First time investor and which markets

[Michael Delgado]

Hey all,

I am looking for some advice as to what to do. We are looking to start our real estate journey and hopefully own enough doors to retire early. Me and my wife are 41 and have access to roughly 500k in assets such as stocks that we would like to shift towards our housing journey. We both are teachers in NYC so even if we retire early we will have a decent pension as part of our income. My question is... where would you begin? We would love to be in driving distance for our first property but realize that anything drivable from NYC isn't the best ROI. Is there a market that anyone suggests for growth and or decent roi not in the NYC area? I see people mention areas of Ohio, Texas, and Florida. Also, would you do single family homes or multi?

I have been a long time lurker and love the wealth of info you all provide and finally looking to jump into it.

Thanks a bunch,

Mike

[Bob Stevens]

Hello, well 500k will get you little to nothing in NY, I am originally from there. All you need to do is connect with those that provide hands free rentals. 10% NET caps are to be had. Its all about knowledge and your team 

[John Mausteller]

Mike, 

That is exciting that your wife and you are starting your real estate journey.  500k in assets is a good starting point and I think there is quite a bit within driving distance (if you don't mind a drive of up to 8 hours).  Have you looked at all the coastal towns up and down the east coast?  Florida is a good spot to look as well but a lot of the beach towns there might be maxing out your budget.   I own a few short term rentals in the outer banks of north carolina and I also sell real estate here - you can still find affordable properties that offer a good return ( plus depending on when you retire and when you buy the first few properties , they could be almost paid off by that time which would equal great cash flow ).      I also own a few STRs in the mountains of NC and that is a 7 - 8 hour drive for me , so close enough that if for some reason I need to get out there, I can make it happen.    Good luck and keep us posted on your journey! 

[Caleb Brown]

Happy to chat on doing OOS. KC is a great place, good mix of appreciation and cash flow

[Steven Foster Wilson]

Quote from @Michael Delgado:

Hey all,

I am looking for some advice as to what to do. We are looking to start our real estate journey and hopefully own enough doors to retire early. Me and my wife are 41 and have access to roughly 500k in assets such as stocks that we would like to shift towards our housing journey. We both are teachers in NYC so even if we retire early we will have a decent pension as part of our income. My question is... where would you begin? We would love to be in driving distance for our first property but realize that anything drivable from NYC isn't the best ROI. Is there a market that anyone suggests for growth and or decent roi not in the NYC area? I see people mention areas of Ohio, Texas, and Florida. Also, would you do single family homes or multi?

I have been a long time lurker and love the wealth of info you all provide and finally looking to jump into it.

Thanks a bunch,

Mike

 Hey @Michael Delgado, first of all welcome to Bigger Pockets. Investing in the right market is always one of the biggest decisions you have to make on your real estate journey I'd choose the in-state option for starters provided that your local market can give you that 1-2% rule deal and if it's affordable. If that isn't available locally, then you should consider out of state investing but do your due diligence.

There are a lot of out of state markets to choose from but before jumping in on this, make sure you have the right systems in place. Get a professional project manager, build a reliable team and get proper education of the market you're investing on.

The risk will be there but you'd be able to lessen it. The key is to make sure that you have those systems in place.

You can learn more from this link here: https://www.biggerpockets.com/...

Choosing which out of state market to put your investment on will depend on your goals. My personal recommendation is if you're looking for cashflow. Look into Cleveland, its got good cashflow potential with appreciation happening as well.

Looking for appreciation come to Columbus, there are still 1% deals, but the more attractive part is the population growth and other economic drivers.

[Account Closed]

Hey Michael,

I feel your pain not being able to invest locally and get any cash flow. I live and work as an acquisitions analyst at a real estate investment advisory firm in Denver and we refrain from touching this market where a $500,000 home rents for $3,000. 

I deal with clients who are often first-time investors that are looking to invest out of state. We are investing in two midwestern markets where we are able to find good appreciation prospects as well as cash flow. 

Many of my clients don't know where to start and that is where I can potentially be of help. If you'd like to hear more about what we do to help investors get started, I'm happy to chat. Not trying to sell anything.

