Looking to purchase first Rental property (need help)
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Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
2yQuote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
It's not easy, but I'm still able to find off-market properties in Florida that meet the 1% rule. In fact, I'm about to start promoting a property in Kissimmee, FL, where I was able to secure seller financing under contract with a 40-year amortization at 3.5%, and a balloon payment due in year 20. This results in a principal and interest of $1,181/month, while the market rent is $2,100/month, and the property is rent-ready.
38 Replies
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2yIf the rent is paying the mortgage in Virginia, thats a good deal. At 75% leverage most would be cash flow negative with todays rates.
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
District Invest Group546 Reviews - Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2y
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
It's not easy, but I'm still able to find off-market properties in Florida that meet the 1% rule. In fact, I'm about to start promoting a property in Kissimmee, FL, where I was able to secure seller financing under contract with a 40-year amortization at 3.5%, and a balloon payment due in year 20. This results in a principal and interest of $1,181/month, while the market rent is $2,100/month, and the property is rent-ready.
- 2yLogan LaperriereBusiness MemberReal Estate Agent · Grand Rapids, MI · Member since 2023 · 333 posts · 124 votes
Congratulations on starting your real estate investing journey!
I am an Agent and Investor in Michigan. The areas where I invest I am still able to find cash flowing properties. I recently purchased one, purchase price $173K PITI $1323 monthly rent $2300. The deals are still out there. As a new investor looking for out of state properties make sure that your agent is well versed on investment properties. The midwest has many good areas to invest. - Property Manager · Member since 2022 · 196 posts · 125 votes2y
Bigger Pockets Podcast is a good educational tool. Youtube has unlimited resources as well.
Books;
The millionaire real estate investor, The book on rental property investing, HOLD, Long Distance Real Estate Investing
In-person;
Best thing to do is to learn from people doing it. Start by finding local REIA's in your area. They could be on facebook, mortgage companies host them, real estate teams host them, and so on. Just get in a room with othet investors and industry people. Show up consistently. Shake hands, have genuine convos, collect numbers, and begin building relationships. Then see if anyone will mentor you (a GREAT mentor will want value exchange... buying them coffee may not do it)
Where to invest;
I can only speak to what I know but the Rhode Island, SE/NE Connecticut, and some Southern MA markets are all pretty hot. We have Boston people, New hampshire people, New York people all moving money into those areas. Let me know if you need help.
- 2yMilton ChamberlainPro MemberReal Estate Agent · Kansas City, MO · Member since 2019 · 235 posts · 107 votes
Hi Nay,
Question: good learning materials?
Answer: Bigger pockets book and podcasts are packed with great info for those just starting out. and then these forums are great too.
I live in and service the K.ansas City Metro in MO and KS. Unfortunately, most anything here in the metro that will immediately cash flow well and also have a good CAP rate and COC return is going to be something that requires a rehab. Many of these deals require hard money loans/cash due to property conditions and competition from other investors. But occasionally, you can find an ok one that can be financed on the MLS.
In addition, a rehab deal OOS certainly contains risks and pitfalls for Beginner investors. Unless you have a solid team of realtor, contractor, and lender that you have developed trust with, the endeavor would be difficult to pull off well.
That being said, I don't ever want to be the one to tell you not to try something, but if I were you and I was doing my first deal as a rehab, and my budget needed to be spot on, I would try and do it local so I could be there in person and turn it into a learning experience. Better yet, I would take advantage of the Feds incentivizing owner occupying loans by opening it up to 3 and 4-plexes, and house hack where I live, taking advantage of the low down payment and lower interest rates. But I understand you already have a home, so that may not be possible.
There are 'Turnkey' multis in my market that you could immediately buy and rent out and have ok metrics (cash flow, COC return, CAP rate)
an example of a typical 'turnkey' deal you can find easily in the metro:
1101 - 1103 N Aztec Court, Independence, MO 64056
Available in the metro in a C+ area with a good school district. Just lowered price today by 15k. If you were to buy at listed price of 215k, traditional lender would require 25% down and buying down 1.25 points for a 7.625% rate. (Once again, the feds have made it harder and more expensive for smaller investors)
Cash to close:~$56,000
(seller pays closing costs)
Rental income: $1,600
cash flow: $79 /monthCoC ROI: 1.71%
CAP rate: 6.8%You could maybe negotiate and get these numbers a bit better, but that's about what I would expect in the 'turnkey' realm
There are much better deals (on paper) available, but you begin to tread into higher crime areas where the tenant pool is not great, and the associated costs of theft and vandalism expenses, and the expense of mitigating theft and crime (security cameras, caging in AC units, providing off street parking) are difficult to manage for a beginning OOS investor.
Or they may require some rehab of some kind to make it rentable.
ALL that being said, if you ever want to connect and learn more about my market, reach out!
