Hey BiggerPockets! I just joined the group yesterday after looking into real estate investing for the past 8 months. My goal is to eventually earn $10k-$12k per month off cash flow, and have been trying to find my first rental property investment.
I am currently preapproved for a conventional loan in Texas and looked for single family homes in both Dallas and Houston, but it’s been difficult trying to find a property that cash flows $300-$500 per unit. After looking for a few months now, I started hearing Ohio is a great market and am starting to look there.
It would be awesome if anyone can share their thoughts on how they’ve grown their portfolio or share any advice on how to start hunting for the right deals!
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
4y
12 posts in this thread, five of them recommend investing in Ohio, hmmmm either Ohio is diamond in the proverbial RE rough or I've missed something.
Oh wait, all five of the posts recommending Ohio come from.... Agents who work in... OHIO!!! Four of them at the same brokerage. They even upvote each other's posts. What kind and caring co-workers reafco hires.
What trends, demographic, governmental, socioeconomic, or other, do you see in Ohio that will lead OP to get a high enough total return relative to what he'd get in TX that justifies the risk of investing 1,000 miles away in a market he has no experience, knowledge, or network?
Investor · Dublin, OH · Member since 2014 · 241 posts · 495 votes
4y
Are you committed to being an active investor? I started out as an active investor investing in Columbus, OH where I live and eventually started investing in turnkeys out of state. I owned single and multifamily in Columbus as well. I learned that I did not like being an asset manager and I wasn't very good at it. I went through multiple property managers and struggled to cash flow any of my properties to the level I estimated when I did my (conservative) underwriting of the properties. I decided to sell all of my active investments and start investing in passive real estate syndications. I was fortunate that the market saved me and I made money on all of the active properties through appreciation - even though they never cash flowed as I projected.
Now I invest in passive real estate syndications. When investing in a syndication, I am effectively hiring a professional asset manager - they negotiate the purchase of the property, they hire a property manager, they handle the business plan and renovations. After I make the investment, I have no control and no responsibilities - all I do is wait for the ACH's to come in. I now have enough cash flow that I don't need a W2 and I am a full time passive investor.
I have found that the returns of the syndications I invest in are as good or better than the returns I got owning active real estate. I am sure if you go into active investing full time and really know the market and spend your time managing the assets and the property managers - you can make fine returns, maybe even better than that of a syndication - but it will be a JOB. Because it is a job it is not passive. That's not to say you can't be successful being an active investor - there are hundreds of people in this Forum who are successful active investors. But if you are new and you are going to invest out of state - ask yourself what skills or expertise do you have that will make you more successful than all of the people already actively investing in Texas, Ohio or anywhere else? If you have the skill and expertise - go for it! If you don't, I would consider looking into real estate syndications!
Investor · Milwaukee WI · Member since 2022 · 8 posts · 2 votes
4y
I'll give the same advice as @Jim Pfeifer, active investing takes quite a bit of time and research just to source the right deals and then once you purchase an asset you're investing even more time in the active management of the asset. I have wanted to buy a duplex in my home market for years, but have never found the right opportunity, recently I've turned to passive investing in a fund that provides great diversification and cashflow.
You get all the benefits of real estate with out the time commitment that is required to source and manage a property. I'd be happy to talk more about the fund I am invested in if you're interested!
For reference on the last point, I bought a property in 2012 for $20k, 15k to get rent ready, 850/mo starting out. All was great. Raised rents a few times to $1030/mo. Tenant moved out last fall, had to put in $90k full gut rehab. Some of this was voluntary, and am getting $1800/mo now with no deferred maintenance, NOW. But that renovation took literally every dollar of GROSS RENT I had made over the last 10 years, not including the roof from a few years ago, water heaters, turnover expense, repairs, appliance replacements, insurance, etc.
But what is the ARV? That's the missing part of this equation.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
4y
Make sure you're buying in a market that has a robust, growing working class, because that will be your anchor. You're more likely to find a property that cash flows $100-$200, unless you're buying in a risky area.
When starting to hunt for the right deals, make sure you build up a spreadsheet to help you quickly assess each property's projected expenses to see how much cash flow you estimate to make each month (i.e. rent to value ratio from the projected rent and purchase price, interest rate, property taxes, prop management fee, etc.) this way you can quickly plug in the numbers of a prospective property to see if it works on paper.