Thanks

[Account Closed]

Also, single family vs. multi family depends on the market and the environment and I do not believe one is necessarily better than the other despite all these 21-year-olds on social media telling you how silly you are to own a single family rental as opposed to a 300 unit building.

[Account Closed]

Quote from @Caleb Brown:

Happy to chat on doing OOS. KC is a great place, good mix of appreciation and cash flow

 Yes, we are buying up Blue Hills, Independence, Raytown, some Marlborough Heights. 

[Caleb Brown]

Quote from @Account Closed:

Quote from @Caleb Brown:

Happy to chat on doing OOS. KC is a great place, good mix of appreciation and cash flow

 Yes, we are buying up Blue Hills, Independence, Raytown, some Marlborough Heights. 

 All hot areas

[Wale Lawal]

@Michael Delgado

Make sure to consume contents here as much as possible and feel free to ask any questions you may have. We are here to help each other grow.

Get as much knowledge and experience as possible and find a mentor.

Join real estate investment clubs.

I am a real estate agent and investor in the Austin and Dallas market.

Rent growth and appreciation is steady.

These cities tend to command quality tenants, and they have great schools.

Get in touch with a local agent or investor and shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

All the best!

[James Wise]

Quote from @Michael Delgado:

Hey all,

I am looking for some advice as to what to do. We are looking to start our real estate journey and hopefully own enough doors to retire early. Me and my wife are 41 and have access to roughly 500k in assets such as stocks that we would like to shift towards our housing journey. We both are teachers in NYC so even if we retire early we will have a decent pension as part of our income. My question is... where would you begin? We would love to be in driving distance for our first property but realize that anything drivable from NYC isn't the best ROI. Is there a market that anyone suggests for growth and or decent roi not in the NYC area? I see people mention areas of Ohio, Texas, and Florida. Also, would you do single family homes or multi?

I have been a long time lurker and love the wealth of info you all provide and finally looking to jump into it.

Thanks a bunch,

Mike

 Welcome aboard M-Dawg

[Damon Bodine]

Hey @Michael Delgado. Welcome!    Sounds like you guys have a dry powder to work with which gives you a ton of options going into this cycle.   

Things I might suggest.  
#1. If you're in nyc for the long haul think about your own personal residence situation and how you're calibrated there.   NYC isn't always an amazing cash flow market but we are in a shifting market right now.   There is more negotiability in the multi family market than there has been in a while.  
#2.  I wouldn't automatically disqualify the markets in driving distance from NYC or even in NYC itself.   I've met investors who've done very well in Upstate ny, Connecticut, new jersey.  I've personally done well investing in philadelphia.   There are opportunities.  
#3  I would try to further define the goals.   Kind of defining if your goal is growth or cash flow.   Cash flow you'll find a lot of great markets in the midwest.   Conversely growth you might opt to look into the southeast etc. 
#4   Inevitably there are great deals to be had in every market.   Personally I can't emphasize enough how important the right team (PM, Contractor, Agent, Lender) are to success.  If I was starting again I would focus more of my time on finding the elite players in those positions.  Learning to right questions to ask, how to have a better BS detector etc.  
#5.    There are a ton of great meetups in NYC  with investors focusing local and out of state.  I've found them incredibly helpful at all stages of my journey.     

[Nate Sanow]

Quote from @Damon Bodine:

Hey @Michael Delgado. Welcome!    Sounds like you guys have a dry powder to work with which gives you a ton of options going into this cycle.   

