Should I house hack close to home or just buy a rental out of state?

Kofi, I don't think your order is wrong. I think the out-of-state idea is pulling you away from the strongest card you have. At 22, living in one unit of a two-family and renting the other is about the best start a buyer can get, because owner-occupant financing usually asks for a lot less down than an investor loan on a rental you'd rarely see. So I'd lean into that one to two hour radius from Yonkers. Before you tour another listing, sit down with a lender and ask what price you're approved for and how they'd count rent from the second unit. That answer tells you how far out the search really has to go. Keep a real cushion out of the $100k, so a vacant unit or a dead boiler in year one is annoying instead of scary. I'm licensed in California, so please run the New York details by a local agent who works with two-family buildings up there. Alla Novytska, Realtor®, JohnHart Real Estate, DRE #02254775

You are not approaching it in the wrong order. I would decide first whether your priority is reducing your own housing cost and learning to manage property or owning a rental purely as an investment. A local house hack lets you see the property regularly, learn how repairs and tenants are handled, and potentially use owner-occupied financing. A remote rental may have a lower purchase price, but you will need a reliable property manager, local contractors, stronger reserves, and enough income to cover vacancy and unexpected repairs. Before choosing either option, get fully preapproved and ask the lender how projected rental income may be treated. Set written acquisition criteria that include total monthly payment, realistic rent, maintenance, vacancy, management, insurance, taxes, and cash reserves after closing. Do not buy remotely simply because the list price looks lower. Compare the complete operating picture. If a local property does not meet your numbers today, continuing to save and monitor nearby markets may be smarter than rushing into a first investment you cannot supervise. Amber Johnson, Founder Pillar Real Estate 805.835.3425 [email protected] 1345 Park St. Paso Robles, CA 93446 DRE# 01925434

You are going about it in the right order: house hack first. A two family you live in qualifies for owner occupied financing, and FHA lets you buy a two family with 3.5 percent down, against the 20 to 25 percent an out of state investor loan asks. One to two hours out from the city, a $450,000 two family is still in reach. With 100k you can cover the down payment, closing costs and six months of reserves. You have to live there at least a year, so pick a place you can commute from. Run the payment, then subtract the rent from the second unit: https://hellomuds.com/monthly-payment/

Kofi, you are not going about this in the wrong order, but one piece of the plan could cost you a lot: buying out of state as an investor instead of buying close to home as an owner-occupant. At 22 with $100,000 saved, the owner-occupant route is your biggest advantage. If you live in one unit of a 2 to 4 unit building, you can use owner-occupant financing. FHA allows as little as 3.5% down on a 2 to 4 unit property you will live in, and conventional loans generally allow 5% down on a 2 to 4 unit primary residence. On a $450,000 two-family, 3.5% is about $15,750, plus closing costs and mortgage insurance. Lenders can often count a portion of the rent from the other unit toward your qualifying income, so ask a lender exactly how they would count it. An out-of-state rental is an investment loan, which typically means 15% to 25% down, a higher rate, and no ability to count your own housing. Your $100,000 would buy much less leverage there, and you would be managing tenants and repairs from far away, which is where first-time landlords get hurt. So the better order is: talk to a lender first to see what you qualify for with your income and credit, keep six months of expenses in cash so one vacancy or boiler does not sink you, and then widen the search radius for a two-family you can live in. Look at the Hudson Valley and Westchester towns where you can still occupy a unit within a reasonable distance of work. Ask the lender about New York's first-time buyer programs too, since income and price limits apply. Keith raised commute, and that matters because you have to live in the building, typically for at least a year, to use owner-occupant financing. I am a real estate professional, not a lender or attorney, so confirm the loan terms with a lender and the landlord rules with a New York attorney. I work in the Palos Verdes and South Bay area of Los Angeles, so I am not your local agent in Yonkers, but I would be glad to point you to a strong local agent who knows two-family buildings. I'm Zoltan Peresztegi, and I think you are in a stronger spot than you realize. Zoltan

Kofi, at 22, with $100,000 saved, you're already in a strong position. I don't think you're going about this in the wrong order, but I would encourage you to focus on your long-term goals before deciding where to buy. House hacking a two-family home within 1-2 hours of home could be a great first investment. Living in one unit while renting the other allows you to build equity, gain landlord experience, and potentially offset a significant portion of your mortgage. You may also qualify for owner-occupied financing with a lower down payment than you'd need for an investment property. Buying out of state might offer a lower purchase price, but managing tenants, repairs, vacancies, and unexpected expenses from a distance adds another layer of responsibility, especially for a first-time investor. My recommendation? Don't let the $450,000 price tag alone discourage you. Speak with a lender experienced in financing two-family properties. Run the numbers, including mortgage payments, taxes, insurance, maintenance, reserves, and realistic rental income. Just remember that lenders may not count all projected rental income toward qualification. Also, don't put your entire $100,000 into the purchase. Keep sufficient cash reserves. At 22, your biggest advantage is time. I'd explore house hacking closer to home first, but only if the numbers make sense. The goal isn't simply to buy your first property; it's to buy one that puts you in a stronger financial position for your second. Brenda Ashby | REALTOR® | JohnHart Real Estate | DRE License # 01700249

Kofi, I'd look at this through the financing lens, because that's where house hacking has a big edge for a first deal. As an owner-occupant you can buy a 2-4 unit property with as little as 3.5% down (FHA) or 5% down (conventional), and lenders can count a portion of the projected rent from the other units toward your qualifying income. An out-of-state rental is investor financing, which usually means 20-25% down and a higher rate. The same cash that buys one out-of-state rental could get you into a multi-family near home, with your tenants covering a big part of your mortgage. In Yonkers and lower Westchester, two- and three-family homes are common, so there's real inventory to work with. A practical plan: house hack first, live there at least a year, build reserves and landlord experience, then keep it as a rental and use your savings for the next property, whether that's local or out of state. Before you decide, run the numbers on both with a lender so you can compare cash needed, monthly cost, and cash flow side by side.

Don't underestimate how hard being an out-of-state landlord can be. Finding a solid property manager who has your best interest in mind, who can keep your expenses low, is so much easier said than done. I don't have any data to back me up, but I would assume that far more out-of-state deals go bad for investors compared to local ones. Buying in a market which continues to appreciate is not the worst thing in the world either. I'm in St. Paul and specialize in duplex sales, so I understand it's a completely different market, and housing is much more accessible here. But we still need to sift through the 98% of deals which make no sense in order to find good house hack deals for our clients.

Kofi, have you factored in your commute with that type of distance? Additionally, purchasing in a less desirable area will lead to lower rates of appreciation, if any. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States