unit.
The Assumable Guy544 Reviews
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Account Closed
Columbus, OH · Member since 2023 · 427 posts · 254 votes
3y
Hi Mitch,
At the end of the day, a house hack is meant to generate cash flows strong enough to cover your mortgage payments, and allow you to build equity over time. From a financial perspective, a good metric to use when selecting a market is the ratio of median home price to rent price. This a general but useful way to assess a larger markets rentability. Based on what your interests and preferences are, it sounds like your best bet is to find a suburb ~30 minutes from a major city. This will allow you and your girlfriend to avoid the crazy traffic, and still attract commuters are tenants.
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Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Hi Jonathan,
Can you explain a bit further regarding the ratio of home price to rent price? I've been reading quite a bit, but haven't stumbled across this yet. Also, from my reading, I understood house hacking to start by 1 of 2 ways. Buy a single family home, live in for one year, then move out and rent it. Or, buy a duplex, tri, or four-plex, and live in part of it and rent the remaining unit(s). If you took the first approach, living in a single family home for a year, there would be no cash flow. I don't know how quickly you could get a tenant in a vacant unit if we purchased a du, tri, plex, etc.
I will say I agree that a suburb at least 30 mins from a bigger city is ideal. Savannah, Charleston, while small, quaint, beautiful, etc., are not close to big cities at all. Savannah is four hours from ATL for example. Other than the aforementioned ratio, I appreciate your comment.
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Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @John Mathew:
Hi there! It sounds like you and your girlfriend are planning an exciting transition and considering different options for your future in real estate investing. Here are a few tips to help you decide which location might be best for you:

Evaluate the local real estate market: While smaller cities may have a more charming and charismatic feel, it's important to evaluate the local real estate market to determine if it's conducive to real estate investing. Look at factors such as the number of available listings, the median home price, and the overall market trend.
Research the local economy: Consider the strength of the local economy and job market, as these factors can impact the demand for rental properties. Cities with a diverse and growing economy can be ideal for real estate investing, as they offer more stability and potential for growth.
Look at population growth and demographic trends: Investigate the population growth and demographic trends in the area, as these can also impact the demand for rental properties. Cities with a growing population and an increasing number of younger residents may be more attractive to real estate investors.
Consider the proximity to amenities: Look at the proximity to amenities such as shopping, dining, entertainment, and transportation. These can be important selling points for potential renters and can impact the overall desirability of the area.
Evaluate your personal priorities: Ultimately, the decision of where to invest in real estate should be based on your personal priorities and lifestyle preferences. Consider factors such as quality of life, traffic, accessibility, and community when making your decision.

Overall, there is no one-size-fits-all approach to real estate investing. Take the time to evaluate your options, research the local markets, and consider your personal priorities to determine the best location for you and your girlfriend. Good luck with your transition and your future in real estate investing!
Hi John,
Thanks so much for the reply. your first of five points was my main question in the original post. We do like the idea of a generally smaller city/town. However, if it's so small, and there's only so many listings, and just less overall population...how likely is one to be successful. Think a town of 125K population compared to one of 725K population. The latter is just bigger.
My other follow up question to your reply...when you talk about evaluating the market...with regards to market trends. What are you looking for? Where do you find information (I don't expect a one stop source by any means)? Things like population grown, demographic trends, etc. Prior to nursing, I was actually a registered trainee commercial appraiser. Our reports had demographical data, pulled from a website companies subscribed to. On a smaller, personal, scale, and having not been in the industry since 2010, I don't know what seasoned investors use as reference material. I'm the guy who has the drive and work ethic to make this happen. My biggest holdup isn't fear. It's just literally how do you take step one per se (hence the question(s) about trends, sites used for trends, number of listings, etc...
Thank you again!
0 Reply
Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
0 Reply
Jacob GomesBusiness Member
Real Estate Consultant · Nashville · Member since 2020 · 70 posts · 22 votes
3y
Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.
615-968-9539
0 Reply
Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.