Things I might suggest.  
#1. If you're in nyc for the long haul think about your own personal residence situation and how you're calibrated there.   NYC isn't always an amazing cash flow market but we are in a shifting market right now.   There is more negotiability in the multi family market than there has been in a while.  
#2.  I wouldn't automatically disqualify the markets in driving distance from NYC or even in NYC itself.   I've met investors who've done very well in Upstate ny, Connecticut, new jersey.  I've personally done well investing in philadelphia.   There are opportunities.  
#3  I would try to further define the goals.   Kind of defining if your goal is growth or cash flow.   Cash flow you'll find a lot of great markets in the midwest.   Conversely growth you might opt to look into the southeast etc. 
#4   Inevitably there are great deals to be had in every market.   Personally I can't emphasize enough how important the right team (PM, Contractor, Agent, Lender) are to success.  If I was starting again I would focus more of my time on finding the elite players in those positions.  Learning to right questions to ask, how to have a better BS detector etc.  
#5.    There are a ton of great meetups in NYC  with investors focusing local and out of state.  I've found them incredibly helpful at all stages of my journey.     

This is solid advice. As much as I love OOS REI coming into my market. I also think starting out it's wise to keep investments tangible and in person for as long as possible.

[Sam McCormack]

@Michael Delgado

You are right about Ohio, areas like Columbus, Greater Cincinnati, and Cleveland are good markets depending on your targets. I am in Cincinnati, and if you are looking in Cincinnati/NKY, let me know! I have the contacts and there are properties around here for deals to be done! Let me know!

[Mohammed Rahman]

Hey @Michael Delgado - congrats to both you and your wife for wanting to take the first step! 

As you post more questions like this in the forums, you'll learn that everyone's opinions might pull you in different directions. My recommendation, as an investor & a realtor, is to sit down with your wife and figure out what your goals are. 

I don't mean deciding whether or not you want to invest in real estate, I mean what avenue of REI you're wanting to explore. There's buy & hold, BRRRR, flip, foreclosure investing, etc. and a whole lot of other options that offer different standards of returns. To best figure out where you want to start, I recommend the easiest thing to do first: get your hands on a couple of books (BP has a few too) to figure out which direction is best.

My advice would be to learn what your appetite for risk is - based off what you've described, and my experience with working with others in your shoes, you might lean towards a property that is more turnkey (i.e. less up front work needed from the buyers). You just buy it, turn the key, and rent it out :) 

You might pay a bit of premium, but depending on what your goals are - it may be worth the headache. 

Please DM me as I'm happy to point you in the right direction - my sister is a teacher in Queens as well, thank you for your work! 

[Alex Evans]

Hey @Michael Delgado

I always recommend the Memphis, TN market for people to look at! Memphis is a market where your money can go so much further than a lot of other places in the country. Memphis is a marker that a lot of people look to when they are trying to increase their income. It has been a market that many people have turned to because it provides a lot fo stability, cahs-flow, and appreciation! 

I would be more than happy to speak with you about investing in Memphis! Feel free to reach out! 

[Alyssa Dyer]

Congrats, that’s huge you’re jumping in. 

I always tell people to start with the end in mind. What’s your goal with investing? Cash flow to replace income? Tax benefits? Assets to pass to family members? 
ideally all of the above happen, but usually people have a single goal in mind as a starting point. 

Usually the goal will help narrow down markets. For example, I wouldn’t invest in NYC if cash flow was my goal, and I wouldn’t invest in OKC if appreciation was needed to hit my goal). 

Once you have your goals defined and know the strategies that’ll help you hit your goal, narrow down to some markets that help with that goal. 

From there, interview some teams (sales, and management companies). I generally suggest making the final call based on a team you can trust. Because  great teams will make average deals perform but bad teams can yank great deals.  

If you end up looking for a cash flow market, I’m happy to chat about OKC. If you end up looking in other markets I’m happy to help refer you to some people I’ve work with. Good luck!!

[Carlos Albarracin]

Congrats to you guys! Definitely much you can do with the 500K? Are you willing to invest conservatively or aggressive? 

You can start fix and flip or invest out of state for higher ROI, but keep in mind you will need a team- contractor, plumber, property manager, that can maintain the property going (cash flowing) even when you are not there.

We have dealt with many buyers coming into NJ from NY, and even the market now people want to be as close to the city as possible. Areas such as Newark, Elizabeth, Linden to name a few. It would great to consider close to state or in-state at least. 

Definitely keep us posted on your real estate journey!

