Greetings all,
I wanted to pose this question here and gather some thoughts; by no means would I use the guidance here as the crux of my decision making, but hearing everyone's thoughts would be helpful. I am considering whether it would be worthwhile to purchase a home in another state (WA) as an investment property that I eventually intend to make my primary residence – it would be an investment property for 5+ years as I will not be settling in the State in the near term. Taking this step would be my first foray into real estate investing, and I fully recognize the process is very involved and hard on newcomers. The upside is that I would purchase the home now without wrestling appreciation in the area of interests (Greater Seattle Area) 5 years down the line and could start building equity early through renting the property out.
Alternatively, I can put the down payment $ into the market and hope that it grows since I have a reasonable time horizon of 5+ years. Whether this growth will supersede the upside of the home's appreciation and equity built through renting the home over X years I do not know. I wanted to reach out and see if anyone has taken this approach – how did it go for you? Any regrets? Do you feel you would have done things differently? I'd also love to hear from seasoned folks on which approach seems like it'd yield the better outcome here (acknowledging there is some crystal ball thinking involved here).
I appreciate both the time and insight offered – thank you!
Purchasing a home in another state and renting it out with the intention of eventually making it a primary residence
byu/BlueOctoberRS inrealestateinvesting
Posted by BlueOctoberRS
4 Comments
My opinion is stocks will appreciate better than RE in Seattle over the next 5 years. RE is sort of lumpy. Stocks are more consistent. Opinion only.
I would say the biggest difference between the two investments your company – Real Estate vs Stock market – is they fare quite differently in down economies, which it looks like we may be entering.
Stocks are quite volatile. The S&P has lost on average 30% in years of recessions.
Real Estate has averaged its normal 5% yearly increases, even during recessions.
So the safer, more insulated option would be buying the Investment Property.
You can’t keep a good eye on a house from a far like you can while living there. Seattle is very particular in its topology, trees, and even natural fire hazards. It ain’t Cali for blazes, but it’s not nothing either. There’s mudslides and rock falls too. Not like you’re Superman and would be able to stop one, but if some neighbor’s retaining wall starts to look iffy, you’re gonna act well in advance.
Buy when you’re ready to move there.
[https://imgur.com/a/2qPVqkq](https://imgur.com/a/2qPVqkq)
I have done this with a good outcome with all of the following differences or specifics:
1. Not my first investment LTR (about my fifth). Also longer range timeframe- 15+ years
2. In a market I knew and know extremely well – home town in fact and lived there over 24 years. Native level knowledge of markets, trends, neighborhoods, etc.
3. In a place I routinely spend 4-12 weeks every winter and have many connections including family and more important, handyman and trades people. I was doing this a decade before that purchase.
4. In a market that was at that time considered quite inexpensive for housing. Ten years in, housing still has nearly doubled in that market since purchase.
5. One day drive from where I live the rest of the year and my W2 is fully, 100% remote. A long day’s drive for sure, but doable. Along with good handyman/trades and frequent, easy business we can reasonably easily self-manage.
6. Because housing was much cheaper vs rents in that market (vs other markets where we operate) we have since acquired a handful of other SFR properties in that same metro area, continuing to leverage good trades relationships and self manage.
7. General surplus of cash and capital from cash-flowing (self managed) rentals, two high W2 jobs, and a desire to occasionally rebalance between RE investments and traditional investments.
The lack of any of these would make this more risky.