Finally set on starting my REI journey. Please advice

[Edward Golubiievskyi]

Hello BP community, my name is Edward and I am starting out my REI journey. First of all, I wanted to say thank you to all founders of BP, contributors and those who actively supports everyone who needs it. Thank YOU!

Little bit about myself. I moved to US from Europe 8 years ago and got involved into RE by working and then helping to manage Home Staging company and being part time marketing manager for local RE Agent.

I live in OC, CA and while most people say opportunities could be find anywhere, I think that going out of state is more beneficial budget wise and learning wise.

I set my goals, have a plan and currently analyzing couple of markets:

- Omaha, NE

- Cincinnati OH

- Milwaukee WI

I wanted to ask more experienced investors about following:

- Market analysis: I decided to look into 1) Population Growth 2) Median Home Price 3) Median rent 4) Price/rent ratio 5) Quality of life 6) Economic Growth 7) Affordability. Are those criteria correct? What do you look at without getting very deep into details (like crime rates, commute time etc)

Thank you for all your help and response any feedback is greatly appreciated. Edward.

[Brock Mogensen]

Those are all the key stats you should be looking at when analyzing a market. In regard to the Milwaukee market - you will find that it lacks a lot of those positive key metrics.  That being said, it is a great cashflow market where you can find deals at good prices (relative to market).

[Marcus Auerbach]

The issue with Milwaukee is that most statistics, reports and articles describe the municipal area of the City of Milwaukee - about 600,000 people including the all of the  challanged neighborhoods and excluding literally every single good and great one. 

The Milwaukee metro area has 1.6 million people in 19 municipalities and including them  paints a very different picture. 

It's like using Manhatten statsistics when describing NY.

@Edward Golubiievskyi - it's not about the best city, it's about the city you know best and where you have the best team!

[Charles Clark]

@Edward Golubiievskyi congratulations on taking the next step on your REI journey. I have to echo @Marcus Auerbach point of view. I think small investors get caught up in what the institutional investors look at. They investing billions of dollars so they have to look at the bigger picture. For small investors it is about knowing where you are investing and the team to support your investment goals. You are trying to find one property in one neighborhood that will provide you the return you are looking for. And then repeat until you reached what you were hoping to attain on your journey. You are trying to rent to one person or one family at a time. Narrow your approach, research properties that meet your monthly cash flow goal, analyze properties based on the local rents and build relationships within the real estate community. If you focus on this type of market analysis, I think you will be on your way on building your RE portfolio. 

If you would like to chat some more, feel free to contact me.

Beleza,

Charles Anthony

[Lee Yoder]

I also second what @Brock Mogensen and @Marcus Auerbach said: 1) You won't get the correct picture of a city when you simply look up the statistics of that city, 2) Many cities that don't meet the metrics most investors look for are the cities that cash flow very well (primarily because they don't meet the metrics most investors use so they aren't as crazy-competitive), and 3) It's much more important to put together a good team to help you find deals and manage your properties than it is to pick a city that meets the metrics you've rightly come up with.

Good luck and God bless!

[Edward Golubiievskyi]

@Marcus Auerbach Thank you for your input Marcus. Your point does make sense. As I was analyzing those markets I came down to a question: "How would this data really effect my decision of investing or not?" - and I couldn't find an exact answer and decided to reach out to community. But I new there is something I am missing and it is exactly what you said - " it's not about the best city, it's about the city you know best and where you have the best team!". What would be your advise on finding and interviewing team members? Is there something you look at specifically? Thank you for your help Marcus. Edward 

[Edward Golubiievskyi]

@Charles Clark, thank you for you response. I feel like all newcomers (for sure for myself :) ) spend a lot of time researching and analyzing data, building Excel files with formulas etc. I got a very important advice from a very helpful BP member that "once you start thinking about your 1st property as a learning tool and not as your future cash cow it will be easier for you. Now, granted you don't need to jump at any property, but with that mindset it might be easier at least to make that move. Thank you, Edward 

[Edward Golubiievskyi]

@Lee Yoder thank you Lee for your input! 

[Gino Passante]

Edward,  I have to echo @Marcus Auerbach and @Charles Clark. The reported statistics will only get you so far and in some cases into a regretful investment. Start building your team by contacting/interviewing your top pics for realtors and property managers. Based on your budget they can work in unison to find the best property that supports long term performance. If you ever want discuss area performance in depth feel free to DM me. 

[Rebecca Knox]

"It's not about the best city, it's about the city you know best and where you have the best team!- it's not about the best team!" 

On Point Realty Group - Keller Williams

On point Marcus Auerbach 👏 

#Dropthemic

[Marcus Auerbach]

Originally posted by @Edward Golubiievskyi:

@Marcus Auerbach Thank you for your input Marcus. Your point does make sense. As I was analyzing those markets I came down to a question: "How would this data really effect my decision of investing or not?" - and I couldn't find an exact answer and decided to reach out to community. But I new there is something I am missing and it is exactly what you said - " it's not about the best city, it's about the city you know best and where you have the best team!". What would be your advise on finding and interviewing team members? Is there something you look at specifically? Thank you for your help Marcus. Edward 

Its always easier if someone has family or job connections to a city, or have lived there in the past. If you start from scratch it will take time and effort - and travelling. I would narrow it down to two, interview a few people on the phone and then go there for a weekend. Have a good agenda and visit startegically neighborhoods that would be a consideration, don't get lost in the details, keep it on a 30,000 foot level. YouTube might be helpful to get started and a first idea.

[Edward Golubiievskyi]

Thank you for your input @Gino Passante and @Marcus Auerbach. What are the things you would suggest to look at while researching on property managers? I think, for example, online reviews won't give the whole picture, as most people write negative ones and specifics of Property Manager's job is kind of between profit oriented landlord and almost always complaining tenant :) Thank you

[Marcus Auerbach]

@Edward Golubiievskyi I get that question about PM a lot. Online research is part of it, but you already know that PM's tend to get negative reviews, it's in the nature of their business. 

The question is tough to answer in absolute terms, because every PM is working in a different market segement and has a little different philosophy. Some of the negativeee feedback is often rooted in a mismatch between investor (and their portfolio location, type and price point) and PM - if that does not line up, it will not end well.

I would suggest narrow it down from online research and then interview your favorites in person. If you follow this process you have a 66% chance of getting it right - according to Jack Welch. So you may have to pivot and thats okay.

[Edward Golubiievskyi]

@Marcus Auerbach thank you again Marcus for your thoughts. If you happen to know PM or RE agent in Omaha, I would appreciate you sharing. Thanks again. 

[Tanner Sherman]

Originally posted by @Edward Golubiievskyi:

@Marcus Auerbach thank you again Marcus for your thoughts. If you happen to know PM or RE agent in Omaha, I would appreciate you sharing. Thanks again. 

Edward,

Thanks for reaching out, I look forward to working with you!