Thanks! So that brings another question/follow up. Is there a general rule of thumb, to where (lets say regardless of money and purchase price), how does one decide what price point is a good start? Example....lets say my gf and I could swing a mortgage of $2500 (I like the least amount of money out of pocket as possible). If after a year, we rent out both units (presuming a duplex was purchased), then likely the mortgage would be covered with both units rented (many variable expenses accounted for/budget for/assumed herein for the example). In other words, if we could purchase a property at $400k, would that be a better long term investment compared to one of say $250K (I'm randomly choosing $250K as a comparative purchase price)? Maybe the higher price would be in a better area, attracting higher quality, maybe more longer term tenants.
Or, if upon proper financial analysis, regardless of price, would we be better suited for the one with a higher return (be it COC or CF)...assuming it was something we can stand to live in at least a year, or longer until we found the next/2nd property.
0 Reply
Jacob GomesBusiness Member
Real Estate Consultant · Nashville · Member since 2020 · 70 posts · 22 votes
3y
Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.

Thanks! So that brings another question/follow up. Is there a general rule of thumb, to where (lets say regardless of money and purchase price), how does one decide what price point is a good start? Example....lets say my gf and I could swing a mortgage of $2500 (I like the least amount of money out of pocket as possible). If after a year, we rent out both units (presuming a duplex was purchased), then likely the mortgage would be covered with both units rented (many variable expenses accounted for/budget for/assumed herein for the example). In other words, if we could purchase a property at $400k, would that be a better long term investment compared to one of say $250K (I'm randomly choosing $250K as a comparative purchase price)? Maybe the higher price would be in a better area, attracting higher quality, maybe more longer term tenants.
Or, if upon proper financial analysis, regardless of price, would we be better suited for the one with a higher return (be it COC or CF)...assuming it was something we can stand to live in at least a year, or longer until we found the next/2nd property.
All really good questions! One rule of thumb that I have is that since you generally only get one shot at using an FHA loan, you want to get the best asset possible on that first one. If you’re able to find a better return on the example of a 400 K, versa, 250 K, then it’s a double whammy of benefits.

Basic rules of investing are you always go with the higher return, you will, however need to balance that with the fact that you’ll be living there and it needs to be a place that you feel comfortable. There may be some places that you get an insane return, but you don’t feel comfortable walking your dog. It’s certainly a balancing act when you incorporate if you and your primary residence.
615-968-9539
0 Reply
Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.

Thanks! So that brings another question/follow up. Is there a general rule of thumb, to where (lets say regardless of money and purchase price), how does one decide what price point is a good start? Example....lets say my gf and I could swing a mortgage of $2500 (I like the least amount of money out of pocket as possible). If after a year, we rent out both units (presuming a duplex was purchased), then likely the mortgage would be covered with both units rented (many variable expenses accounted for/budget for/assumed herein for the example). In other words, if we could purchase a property at $400k, would that be a better long term investment compared to one of say $250K (I'm randomly choosing $250K as a comparative purchase price)? Maybe the higher price would be in a better area, attracting higher quality, maybe more longer term tenants.
Or, if upon proper financial analysis, regardless of price, would we be better suited for the one with a higher return (be it COC or CF)...assuming it was something we can stand to live in at least a year, or longer until we found the next/2nd property.
All really good questions! One rule of thumb that I have is that since you generally only get one shot at using an FHA loan, you want to get the best asset possible on that first one. If you’re able to find a better return on the example of a 400 K, versa, 250 K, then it’s a double whammy of benefits.

Basic rules of investing are you always go with the higher return, you will, however need to balance that with the fact that you’ll be living there and it needs to be a place that you feel comfortable. There may be some places that you get an insane return, but you don’t feel comfortable walking your dog. It’s certainly a balancing act when you incorporate if you and your primary residence.

That makes sense. One last question regarding FHA. I didn't realize it's likely a one time deal (no pun intended). As such, let's assume we find a duplex or tri, etc....are able to actually put 20% down...do a HH for a year...rent it out after, and we find a second property. With that, can you use a FHA when purchasing a second property (that you likely would HH again, if you didn't use the FHA for the first property?) In other words, is the FHA mostly for a first time buyer, or, is it a loan you can only take one time, regardless of a first purchase or say a fifth purchase?
Thanks
0 Reply
Callaway Pate
Real Estate Agent · Washington, D.C. · Member since 2022 · 37 posts · 15 votes
3y
Hey Mitch,
There are real estate opportunities everywhere and it'd probably be best to prioritize your ideal lifestyle with your girlfriend and figure it out from there. I'd caution you to be realistic about the strategies available to you in particular markets. In these smaller southern cities, cashflow will likely be quite strong but with lower property values you may not see as much gain on the appreciation side. However, there are always outliers and you can find them. I'm sure you'll make the right call.
Best of luck!
0 Reply
Fiza Ah
Investor · Member since 2020 · 80 posts · 71 votes
3y
We moved to Charleston 3 years ago for better quality of life and it has delivered on that. Since 2021, we have purchased a total of 12 doors including our primary duplex we house hack.

