I am based in NYC and new to real estate investing. So far I have been reading Rental Property Investing by Brandon Turner. I am interested in single family rentals or multifamily. However I am in a very expensive market and the barrier to entry is very high. Are there any experienced investors in the city whom I can connect with to ask questions? I am also looking into out of state turn key properties, especially Dallas. Does anyone have recommendations which cities I should look into?
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
4y
@Abel Asfaw I'm assuming you're in NYC. If that's the case, it's not just the barrier to entry that is the problem. It's the lack of cash flow, high property taxes and unfriendly landlord/tenant laws. If your goal is cash flow, you'll have no choice but to go outside. That's not as scary as it might seem. People are doing it all the time. To evaluate and choose a market, first look at states with low to moderate property taxes and insurance which leaves out Texas, and which are landlord friendly. Then identify the metropolitan areas within those states that have growing populations, growing jobs, strong incomes and modern/diverse economies. Don't look for cash flow alone, You'll never get wealthy from cash flow alone. Real wealth comes over time from rental income and equity.
Rental Property Investor · Upstate, NY · Member since 2021 · 110 posts · 66 votes
4y
@Abel Asfaw Welcome to the bigger pockets forums! I'm an investment expert based in Upstate NY. I do property management for portfolios that I purchase with my investor groups, and a little bit of 3rd party management. If you want to talk shop about investments, i'm hyper niched into the upstate NY market.
In general I believe the formula to success in real estate if you're looking to grow beyond just a hobby or side project is to become an expert into a single town. Purchase increasingly larger portfolios in the market you study until you're reliably doing 50-100 units at a time, and at that point you can venture out to national markets and buy large portfolio transactions.
Avoid peppering investments in many locations. I feel that's a recipe for disaster when you have to learn a new municipality for each small investment.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
4y
@Abel Asfaw I'm assuming you're in NYC. If that's the case, it's not just the barrier to entry that is the problem. It's the lack of cash flow, high property taxes and unfriendly landlord/tenant laws. If your goal is cash flow, you'll have no choice but to go outside. That's not as scary as it might seem. People are doing it all the time. To evaluate and choose a market, first look at states with low to moderate property taxes and insurance which leaves out Texas, and which are landlord friendly. Then identify the metropolitan areas within those states that have growing populations, growing jobs, strong incomes and modern/diverse economies. Don't look for cash flow alone, You'll never get wealthy from cash flow alone. Real wealth comes over time from rental income and equity.
We think the Midwest is a GREAT place for OOS investors to consider!
YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.
Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
4y
Hi Abel, Welcome to Bigger Pockets!!! Continue listening to podcasts, audio books and reading books, articles, forum posts to get strong in the mindset because it will go a long way in your journey as an investor.
I am an out of state investor and invest primarily in Cleveland with Small multi family and Single family homes. Feel free to connect if that is a strategy you want to explore.
Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 464 posts · 254 votes
4y
Hi Abel-
Congratulations on starting your education in real estate investing and coming to Bigger Pockets for networking support.
I agree with several comments already shared that you should focus on one area and become an expert in that area, look for an investor friendly agent in that area to help you build your team and avoid costly mistakes. I also think Southeast Michigan offers great investment returns at a reasonable price point with a diversified economy and abundant natural resources.
I am based in NYC and new to real estate investing. So far I have been reading Rental Property Investing by Brandon Turner. I am interested in single family rentals or multifamily. However I am in a very expensive market and the barrier to entry is very high. Are there any experienced investors in the city whom I can connect with to ask questions? I am also looking into out of state turn key properties, especially Dallas. Does anyone have recommendations which cities I should look into?
Thanks,
Hi Abel, NYC is a different beast when it comes to real estate investments. I would say multifamily are better investment than single families unless it's a quick flip. But the investment strategies depend on the cash available to you, mortgage qualification, short and long term goals, cash flow or appreciation etc. I'd be happy to dive into this with you and discuss your personal sitation and how it can applied to NYC market.
NETWORTH BUILDERS5236 Reviews
Logical Property Management4.9458 Reviews
FIRE Realty Team - Keller Williams5379 Reviews