Beginner looking for advice

Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes

2y

@Nick Johnson- if possible - try to buy your 1st property close ( or realtively close ) to where you live so that you can be avaiable should anything be needed ....once you obtain some experience - longer distant is easier ......of course buying your first place long distance is fine as long as you have a team in place to assist . First step is to get fully pre approved for a loan ( assuming you will need one )

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Diran Deukmajian

Contractor · San Diego, CA · Member since 2024 · 43 posts · 27 votes

2y

Quote from @Nick Johnson:

Hello everyone,

I have been looking to get into real estate for sometime and finally want to take the next step and secure my first property. Over the last few months I’ve been trying my best to learn as much as I can to gain knowledge in the business and help me make good decisions.

My first issue is I live in a HCOL area (NY) and investing locally seems like numbers are not worth it. I’d have to spend big money on a downpayment and most properties won’t even cash flow enough to make it a good deal.

I am now trying to learn as much as I can about investing out of state. I finished reading long distance real estate which was very helpful in showing that it is feasible to buy properties out of state.

I have a good full time w2 job so coming up with a down payment is not an issue. I just am having issues feeling confident in an out of state market that I have no clue will be good.

I’m looking for advice on what I should be doing to get where I need to be. So far I’ve read long distance real estate, rental property investing and abcs of real estate. I’m also reading forum posts and listening to the bigger pockets podcast when I can.

My goal is to buy my first rental property this year, preferably a duplex and would like to get to a point where I feel confident to put my money down and make my first deal. I currently am not a homeowner so this would be my first property all together.

Thank you for the help.

Hey Nick. That's great you are starting to invest in properties. From experience, I would begin by investing somewhere near your hometown. You might have read all the books, but actual experience counts just as much. Believe me when I tell you, there are a lot of tenants that can cause problems. Being out of state can really drain you and your bank account, by flying back and forth trying to deal with a horrible tenant.
Work with something that is close to home, get some experience, then start investing further out.
Good luck!

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Mark Brown

Member since 2022 · 30 posts · 18 votes

2y

You're in a great position! Your DTI will be low and you'll qualify for many loans. I'm guessing you're not going the partner route based on your comment about your income. If I were you I would do something a little different. I would look for any class D neighborhood in my same CITY or STATE. Or I would look for a class B neighborhood and buy a rehab job since you have the capital. Think about it, if you paid 20% down for an inexpensive buy and hold property then paid for a rehab, you'd possibly be around the same amount in terms of expenses. Not to mention instant equity and possibly setting you up well for the BRRR strategy after seasoning period.

Otherwise you'd need to figure out how to be a remote landlord in an unfamiliar market. One caveat is if you can get a REALLY cheap turnkey multifamily in an adjacent state it might be worth it.

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Dave Hagen

Chicago Area, IL · Member since 2024 · 54 posts · 49 votes

2y

Investing local makes it easier to start, since, even if you get a property manager, you can easily check up on the property, and the property manager.

For a first property, you might want to look at a 4-unit property in the area you would like to live in. You can obtain a personal property loan, cheaper than a loan on an investment property, if you live in one of the units, and in some areas, it can cash flow on the remaining 3 units. And you can still house hack and rent out any additional bedrooms in your unit. Figure in a 10% property manager expense on the 3 rentals, just in case you want to go that route.

Even if it doesn't cash flow, and you pay full rent, you have a property you can easily check on, and for a first property, have fewer problems than an OOS property. And after a year, you can get another, with the cheaper personal residence loan, and repeat the process. If you get decent rates, you might even keep the loans for the full 30 year period.

You could even use one of the units as a short or medium term rental, further increasing your rental income. Including renting out a bedroom, that would expose you to 3 methods of rental, with learning made easier because you are right there. And if you included the property manager in your calculations, you could use them to ease your entry into REI, while watching and learning, without as many possibilities for mistakes.

If it cash flows on 3 units, or even with you paying rent, then renting the spare bedroom and STR/MTR rentals are just a way to increase your income, or you still have the option to stick with normal renting, and add the others, as you feel comfortable expanding your skills.

Good luck.

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Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

2y

@Nick Johnson

It's fantastic that you're educating yourself and pursuing your objective of acquiring your first rental home. Purchasing real estate, particularly out of state, may be a lucrative endeavor. To help you gain confidence and make wise judgments, consider the following actions and advice:

Keep investigating possible markets outside of your state. Seek out regions with robust population growth, a variety of sectors, and job growth.

Make contact with nearby property managers, real estate brokers, and other investors in the desired region. Participate in online and in-person networking events and meetups for real estate in your community.

Think about collaborating with nearby experts like contractors, property managers, and real estate brokers. Having trustworthy local partners is essential when managing a property remotely.

Investigate and speak with a number of local property management firms. Having a competent property manager is crucial when investing in distant real estate.

Make sure you investigate any property you're thinking about thoroughly. This include examinations, appraisals of the state of the property, and financial analyses.

Keep in mind that it takes time and expertise to gain confidence while investing outside of your state. To begin, go cautiously, absorb knowledge from every encounter, and adjust your strategy in response to input and outcomes. I hope your real estate endeavors are fruitful!

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Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

2y

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Lily Aldridge

Member since 2024 · 9 posts · 9 votes

2y

Hey there! Totally get your struggle with the crazy market in NY. Investing out of state sounds like a smart move. You're on the right track with those reads and podcasts. One thing to add - start networking in the areas you're eyeing. Local investors and realtors can spill the beans on market trends. Attend meetups or join online forums specific to those regions.

Also, consider hiring a local property manager; they're gold when you're miles away. You got this – go snag that duplex and make that first deal happen! Good luck!

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Jake KnightPro Member

Property Manager · Indianapolis · Member since 2017 · 303 posts · 146 votes

2y

I'm in Indy if you need any advice on investing here, please feel free to reach out.

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