If you're interested in house hack or multi-family hack, there are certainly still options available. The challenge with Charleston is that the price points have trended higher and higher since 2020 and a SFH within 20 minutes of downtown would start around 450-550K and can exceed 1 or 2 mil. It is NOT a cheap city and the WFH dynamic has really thrown off housing prices (both owning and rentals). 2 BRs are renting for an average of $1900/month, which is fairly high for income in SC.

Also, traffic can be rough during rush hour(s) as the city infrastructure hasn't caught up with growth.

If you have any questions, feel free to reach out!
0 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
I understand that you and your girlfriend are considering a permanent move to the greater south/southeast and are interested in transitioning from healthcare to real estate investing. It's essential to consider several factors when choosing a location for real estate investing, including market size, growth potential, accessibility, and quality of life.

While smaller, charming cities can have their appeal, they may not always offer the same level of investment opportunities as larger cities. However, that doesn't mean that investing in smaller cities is not possible, as some smaller cities may have lower competition and more affordable prices. It's crucial to conduct thorough market research to determine the potential for growth and profitability in a given area.
[email protected]832-889-5607
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Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
3y
My best recommendation is to find a place that you and your partner are happy to live in. Each market is going to different as far as your cost of investment and what kind of return you will get. For example, your money will go a lot further in Phila vs NY or Boston. But would you give up your preferred lifestyle for investment returns? Determine your budget and go from there. The main difference that is going to determine your affordability is the local taxes, so if you know your approved loan amount, you should know what you can afford. Figure out the finances first, then desired lifestyle and go from there. Best of luck sir
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Jacob GomesBusiness Member
Real Estate Consultant · Nashville · Member since 2020 · 70 posts · 22 votes
3y
Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.
It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.
Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!
That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,
Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.
Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.

Thanks! So that brings another question/follow up. Is there a general rule of thumb, to where (lets say regardless of money and purchase price), how does one decide what price point is a good start? Example....lets say my gf and I could swing a mortgage of $2500 (I like the least amount of money out of pocket as possible). If after a year, we rent out both units (presuming a duplex was purchased), then likely the mortgage would be covered with both units rented (many variable expenses accounted for/budget for/assumed herein for the example). In other words, if we could purchase a property at $400k, would that be a better long term investment compared to one of say $250K (I'm randomly choosing $250K as a comparative purchase price)? Maybe the higher price would be in a better area, attracting higher quality, maybe more longer term tenants.
Or, if upon proper financial analysis, regardless of price, would we be better suited for the one with a higher return (be it COC or CF)...assuming it was something we can stand to live in at least a year, or longer until we found the next/2nd property.
All really good questions! One rule of thumb that I have is that since you generally only get one shot at using an FHA loan, you want to get the best asset possible on that first one. If you’re able to find a better return on the example of a 400 K, versa, 250 K, then it’s a double whammy of benefits.

Basic rules of investing are you always go with the higher return, you will, however need to balance that with the fact that you’ll be living there and it needs to be a place that you feel comfortable. There may be some places that you get an insane return, but you don’t feel comfortable walking your dog. It’s certainly a balancing act when you incorporate if you and your primary residence.

That makes sense. One last question regarding FHA. I didn't realize it's likely a one time deal (no pun intended). As such, let's assume we find a duplex or tri, etc....are able to actually put 20% down...do a HH for a year...rent it out after, and we find a second property. With that, can you use a FHA when purchasing a second property (that you likely would HH again, if you didn't use the FHA for the first property?) In other words, is the FHA mostly for a first time buyer, or, is it a loan you can only take one time, regardless of a first purchase or say a fifth purchase?
Thanks

There are exceptions and times that you can use an FHA after you already own a home, but it does become more difficult after you already own a home in my experience.
I'd happily connect you with my mortgage lender to provide clarity since there are so many factors.
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Mitch Walker
OP
Member since 2023 · 48 posts · 11 votes
3y
Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

Quote from @Mitch Walker:

Quote from @Jacob Gomes:

I can speak for Nashville.

