Starting Out.... towards my first SFR investment
Most Popular Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votesI'll second what @Aaron Bihl said - I'm local to Houston and you don't want a $100k house here. You'd be buying problems - especially at a distance. I also think that a property manager that wants to manage a $100k house in Houston is not one that you would want. Anyone with talent has better options - the very limited income upside vs. the problems and time it can potentially eat up is just a bad deal for a property manager on a single SFH unit. If you're interested in Texas, look in a secondary or smaller market - places like Waco, Bryan/College Station, New Braunfels, San Marcos, Killeen, etc. if your budget is $100k. Even something in Midland/Odessa that could be a furnished rental for oilfield workers.
I also lived in St. Louis for 5 years. You need to know that market well before buying a low priced home. It's a city that certainly has opportunity - there is absolutely money to be made, but you need to really know the city/area before pulling the trigger on a property. It's a shrinking population that saw rents decrease in the last year or two when the rest of the country was on fire. While a part of me still calls it home and loves it, there are parts of town that are downright depressing.
I'd suggest getting a 10% down second/vacation home loan (since it is at a distance) and upping your budget a little bit rather than 20-25% down for a $100k home.
If you do get closer and want to talk Houston or St. Louis, please send me a DM. I'd love to offer any knowledge or help that I could. Good luck! You're asking the right questions and on the right track.
17 Replies
- Real Estate Agent · Cleveland, OH · Member since 2021 · 383 posts · 361 votes4y
I can go ahead and say looking in Cleveland you will definitely find above a 1% rule here at the $100000 range. But $100000 will get you something in a C or lower area in most places of Cleveland (but there are exceptions to this). I would highly recommend property management if this will be your first SFR, but use BP as leverage to find a good one. It has been said many times before that your PM can make or break a deal as an OOS investor. Especially a new one.
- 4yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
You should be building a team to maximize your probability of success!
While building your team, it's important you understand the motivations of everyone on your team.
Sourcing: whether agent, wholesaler, flipper, etc. many only have a vested interest in a transaction. You want to find ones that are vested in developing a long-term business relationship with you. Otherwise, they will screw you for their own compensation.
Property Management Company (PMC): No one else on your team should be as vested in a long-term relationship with you as a PMC. They will have to manage whatever you buy on a daily basis until you sell the property or terminate them. You need to find a good one though, that is honest & competent. An honest PMC's incompetency will still cost you.
Inspector: You want an unbiased and competent professional that will properly do their job and document it.
Contractor: Finding contractors that don't cut corners and overcharge is EXTREMELY difficult. Even if they are referred, you really don't know until AFTER they've done a job. The other 3 above should be able to provide referrals, but don't blindly trust anyone!
Logical Property Management4.9451 Reviews - 4yNicholas MischPro MemberInvestor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
Cleveland will definitely fit your criteria and possibly St. Louis MO (I am not an expert on MO, but based on my limited knowledge). Most of Texas I don't think it would be possible, but I am not an expert in Texas also.
- Investor · San Rafael · Member since 2020 · 376 posts · 274 votes4y
Hey @Neel Iyer, welcome to biggerpockets and congratulations on doing the work.
We invest out-of-state in St Louis, MO, as well as Northwest Indiana. I still remember how excited I was when getting started.
I am happy to share any and all tips, tricks, tools, resources, network, we have and still use today.
Please do not hesitate to reach out, connect, and DM me if you want to chat more.
- Investor · San Antonio, TX · Member since 2017 · 344 posts · 268 votes4y
A house for 100k that meets the 1 percent rule in San Antonio will be in a war zone
- 4yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
I'll second what @Aaron Bihl said - I'm local to Houston and you don't want a $100k house here. You'd be buying problems - especially at a distance. I also think that a property manager that wants to manage a $100k house in Houston is not one that you would want. Anyone with talent has better options - the very limited income upside vs. the problems and time it can potentially eat up is just a bad deal for a property manager on a single SFH unit. If you're interested in Texas, look in a secondary or smaller market - places like Waco, Bryan/College Station, New Braunfels, San Marcos, Killeen, etc. if your budget is $100k. Even something in Midland/Odessa that could be a furnished rental for oilfield workers.
I also lived in St. Louis for 5 years. You need to know that market well before buying a low priced home. It's a city that certainly has opportunity - there is absolutely money to be made, but you need to really know the city/area before pulling the trigger on a property. It's a shrinking population that saw rents decrease in the last year or two when the rest of the country was on fire. While a part of me still calls it home and loves it, there are parts of town that are downright depressing.
