Seeking Advice on Real Estate Investment Strategy with $350K

[Minho Lee]

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!

[Michael K Gallagher]

@Minho Lee

A couple of things to consider, if you are looking at Shrewsbury, Grafton Worcester etc, These are pretty high growth markets from what I understand although I'm not in that market I just have family there.  If it were me I'd be looking at taking advantage of a low down payment owner occupied loan and getting a house hack going in that market.  This gets you two units in a market that rents are going to be higher than anything in the midwest.

You mentioned Columbus and wanting to get $2K cashflow from 2 properties.  I'm not sure what numbers you are using our how you are calculating that, but there is nowhere in the central OH market that is going to purely cashflow $1K per door.  If you are in fact referring to gross rents, then yes you can get gross rents well above that but after all expenses, includeing debt service, PM, maint, cap ex reserves etc, a good deal is about $100 - $200 a door in pure cashflow.  If you are buying cash obviously this makes that number go up, but then again two $125K properties are both going to need work, and will likely be in areas that are not going to attract the greatest tenant pool.  If you are looking for just cheap properties, with decent cashflow and not much appreciation I'd check out the Dayton market.  

[Jake Baker]

@Minho Lee

Real Estate has several wealth generators:
Cash-flow
Forced Appreciation
Market Appreciation
Debt-Paydown
Tax-Benefits

I look at Cash Flow and Forced Appreciation as a hedge against market corrections. Cash flow (in my portfolio as a whole) covers my expenses. Forced Apperception (BRRRR or buying at a discount) allows me to build in equity from the beginning.

Market Appreciation is where you will make the most money over a 10-year period but is the least predictable.

You typically cant get a second position loan or HELOC from an investment property. You can cash out refinance, allowing you access that equity tax deferred.

[Tyler Lingle]

I'd love to be in your situation! The Midwest but specifically Indianapolis would be a great potential option for you. From 2019-2024 Indianapolis has had be best jobs growth & GDP % growth of any Midwest city. It's truly on fire! And very pro-investor / landlord here. 

Here's exactly what I'd do in your shoes: 

1) Build a solid team -- Agent, PM, Contractor, Handyman, Lender (all local pros)

2) Invest in a Turnkey Duplex or SFR just to get your foot in the door and learn the area

3) Then, with money left over Invest in a BRRRR and recycle that money indefinitely as assets appreciate / force appreciate

4) Acquire a large fleet of Indianapolis rentals as the city continues to expand. 

Indy is now the host of many major events / conferences, and the narrative on the ground is very positive about our real estate, and like many places the supply cannot keep up with the demand. 

[Brian J Allen]

@MinhoLee I would be glad to help you find something in Millbury/Grafton/Worcester/Shrewsbury.  I live in Sutton so I drive these towns on a daily basis.  Price wise, Millbury and Worcester will be the lowest entry point as they have smaller houses

[Mohammed Rahman]

Hey @Minho Lee - my only advice would be to not narrow yourself down into what you think your ideal goals are for the current position you're in. 

Investing out of state or in the midwest or anywhere is great and all, but you'd be doing yourself a disservice if you didn't explore other options too. 

For example, you might buy your first property and realize that being a landlord (especially a long distance landlord) is not for you - even with a property management in place. In that case you should be open to exploring more hands off REI strategies like funds, REITs, etc.

[Nick Giulioni]

@Tyler Lingle is a great partner to work with. You can't go wrong

[Crystal Smith]

Quote from @Minho Lee:

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!My advice- 

Tips:  Set aside some time and a little cash and visit each market you are considering. The objective- Establish some boots-on-the-ground support and potentially some partners. We found that our out-of-state investments always worked the best when we had a local partner or partners that had an interest in the project.  It's not necessary but it helps.

 I cannot speak for Cleveland, Columbus or Kansas City as I do not know the rental rates in those markets. You can however as a cash buyer purchase a home near Indianapolis and some of the suburbs of Chicago (which includes Indiana) for $100K and rent them out between $1500 to $2500 per month. The homes may need some cosmetic work & you'll have to make sure the real estate taxes are reasonable.  So yes it's possible to spend your $250K and get 2 homes. You will also have an advantage if you pay cash.  A caution- At this price point expect it to be a cash flow play, not an appreciation play. 

Regarding getting financing after the fact-  yes you will be able to get a loan and pull much of your cash cash out of the properties. 

[Remington Lyman]

Quote from @Minho Lee:

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!

 I use a strategy that does not give me a lot of cash flow every month but gives me large liquidity events when I choose to have them. I do this in Columbus, Ohio

[Jeremy Melloul]

@Minho Lee. I would buy in Columbus OH. It’s the fastest growing city in America and is poised to pop. DM me if you’d like to know more about the CBus market.  

