Diversify in Seattle and texas or just invest all into Texas?

Hi guys,

I am wondering if you can give me advice on my current situation. We live in the Seattle area and currently building our next primary res house in Texas.

Option 1: We can sell our 1.4M property in Seattle area which is on a 3% 15 year mortgage now (we owe 600k), and invest all remaining funds into several texas investment properties, at today's mortgage rates (~7-8%) on 30 year notes, and turn them into STRs. We don't need the funds for our primary res build.

Option 2: keep Seattle house, turn it into an STR, and just buy 1 house in texas at today's mortgage rates for STR purposes using an existing HELOC on our Seattle house.

Here's a couple interesting facts: Seattle area values have already dropped 12.5% to 19% in our area in Seattle since March 2022. In our area in Texas, values have not really dropped. My wife would also manage all future STRs and that would be her only job.

Option 1 pros

• all of our STRs are close to us and this is preferable especially since we're just starting out.
• There is also more potential for higher cash flow on several $200k-$300k properties than there is on Option 2. (However, as mortgage rates go up, by the time we are ready to deploy the capital, that could not be the case. )
• we have the ability to really build the texas business faster. Hopefully, some day we get to 10 STRs in texas and we can start hiring cleaners per hour which will dramatically decrease cleaning costs
• could also just have some cash on hand in case we find a good deal

Option 2 Pros

• keep our low 3% 15 year mortgage, use our 5% heloc at 300k to buy additional texas investment property
• Seattle house is already split into two units with separate kitchens and everything, so potentially more cash flow from flexibility of renting out whole house or just each unit
• market comes back up some day and if/when mortgage rates get low enough, we can sell and buy back into low mortgage rates in texas properties
• potentially less risky option as we are using a 3% mortgage to cashflow

submitted by /u/Fearless-Guide-4484
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source https://www.reddit.com/r/RealEstate/comments/yh67qj/diversify_in_seattle_and_texas_or_just_invest_all/