It's an awesome market to house hack in. Due to our slightly limited number of multi-families, compared to some other comparable cities, I have clients who get creative! They will buy a home and use/build an in law suite to live in while they rent out the other side, or vice versa.

Another strategy my clients are using is to buy a property zoned and permitted for Airbnb, they then live in it for one year, then move out and have a fully allowable, cash flowing airbnb!

That being said we have a cities very close to Nashville with way more multi families available, Clarksville. It's the 5th biggest city in TN and is booming currently!

Hi Jacob,

Thank you. I'll have to look up the proximity of Clarksville to Nashville.....I used to work in commercial appraisal and do know (and agreed with another poster's comment) about being in a suburb proximate to a larger city. One of the biggest rhetorical questions I personally have is, how much cash does one really need for a HH (taking into account price flutuations for locales, etc). Example. As a travel RN, I am able to now save about 80-90% of my income, after paying off my student loans in 2022. While I'm saving/holding cash presently, and do NOT want to dump $50-70k up front into one home....having let's say $50-$70k in a bank is a waste of the money's time also. So, I don't know if more expensive markets (Nashville proper vs. Murfreesboro for example) would require more cash on hand. It's another way of asking, what is the best way I can use somewhere around $50k, maybe more...rather than making a huge down payment, if we hope to do the FHA 3.5% down pmt approach.

Awesome question! So I think you’ll be able to find what you’re looking for for under 400 K so you would need 3 1/2% down for an FHA loan and then another three-ish percentage for closing costs. So for $400k you’d need $26k.

Thanks! So that brings another question/follow up. Is there a general rule of thumb, to where (lets say regardless of money and purchase price), how does one decide what price point is a good start? Example....lets say my gf and I could swing a mortgage of $2500 (I like the least amount of money out of pocket as possible). If after a year, we rent out both units (presuming a duplex was purchased), then likely the mortgage would be covered with both units rented (many variable expenses accounted for/budget for/assumed herein for the example). In other words, if we could purchase a property at $400k, would that be a better long term investment compared to one of say $250K (I'm randomly choosing $250K as a comparative purchase price)? Maybe the higher price would be in a better area, attracting higher quality, maybe more longer term tenants.

Or, if upon proper financial analysis, regardless of price, would we be better suited for the one with a higher return (be it COC or CF)...assuming it was something we can stand to live in at least a year, or longer until we found the next/2nd property.

All really good questions! One rule of thumb that I have is that since you generally only get one shot at using an FHA loan, you want to get the best asset possible on that first one. If you’re able to find a better return on the example of a 400 K, versa, 250 K, then it’s a double whammy of benefits.

Basic rules of investing are you always go with the higher return, you will, however need to balance that with the fact that you’ll be living there and it needs to be a place that you feel comfortable. There may be some places that you get an insane return, but you don’t feel comfortable walking your dog. It’s certainly a balancing act when you incorporate if you and your primary residence.

That makes sense. One last question regarding FHA. I didn't realize it's likely a one time deal (no pun intended). As such, let's assume we find a duplex or tri, etc....are able to actually put 20% down...do a HH for a year...rent it out after, and we find a second property. With that, can you use a FHA when purchasing a second property (that you likely would HH again, if you didn't use the FHA for the first property?) In other words, is the FHA mostly for a first time buyer, or, is it a loan you can only take one time, regardless of a first purchase or say a fifth purchase?

Thanks

There are exceptions and times that you can use an FHA after you already own a home, but it does become more difficult after you already own a home in my experience.
I'd happily connect you with my mortgage lender to provide clarity since there are so many factors.

Hey Jacob,
That would be helpful. Sorry for the delay. I've been traveling from Fargo back to my current residence in Indiana, then two days later, Flew to Boise where I am now for a few days. I spoke with a realtor from BP who's based in Boise and had some good insight, but we didn't talk much about the FHA portion. If you were able to have the lender reach out, that would be great!
Thank you!
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