Imagine receiving a $20,000 check to purchase a rental property as well as step-by-step guidance from some of the most experienced real estate investors in the industry. Well, that’s exactly what the Dream Investment Adventure Series is all about.
Follow along with our contest winner, Joe, and his journey of purchasing an out of state rental property through the mentorship of Steve Rozenberg, Head of Investor Education for Mynd. Throughout the next two months, the pair will research markets, build a team, purchase a property, complete a renovation, lease the property, and everything in between—without Joe ever seeing the property in-person.
Let’s start from the beginning by learning about Joe, discussing goals and strategy, and determining what makes for a strong, investable market.
From Accidental Landlord to Investor
Joe’s experience with investing began when a required military move transformed him into an accidental landlord. He and his wife rented out their home and managed it remotely for a few years. During his deployment, Joe stumbled across BiggerPockets and began researching more about investing.
His interest in building a portfolio of single-family homes grew, and after returning home, he was eager to implement what he had learned. He and his wife purchased their first true investment property as a BRRRR deal in Eastern North Carolina, and now they are interested in expanding into a new market.
Establishing Joe’s Investment Goals
Investment goal: Building a cash flow portfolio of single-family homes in a few real estate markets.
Strategy: Continue using the BRRRR method to purchase and rent out additional properties.
Dream Investment Purchase
Budget: $150,000 cash for purchase and renovations
Strategy: BRRRR (Buy, Renovate, Rent, Refinance, Repeat)
- Add 20-25% equity either by buying under market value or through renovation
- $200 a month in cash flow after all expenses
Challenge: Completing the BRRRR process remotely
Choosing the Correct Market to Reach BRRRR Goals
Step one in the process will be selecting a market that offers deals that fit Joe’s strategy and goals. When analyzing a new market, it is important to research the real estate market, as well as the health of the city. This means looking at trends and forecasts for home sales prices, average rental rates, job growth in the area, and other important statistics.
Analyzing this data will give you the numbers you need to make smart decisions. If you are looking for cash flow, you want to make sure that is possible in the market you are buying in. You don’t want to find out later the home you thought you would get $200 a month out of in cash flow is actually costing you money each month.
For example, markets in the Los Angeles or San Francisco areas are not going to offer high cash flow because real estate is pricy there, but you can expect to benefit from the high appreciation. If your goal is cash flow, these would not be the markets to target.
Steve narrowed the list of markets down to four choices that offer the best strategies that match Joe’s goals:
- San Antonio
- Tampa Bay
Now that the list of markets is narrowed down, how do you select one? You will want to compare specific data about each market to see which one offers the better deals that will accomplish your goals.
It is important to compare apples to apples, so the data should come from the same source and be from the same year. The more current the data, the better the numbers to base your decision on.
Statistics & Trends to Consider
- City job growth
- Industry trends
- Types of renters in the area (students, retirees, families, military)
- Average age of the population
- Median household income
- Property appreciation
- Age of properties
- Averages sales price
- Days on market
- Average rent
- Most popular home types and sizes
The Data Tell a Story
Once you have collected the data, it begins to tell you a story about the market. You are looking for a city with a healthy economy and real estate trends that show growth. Use this data to determine which market is best to take the next step to look for smart investment opportunities.
Dream Investment Weekly Homework
Joe’s homework is to create a spreadsheet and collect information on the four markets for comparison in the next episode. You can find city and real estate data online from various sites such as Zillow, Redfin, BiggerPockets, census data, and city websites.
Tune in next week to learn how to determine the right market to invest in remotely as Steve and Joe use the comparison spreadsheet data to select a market.
To learn more about Joe’s investing journey, gain access to investor tools and resources, and help your own remote investment journey, check out the exclusive destination page for BiggerPockets fans only. You’ll also find a limited-time BiggerPockets exclusive offer for property management.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.