I'd suggest getting a 10% down second/vacation home loan (since it is at a distance) and upping your budget a little bit rather than 20-25% down for a $100k home.
If you do get closer and want to talk Houston or St. Louis, please send me a DM. I'd love to offer any knowledge or help that I could. Good luck! You're asking the right questions and on the right track.
- 4yJoe A.Pro MemberRealtor · Waco, TX · Member since 2018 · 75 posts · 80 votes
Quote from @Travis Timmons:
I'll second what @Aaron Bihl said - I'm local to Houston and you don't want a $100k house here. You'd be buying problems - especially at a distance. I also think that a property manager that wants to manage a $100k house in Houston is not one that you would want. Anyone with talent has better options - the very limited income upside vs. the problems and time it can potentially eat up is just a bad deal for a property manager on a single SFH unit. If you're interested in Texas, look in a secondary or smaller market - places like Waco, Bryan/College Station, New Braunfels, San Marcos, Killeen, etc. if your budget is $100k. Even something in Midland/Odessa that could be a furnished rental for oilfield workers.
I also lived in St. Louis for 5 years. You need to know that market well before buying a low priced home. It's a city that certainly has opportunity - there is absolutely money to be made, but you need to really know the city/area before pulling the trigger on a property. It's a shrinking population that saw rents decrease in the last year or two when the rest of the country was on fire. While a part of me still calls it home and loves it, there are parts of town that are downright depressing.
I'd suggest getting a 10% down second/vacation home loan (since it is at a distance) and upping your budget a little bit rather than 20-25% down for a $100k home.
If you do get closer and want to talk Houston or St. Louis, please send me a DM. I'd love to offer any knowledge or help that I could. Good luck! You're asking the right questions and on the right track.
If you want a quality property for $100k in Texas, you’re going to have to go to smaller towns than Waco, Bryan/College Station and the others mentioned. Those cities don’t have that price point anymore. Think towns with populations less than ten thousand. Even some of those will be difficult. Not saying it can’t be done, though.
- Investor · San Antonio, TX · Member since 2017 · 344 posts · 268 votes4yThey exist if you go remote enough. I have a place we are buying that we'll be listing for like 65-70k and it was previously rented for 1000-1200 a month to oilfield workers. But it's also in an oilfield town with a population of 400 people. Probably a great little rental but not something I plan to deal with from a few hours away.
Quote from @Joe A.:
Quote from @Travis Timmons:
I'll second what @Aaron Bihl said - I'm local to Houston and you don't want a $100k house here. You'd be buying problems - especially at a distance. I also think that a property manager that wants to manage a $100k house in Houston is not one that you would want. Anyone with talent has better options - the very limited income upside vs. the problems and time it can potentially eat up is just a bad deal for a property manager on a single SFH unit. If you're interested in Texas, look in a secondary or smaller market - places like Waco, Bryan/College Station, New Braunfels, San Marcos, Killeen, etc. if your budget is $100k. Even something in Midland/Odessa that could be a furnished rental for oilfield workers.
I also lived in St. Louis for 5 years. You need to know that market well before buying a low priced home. It's a city that certainly has opportunity - there is absolutely money to be made, but you need to really know the city/area before pulling the trigger on a property. It's a shrinking population that saw rents decrease in the last year or two when the rest of the country was on fire. While a part of me still calls it home and loves it, there are parts of town that are downright depressing.
I'd suggest getting a 10% down second/vacation home loan (since it is at a distance) and upping your budget a little bit rather than 20-25% down for a $100k home.
If you do get closer and want to talk Houston or St. Louis, please send me a DM. I'd love to offer any knowledge or help that I could. Good luck! You're asking the right questions and on the right track.
If you want a quality property for $100k in Texas, you’re going to have to go to smaller towns than Waco, Bryan/College Station and the others mentioned. Those cities don’t have that price point anymore. Think towns with populations less than ten thousand. Even some of those will be difficult. Not saying it can’t be done, though.
- Member since 2021 · 16 posts · 10 votes4y
Yes- the only thing you might be able to buy in some of those areas in Texas mentioned would be a trailer house. New Braunfels is actually an expensive market. Quick Zillow search confirmed that is what is available (trailer house or empty lot) for under 100000 in NB at the moment. In SA, you could buy a small condo. There are a couple of shady houses on the other side of IH-10 that need a lot of work, but could be intriguing.
