First time home buyer/investor so any advice is helpful. I am looking to purchase a property soon (active duty using VA loan). I will be moving in 2025 because of military so I plan to either rent it out if it makes sense or just sell. Here is a brief summary of the markets I'm looking at.
Region A: high demand, low supply. Influx of old 50-70yo semi-retirees coming from NY, midwest, CA due to warm weather and bc it's along the water. 3BR/2BA houses that were 200K in 2020 are now selling for low to mid 300s. Small town that is heavily occupied by military and retirees. I could probably get ~2200-2300 on rent. Mortgage+prop taxes would be around $2K for a 300K house. I know there is also insurance, maintenance, capex, prop mgmt fees, hence the negative cash flow. But in my eyes, I put no skin in the game- I put 0 down, maybe some money in closing cost (but my realtor tells me the seller will be able to cover my closing) and the VA funding fee can get rolled into the loan. So worst case, I'd be putting down 6K, best case I put down pretty much just earnest deposit. So even though I'd be "losing" probs a few hundred per month if I rent when I leave, in my mind, that's not that big of a deal since I didn't have to lock down 3.5-20% down to begin with. does that logic make sense? Also, I can afford to "lose" that money each month- I can afford these payments currently just based on my salary (~$100K); my wife is finishing up school and will also makes around ~110K, so if we move and have a double mortgage, we can afford it.
Region B: similar landscape- also high demand, low supply and big mix of military and normal civilians but a much bigger city (300K pop vs <20K). Houses are definitely cheaper, esp in the suburbs, which I prefer. I could probably get the same house for 250K there. Rent is probably a little cheaper at 1900-2100. Definitely makes more sense from a cashflow perspective. The house appreciation is still there but I don't think is as strong. My biggest issue is that it would be a 1hr commute each way vs a 15 min. I don't really mind the commute (mil often have to do these long commutes) but 2hr RT (no traffic) does take away from a bit of my personal life, although I have no kids and my wife works long hours anyway so not that big of a deal. It will also take a toll on my car value (2008 civic) and i'd be burning gas. My estimation is that region b would be around 350/mo for gas + car depreciation vs 150/mo in region A, so basically a $200 additional expense in regionB, which would be around $5K over the 2 years i have to do it before moving.
TLDR: wondering whether negative cash flow makes sense but with VA loan in which i am putting essentially 0 down (maybe closing cost). Is it worth the gamble of living in the house for 2 years, then renting for a few more years at a negative and seeing if the market continues to appreciate in this tight market? Key point is that I am in the middle of nowhere (1 hour to the nearest costco if that tells you anything) but constant rotation/influx of military members and steady influx of retirees here, with very limited housing (buying or renting) options.
[link] [comments]
source https://www.reddit.com/r/RealEstate/comments/11cg6ep/does_it_make_sense_to_have_negative_cash_flow/
Comments
Post a Comment