Real Estate Investor · Pittsford, NY · Member since 2012 · 2 posts · 0 votes
Hi,
New to this board so first, thanks for having such a forum.
I'm not young anymore, and would like to enter the rental property market.
I have about $200,000 to invest. This is not my only savings, so this can go to rental properties.
Looking for a good source of first level advice; what I mean is, which cities I should look at first.
I am not sure yet where I will be residing, so it should be an easy manage from a distance property, or a place that will require a local managing agent. I once had a co-op in NY, that was managed from a distance as demand was very high, and complex took care of all regular issues; it had other problems though, such as board that decided to limit renting...
Factor like supply of potential tenants, average rents one can collect and the ability of tenants in that area to pay are what should drive that desired location.
I was always thinking that a nice college town will always have ample demand for rental units, but have no backing data.
I will much appreciate that type of advice: what cities should I put at the top of my list for starting to dig.
Kindly,
Al
I'd invest in 4 SFH in the price range of 40k that rent for 800-1000 each. Then save the last 40 k for a flip. May have to partner up with someone or use Hard money. I'd then save the flip money and re-invest until I can purchase another 40k SFH and repeat this.
Areas I would look in: Atlanta, Memphis, parts of Texas
Well that is easy, here at Bigger Pockets you will find all kinds of advice for free. In general you will get better answers for specific questions. A question like " I am new where should I start is hard to answer?"
Especially if you are doing Single family homes the best place to start is your own Market. Even with commercial properties, if you are local you don't have the expense of traveling to learn the market.
There are good deals everywhere. It's as important to get a good deal as it is to be in the right market. A bad deal in the hottest market is still a bad deal.
Since you have flexibility on where to locate you can check out markets search for sites that offer demographic info and trends on various markets. Milken institute is one best performing cities in both large and small markets. Dave Lindahl is a RE guru that talks a lot about choosing which market to invest via market cycles.
The question that comes to my mind is where do you want to reside. If you know that then check out that market.
If you want to reside where you have close proximity to a good rental market then that becomes more complicated.
There are many areas of the country that might qualify as good investment areas.
If you throw out some areas that sound appealing or list some priorities (nice weather, low taxes, good business etc) then it would be easier to respond.
Texas seems to be making people happy. You might look into things there.
I'd invest in 4 SFH in the price range of 40k that rent for 800-1000 each. Then save the last 40 k for a flip. May have to partner up with someone or use Hard money. I'd then save the flip money and re-invest until I can purchase another 40k SFH and repeat this.
Areas I would look in: Atlanta, Memphis, parts of Texas
If your just looking for a hands of investment you should also consider lending money. Its pretty easy to get 8% or more, but you will need to educate yourself on RE and work with someone with a verifiable track record. It would also be best if they are putting some of thier own money in the deal as well.
Please take your time and don't jump in to anything. Get settled in where you are going first. Good property managers are rare in this business. If you are trying to do it from a distance it will be even more difficult. Try to find people that are already successful in this business to help you through the process. When you get a call from a guy in another state telling you what a great deal he has the first question I would have is- if it is such a great deal then why do you have to go so far to find a buyer. Where I live, in Baltimore, the joke was that if you couln't sell a house then raise the price and advertise in New York and DC. So, use extreme caution investing in an area that you don't know well...
I don't think college towns are better or worse than other towns. I looked in a college town when getting started, but didn't buy anything. Prices were out of whack vs. rents, so there were no deals. Most of the units I looked at were rented. The students were pigs. You have to count on turning over every unit every year, along with all the make ready costs. In some areas, landlords always get parents on the hook, but that wasn't the case where I was looking.
Figure out where you're going to be living first. Invest nearby. If investing is a big consideration, pick somewhere that has good deals. Plenty of candidates. Lots of folks like Memphis, Dallas, or Houston.
Decide on your goal. If you want immediate cash flow, buying right is essential. Do some reading in the Rental Property forum, especially about the reality of expenses (i.e., the "50% rule".) If you're looking for long term appreciation, and can suffer some negative cash flow, then you will want to be in a different market than one that produces good immediate cash flow.
Be very careful telling people you have a big wad of cash. If you tell 10 people you have a big wad you want to invest, I can pretty much guarantee one of them will do their best to separate you from it.