- Developer · Houston, TX · Member since 2019 · 19 posts · 17 votes4y
Some great posts here already. My $0.02's is to double-check property taxes in Texas and confirm insurance for each property/area. Windstorm, hazard insurance, and flood insurance loves to burn cash flow. Angleton insurance is almost 2x that of Beaumont. Good luck!
- Lender · San Francisco · Member since 2019 · 113 posts · 49 votes4y
@Neel Iyer lots of good info here in this thread. There are a lot of things you need to consider. Where ever you choose, definitely fly out and connect with local investors and build rapport with a property manager. Build your team. I'm local to you and invest OOS in Northeast Ohio. Would love to connect or grab a coffee sometime here in the bay!
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes4y
Quote from @Neel Iyer:
Hi BP community - I have started doing some research into my first SFR investment which will likely be out of state - A ~$100,000 home with a roughly 1% rent/cost. I am looking at St Louis, MO, Cleveland OH, suburban Houston TX and San Antonio TX areas. I plan to get it financed through a traditional bank loan with a 20 or 25% down payment. Also, I am thinking about going with a property management company to manage the property instead of self-managing.
I look forward to get to know this community and learn from the wealth of knowledge shared here. Thanks!
Can easily hit those numbers on your post in Cleveland. Just make sure you know what it is you are buying. There is a lot more to it than just looking at the numbers. Give The Ultimate Guide to Grading Cleveland Neighborhoods a read. There are a lot of Cleveland neighborhoods that have far better numbers than what you are looking for, but there is good reason for that.
- Contractor · Aptos, CA · Member since 2020 · 32 posts · 11 votes3y
Investing OOS scares me. I'm here in Santa Cruz CA. Lets get together and brainstorm.
- Real Estate Agent · St. Louis, MO · Member since 2017 · 74 posts · 20 votes3y
@Neel Iyer St. Louis MO can definitely achieve or exceed the 1% rule for cashflow, even in some pretty decent areas experiencing appreciation. Although the population is flat or declining, the affluence of the city is actually going up. Many of the people in the most depressed areas of the city are moving away for better opportunities, however younger white collar workers are moving in due to affordable housing, low cost of living, and a robust startup environment. Another poster mentioned that rents decreased year over year, which is materially inaccurate. St. Louis did not experience 20-40% rental increases like some markets, but we did see an 8% increase from 2020-2021 and a 3.3% increase from 2021-2022. If you're looking for a full service partner in St. Louis please do not hesitate to reach out. From acquisition, to general contracting, and property management, I'd love to serve as a resource if you'd like to learn more about the investment opportunities in St. Louis, which was just named as the best city for new college graduates!
- Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes3y
Hi Neel! Cleveland is a great market to start your investing journey. I am based in Northern Virginia and invest primarily in Cleveland with small multi family and Single Family homes. I would love to share my experience and see if I can add value to your investing journey
- 3yMelanie ThomasBusiness MemberReal Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votesWelcome! When it comes time to find a good PM I would recommend you start with the NARPM website. There are really great PM's affiliated that can get the job done well! If you need help navigating the site or have questions, I am always happy to help. Happy Investing!
RentWerx Property Management4.73296 Reviews - Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes3y
Quote from @Neel Iyer:
Hi BP community - I have started doing some research into my first SFR investment which will likely be out of state - A ~$100,000 home with a roughly 1% rent/cost. I am looking at St Louis, MO, Cleveland OH, suburban Houston TX and San Antonio TX areas. I plan to get it financed through a traditional bank loan with a 20 or 25% down payment. Also, I am thinking about going with a property management company to manage the property instead of self-managing.
I look forward to get to know this community and learn from the wealth of knowledge shared here. Thanks!
Investing out of state is a good idea if you are looking to maximize your cashflow potential. I would personally recommend looking into the primary cities in the Ohio market. As you have mentioned, Cleveland is a great example. The price to rent to ratio on a SFR makes for great investments. Not to mention our appreciation has been 8% higher than the US national average, because of the high demand for affordable housing.
https://learn.roofstock.com/bl...
Columbus is also a good start, with big businesses such as Intel, Amazon, Chipotle, the Limited, and more. We have seen people flooding here. I think now is a perfect time to invest here.
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