First time REI question. Long distance or home area advice.
Hello All. I am brand new to bigger pockets and real estate investing. I have been researching buying rentals for the past 8 months and am starting to complete my own valuations using valuation calculators and now BP calcs. I even have started practicing walk throughs at properties with no intention of buying. I am now just getting comfortable with the idea of actually pulling the trigger on jumping in. My goal is to buy for cash flow but would not mind the equity that comes with it overtime. I am looking to hold longterm. I live in New Jersey and real estate is not cheap here. I currently have ~$100K to use toward a down payment without tapping into my other investments. My options are really limited to smaller SFH or duplexes that need repair. I am in the construction field and can easily undertake a mostly cosmetic project (kitchens/bathrooms/finishes). However, I am finding that I can buy long distance for much cheaper and the rents support a more healthy cash flow situation than real estate in the northeast. I have not looked into long distance REI as much, but I know many investors do invest long distance especially in the mid west. Being that this is my first rental property purchase, should I be more focused on purchasing in my back yard and learning the process, even though finding deals right now is more difficult? Or would putting this on hold and learning more about long distance investing be a better option?
Thank you!
split the difference. find a market within 1-4 hours that you can drive to where prices are slightly more accessible. go to REIA meetings, meet agents and PMs, walk properties like you're doing. you being in the construction field is a huge advantage... that you eliminate if you buy something long distance.
I do not know the northeast well and certainly many people do long distance investing. I may suggest looking for off-market deals in smaller towns around your area. Drive for dollars, go to meetups and tell everyone you meet you are looking to buy a house or duplex to fix up. Doing a couple on your own will guide you when it is time to go to other markets to make as sometimes you do not know what you do not know and learning those lessons near you is much better in my opinion. Also the fact you are a contractor really is a great competitive advantage for you.
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Real Estate Agent Iowa (#S68688000)
- https://linktr.ee/jaredhottle
Quote from @Mark Bistis:
There are pros and cons to both options.
Personally, I would avoid investing in a state that increasingly favors tenants that violate contracts. Keep in mind my position is based on what I see here on BP; I have no first-hand experience.
Your money will go much further in other markets. Yes, you have to pay for someone to manage it, but a good manager may put more money in your pocket while protecting your time and sanity. If the property is local, you'll spend your time managing it and it may become a burden. A large percentage of DIY Landlords don't keep up with market rates, fall for fake sob stories, don't know how to deal with bad behavior, don't understand the law, etc. I've seen self-management cost so many Landlords tens of thousands in losses.
Thank you all. This is great information. I am going to start looking at attending meet ups.
@Nathan Gesner- When you say states that favors tenants, I assume you mean NJ. How is PA?
Quote from @Mark Bistis:
Thank you all. This is great information. I am going to start looking at attending meet ups.
@Nathan Gesner- When you say states that favors tenants, I assume you mean NJ. How is PA?
Pennsylvania is considered Landlord friendly. You can Google search "Landlord friendly states" and get different lists, but they're mostly the same: https://www.fortunebuilders.co...
On the flip side, do a Google search for "Landlord friendly [state name]" and you'll find information about specific states. Here's one for NJ: Is New Jersey Landlord Friendly?
Always start with the market you know, gong long distance or out of state can be difficult if you don't know what you are doing, so get a few under your belt local before venturing out.
Hi @Mark Bistis you sound a lot like me when I first started. I almost pulled the trigger out of state but luckily I never did and decided to stay in NJ. My wife and I have been house hacking around the state with 4 kids and 2 dogs. We started with 100k liquid just like you. The amount of equity, cash flow and all around systematized business we would not have achieved in many other location. We are at a point now were we have reach levels of financial freedom in a relatively short period of time and the bulk of our days is spent helping others do the same.
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Real Estate Agent New Jersey (#1326442)
- https://shawnmcenteer.exprealty.com/
Quote from @Shawn Mcenteer:Thank you Shawn. Much appreciated. I may be contacting you sooner than later.
Hi @Mark Bistis you sound a lot like me when I first started. I almost pulled the trigger out of state but luckily I never did and decided to stay in NJ. My wife and I have been house hacking around the state with 4 kids and 2 dogs. We started with 100k liquid just like you. The amount of equity, cash flow and all around systematized business we would not have achieved in many other location. We are at a point now were we have reach levels of financial freedom in a relatively short period of time and the bulk of our days is spent helping others do the same.
@Mark Bistis, New Jersey is a tougher market to start in, especially if you want positive cash flow. I would look more towards the midwest/Central region, or parts of the southeast. It may be best to use a turnkey company to find those properties, although I would be careful. Many turnkey companies' numbers haven't been great lately due to rising interest rates.
Hey Mark, it's great to hear you've been soaking in the knowledge lately! I don't know anything about your personal situation but it sounds like house hacking would be perfect for you! $100k is plenty for 3-5% down payment on a house hack. This is basically training wheels for REI. It's really hard to mess this up and really easy to hit a financial home run. I would use that money for the down payment, closing costs and renovations for a house hack in an awesome location where you can live and rent out other space. You'll most likely have plenty of money left over for reserves and other investments. In a year you can repeat this! Good luck Mark!
Always start with the market you know, gong long distance or out of state can be difficult if you don't know what you are doing, so get a few under your belt local before venturing out.