- 2yChris SvendsenPro MemberFront Royal, VA · Member since 2016 · 306 posts · 240 votes
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
What part of VA you looking around? I recently left VA and rentals have there doing well. Also just but a 4 plex in PA for 180k and estimated rents going to be $2800 total amd have about 10k in repairs to do. This was a standard MLS deal. There are deals to be found, patience is needed at times though.
- 2yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
RetiredMD offers a great program for this and good courses and community for you to share specific details on. Give that a try!
The Elle Group5154 Reviews - 2yAaron HowellBusiness MemberReal Estate Agent · Crozet, VA · Member since 2014 · 436 posts · 223 votes
@Nay Russ welcome to Bigger Pockets to begin with ! Locally, finding a cash flowing rental is tough with superfunding the downpayment. The local market is still hot despite the rates because of inventory so you may have to get creative with the space and local zoning has changed to help recently.
Story House Real Estate529 Reviews - Turlock, CA · Member since 2021 · 24 posts · 15 votes2y
Congratulations on entering the realm of investing! Take advantage of resources like BiggerPockets forums, podcasts, books, etc. While I reside in California, I manage several properties in Ohio and operate a Short-Term Rental (STR) in Tennessee. A crucial factor for success is establishing a reliable team on the ground. Once you've found a trustworthy team, the process of scaling becomes much smoother. Best of luck in your investment journey!
- Investor · WI · Member since 2020 · 32 posts · 15 votes2y
Hey Nay, excited for you to start your journey! Hoping I can help you two out a bit here.
Whether you choose to purchase your first multifamily or single family income generating property, a major key you're going to want to know is not to bite off anything you can't chew so you don't find yourself in extraneous debt positions and overly large rehab projects or timelines. When you're just looking to start investing but don't have unlimited capital, I've seen a not-so-common but very successful method of scanning small town, seasonal, or rural markets (off-market preferred) that have older homes needing an easy facelift. (New carpets, Siding, Paint, maybe just a few appliances)
The reason being is that many (many) people seem to forget that rental housing is incredibly hard to come by in small towns or outskirts of cities where the primary industries are medical clinics, restaurants, bars, farms, and factories. A lot of independent contractors or blue collar workers reside in these areas as well (trade skills are prevalent). If you haven't seen it already in your area, midwestern investment groups (The big guys) are just starting to catch on in the last 2 years as more 100-250+ unit buildings are going up in these towns. But newer investors have an opportunity to take care of small town communities and provide housing for those who work often but aren't ready to settle down.
I've helped a good friend purchase an older and larger farmhouse in rural Wisconsin, which he then flipped it into two units by rehab and adding a second entry way. By the time he was ready to lease the applications came in quickly due to the rent being more affordable than inner city units and fulfilling a great need for rental housing in the more rural areas or outskirts of town. After a few years you could likely sell to a new investor or even a long term tenant while moving on to other adventures. These are all just possibilities on ways I've seen people get a foot in the door in this market.
If you're looking for good materials learning how to get started I've put together a leasing guide for new or self-managing landlords/investors. Its 22 pages, step by step on how to actually lease your property, and straight to the point. I also make myself available for people who use the guide to answer questions by phone while you learn how to get your properties rented. Connect with me if you're interested and good luck!!
- 2yAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
Hi Nay! I recommend taking a look into the Columbus market. Cashflow and Appreciation are both great over here. It is one of the fastest growing tech cities in the midwest. Most of my clients look into areas like Old North, Old Town East/King Lincoln-BronzeVille, Merion Village, Driving Park, North Linden, Hungarian Village, Bexley, and North Hilltop.
ReafCo | Ahmed Group 55 Reviews - Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Nay Russ welcome to the forums and congrats on the first post! I work with hundreds of investors who like the southern/middle part of the country because the price points are easier and the laws are more friendly. Feel free to reach out if any questions arise. Best of luck on the journey!
- 2yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesHey Nay, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
just to be blunt - it's very difficult right now to buy a vanilla LTR with conventional financing and get any cash flow at all, anywhere.
@Milton Chamberlain gave you a great example. you'd need $56K... to get $79 a month. to me, that makes no sense. so, you either have to be willing to be creative, or look off market, or house hack, or accept less cash flow, or some combination.
i'd encourage you to start locally even if the price points are higher. or go a couple hours away, rather than buying a random property in the midwest thinking it's a great deal, and then having capex eat 10 years of your cash flow. like this guy.
https://www.biggerpockets.com/forums/48/topics/1160450-run-i...
- 2yRebecca KnoxBusiness MemberSpecialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
Milwaukee, WI
Waukesha, WI
- Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes2y
Hey Nay, welcome to BiggerPockets! It all comes down to what you're aiming for. If consistent cash flow is your priority, Cleveland's stable rental market could be the market for you. If maximizing property value is your focus, Columbus' booming population and strong economic factors could be your ticket to faster growth but before diving in to these markets, it will be essential for you to build your Core 4. Would love to connect if you need to know more. All the best!
- Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes2y
Hi Nay, see the comment by @Rebecca Knox. She nailed it. I live in LA and invest out of state. Currently in SE Wisconsin. Think about this for a moment: how many people have mentioned this market? Don't we usually hear Columbus and Cleveland? And years past is was Dallas and Houston... My strategy since 2009 has been to go into markets early (even first) and ride the wave up. There needs to be research behind it of course so you are confident the market will grow. Let me know if you'd like to connect and I can give more info.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
@Tim Ryan we have been going for a while:
Milwaukee prices have almost doubled in the last decade and we just finished another year with 7.6% median price increase. Outlook for 2024 probably the same. In the first half of 2023 Milwaukee was one of the top 5 most competitive markets to buy in the US and Rentcafe had Milwaukee the third most competitive rental market in the US in their December report.
So a lot has already happened here, but I think there is a very good case to be made that this is only the beginning. You can find a video on YouTube called: Milwaukee: Where are home prices going? to take a look at the data and the big picture trends.
Money always goes where it can buy the most, so national home prices are bound to equalize, especially given remote work. And Milwaukee is seeing a major reconstruction of the freeway system and the downtown area, not to mention the Majors initiative to grow the pupulation of the city to a million people, which would bring the metro area to over 2 million.
- Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes2y
@Marcus Auerbach It might surprise you that I'm experiencing these same growth numbers in Racine. Most locals laugh or look at me funny when I say that city. Good! In the meantime, we are doing well there.
- 2yJake BarrBusiness MemberReal Estate Agent · Milwaukee, WI · Member since 2023 · 17 posts · 9 votes
Hey guys,
Love to hear that you are looking to enter into the realm of real estate investing! If you're considering investing out-of-state, Milwaukee could be an excellent choice. The median home price in the city is around $180,000, making it a cost-effective market for investors. Additionally, the rental market in Milwaukee is robust, with a median rent of approximately $1,200 per month, providing opportunities for positive cash flow.
For learning materials, a book that I liked was "The Book on Rental Property Investing" by Brandon Turner. Additionally, being apart of the Bigger Pockets community like you already are is the best place to be to find cumminity and people to help!
Given your goal of holding multiple properties, leveraging the equity in your Virginia home to invest in Milwaukee could be a smart strategic move. Remember to conduct thorough market research and due diligence, but Milwaukee's affordability and rental income potential make it a compelling option for out-of-state investors like yourselves. Best of luck on your real estate investment journey!
- Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes2y
Quote from @Tim Ryan:
@Marcus Auerbach It might surprise you that I'm experiencing these same growth numbers in Racine. Most locals laugh or look at me funny when I say that city. Good! In the meantime, we are doing well there.
Racine is off most people's radar. We moved to Racine County about 2 years ago and it's a good untapped market!
Greg
- Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes2y
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
I'd suggest investing here in the Columbus, Ohio market. The deals we bring our OOS investors typically meet or exceed the 1% rule. 2 weeks ago we helped an OOS investor purchase a home with an ADU in the back. The market rent for the house is $1200/mo and $650 for the ADU. The purchase price for this property is 140K. Also, Columbus has an economic base that is growing substantially, which is resulting in significant appreciation. We also have an in-house property manager to make investing here hassle free.
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Nay Russ you might also want to consider Detroit
https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/
More importantly, trust NO ONE!
Ask a lot of questions and do your own research.
Otherwise, you'll just get taken advantage of:(
Logical Property Management4.9446 Reviews - Realtor · Chevy Chase, MD · Member since 2023 · 74 posts · 51 votes2y
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
Hi Nay! If you are interested in looking outside of Virginia, DC and Maryland are also great areas to explore for rental properties. As someone else mentioned, if you're planning on being out of state, a reliable and hands on team will be incredibly helpful!
- Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 654 votes2y
Quote from @Nay Russ:
Hello Everyone!
We are looking to purchase are first rental property to generate extra income. We eventually want to keep purchasing more and hold multiple properties. I am willing to study and learn all I can about the industry. Can anyone point us in the direction of learning materials for beginners? We live in Virginia and multi families are not abundant here, and when we do come across one they are either too expensive and the rent would just be paying the mortgage. We are looking to be OOS investors. What states are good that are not super expensive were the property will appreciate but will also be able to bring in a monthly income? We are looking to take money out of our current home to help fund this first purchase.
Thank you all in advance!
The eastern shore of md is a great market imo, you can still get new construction under 250k & get pretty close to the 1% rule on new construction which is crazy to me,now that said I’d be very wary about talking too much cash out of your home, it kills cash flow because you are paying two loans, and while I do believe interest rates are coming down being on a revolver is a constant risk, I’d definitely have a plan to pay it off quickly if you get a heloc.
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