[Shawn Mcenteer]

Hi @Michael Delgado North Jersey has always treated us well. You sounds a lot like myself, I was working in NYC as  carpenter when I cashed out about 100k of assets.  Since doing so My wife I turned that into substantially more via house hacking to the point I no longer commute to NYC and now focus full time on real estate.   Having liquid cash is huge in our market, it will allow you to potentially value add comfortably and really compound those funds via forced appreciation plus raise rents.  Any questions regarding House Hacking feel free to reach out. 

[Patrick Drury]

@Michael Delgado
You should look into Columbus, and Cleveland OH. Columbus is a nice balance of cash flow and appreciation. Also, it has lots of job opportunities and population growth. Cleveland is just a great market for cash flow.

[Michael Delgado]

Quote from @Patrick Drury:

@Michael Delgado
You should look into Columbus, and Cleveland OH. Columbus is a nice balance of cash flow and appreciation. Also, it has lots of job opportunities and population growth. Cleveland is just a great market for cash flow.

Are apartments appreciating as well or mostly single family homes are having more upside in Columbus?  Thanks for reaching out 

[Sebastian Villacis M.]

@Michael Delgado

I am kind of in the same spot as you. Live in NY, early 30s, and want to invest. I have been looking a lot into Cleveland. I have been researching and gathering as much information as I can before jumping in. I already spoke with couple real estate agents (investor-friendly) and there is only one thing that both of the agents told me, which I believe is a big deal given the fact that a lot of people in this forum are recommending and it has to do with finding a good team. Both of the agents I reached out have told me that getting a hold of a good contractor in the Cleveland area can be a headache. They pointed out that they are all busy, the lead times are crazy, and that they are not finishing on time, so I decided to adjust my strategy to find a property that has already been renovated or that maybe needs a just a tiny bit of work (something that wouldn't take more than a week or 2). This will drive the property price up if you want a good area. We are planning to buy a duplex which will require 25% down since it will be an investment property and use it as MTR for traveling nurses but now I am stuck figuring out if Cleveland is attracting travel nurses. Otherwise, I will have to stick to LTR and get a low cash-on-cash return (around 3 to 5%) and go with it. Hope this works and  I wish you the absolute best in your journey.

[Eric Fernwood]

Hello @Michael Delgado,

Choosing a location should be based on your goals, not others' opinions.

From what you shared, I gather that you want to build a dependable passive income that can replace your job income (a very common goal for my clients). If so, it requires:

• Reliability - Your income continues even in difficult economic times.
• Inflation-Compensating - Rental income increases faster than inflation, compensating for rising prices.
• Persistence - Your income will last; you and your spouse won't outlive it.

These depend on the location, which is why the investment location is critical.

Below are the criteria I used to select my investment location.

• Rents and prices keep pace with inflation. Unless your rental income rises faster than inflation, you will not have the additional dollars you need to maintain your living standard. Eliminate any location where rents or prices did not keep pace with inflation.
• Metro area population size greater than 1M. Small towns may rely too much on a single business or market segment. - Metropolitan statistical area
• Both state and metro populations are increasing. Do not buy anywhere state or metro populations are stagnant or decreasing. - Metropolitan statistical area
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.
• Low operating cost - High operating costs can turn what appears to be a profitable property into a money pit. The three most obvious are income taxes, property taxes, and insurance. Below is a comparison between three popular investing states. (Sources: Property Tax, Insurance Cost.) The costs in the major metro areas can be higher.

• Rent control - Some states and metro areas have implemented various kinds of rent control. Rent control may prevent you from increasing the rent fast enough to keep pace with inflation. It may limit your property manager's ability to select the best tenant. It may make evictions of non-performing tenants difficult or impossible. Never invest in any location with rent control.

Once you choose an investment location, the next steps are choosing a good tenant pool segment and good properties. Let me know if you want information on these steps.

I hope this helps.

[Eliott Elias]

Begin in your back yard, a area that is easily accessible to you and a area you understand. Historically there may not be good deals out in your market, but now is the time to find them. If every there were going to be deals to be found it's now