[Minho Lee]

Quote from @Michael K Gallagher:

@Minho Lee

A couple of things to consider, if you are looking at Shrewsbury, Grafton Worcester etc, These are pretty high growth markets from what I understand although I'm not in that market I just have family there.  If it were me I'd be looking at taking advantage of a low down payment owner occupied loan and getting a house hack going in that market.  This gets you two units in a market that rents are going to be higher than anything in the midwest.

You mentioned Columbus and wanting to get $2K cashflow from 2 properties.  I'm not sure what numbers you are using our how you are calculating that, but there is nowhere in the central OH market that is going to purely cashflow $1K per door.  If you are in fact referring to gross rents, then yes you can get gross rents well above that but after all expenses, includeing debt service, PM, maint, cap ex reserves etc, a good deal is about $100 - $200 a door in pure cashflow.  If you are buying cash obviously this makes that number go up, but then again two $125K properties are both going to need work, and will likely be in areas that are not going to attract the greatest tenant pool.  If you are looking for just cheap properties, with decent cashflow and not much appreciation I'd check out the Dayton market.  

@Michael K Gallagher 

Thank you for your information! 

I was looking at Reynoldsburg or the Eastland area but agree with you that 250K will not get me 2 properties in central OH. The reason why I included Columbus OH is that I believe the housing price is going to increase and wanted to get my foot in the door. 

Do you think purchasing an SFH for 200~250K cash won't get me even a 1K+ pure cash flow around Columbus, OH? 

[Minho Lee]

Quote from @Tyler Lingle:

I'd love to be in your situation! The Midwest but specifically Indianapolis would be a great potential option for you. From 2019-2024 Indianapolis has had be best jobs growth & GDP % growth of any Midwest city. It's truly on fire! And very pro-investor / landlord here. 

Here's exactly what I'd do in your shoes: 

1) Build a solid team -- Agent, PM, Contractor, Handyman, Lender (all local pros)

2) Invest in a Turnkey Duplex or SFR just to get your foot in the door and learn the area

3) Then, with money left over Invest in a BRRRR and recycle that money indefinitely as assets appreciate / force appreciate

4) Acquire a large fleet of Indianapolis rentals as the city continues to expand. 

Indy is now the host of many major events / conferences, and the narrative on the ground is very positive about our real estate, and like many places the supply cannot keep up with the demand. 

@Tyler Lingle Thank you for your insightful input! It's reassuring to hear your positive perspective on Indianapolis.

I went to high school in Indiana and have traveled to Indianapolis in the past, always thinking it was a great city! So, I'm thrilled to explore investing opportunities there.

No matter what state I decide to invest in, the steps you mentioned were exactly what I had in mind. Focusing on building a good team with local experts, invest in a single-family home to get my foot in the door, and then using the remaining amount to start the BRRRR strategy and eventually expand my portfolio.

It's encouraging to hear about the city's strong job growth and GDP percentage, as well as its pro-investor and landlord environment. 

I'd love to connect to learn more about the Indy market. 

[Minho Lee]

Quote from @Brian J Allen:

@MinhoLee I would be glad to help you find something in Millbury/Grafton/Worcester/Shrewsbury.  I live in Sutton so I drive these towns on a daily basis.  Price wise, Millbury and Worcester will be the lowest entry point as they have smaller houses

@Brian J Allen Thank you for your offer!

We're open to exploring condos or townhouses in addition to single-family homes in the Millbury, Grafton, North Grafton, Westborough, Marlborough, Worcester, and Shrewsbury areas.

[Minho Lee]

Quote from @Mohammed Rahman:

Hey @Minho Lee - my only advice would be to not narrow yourself down into what you think your ideal goals are for the current position you're in. 

Investing out of state or in the midwest or anywhere is great and all, but you'd be doing yourself a disservice if you didn't explore other options too. 

For example, you might buy your first property and realize that being a landlord (especially a long distance landlord) is not for you - even with a property management in place. In that case you should be open to exploring more hands off REI strategies like funds, REITs, etc.

@Mohammed Rahman Thank you for sharing your insights on alternative real estate investment strategies.

While funds and REITs offer the benefit of a hands-off approach and consistent cash flow, I'm also mindful of the potential limitations in terms of equity growth and portfolio expansion. I'm curious to hear your thoughts on whether hands-off REI strategies can effectively increase one's portfolio over time while still generating positive cash flow.

[Minho Lee]

Quote from @Crystal Smith:

Quote from @Minho Lee:

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!My advice- 

Tips:  Set aside some time and a little cash and visit each market you are considering. The objective- Establish some boots-on-the-ground support and potentially some partners. We found that our out-of-state investments always worked the best when we had a local partner or partners that had an interest in the project.  It's not necessary but it helps.

 I cannot speak for Cleveland, Columbus or Kansas City as I do not know the rental rates in those markets. You can however as a cash buyer purchase a home near Indianapolis and some of the suburbs of Chicago (which includes Indiana) for $100K and rent them out between $1500 to $2500 per month. The homes may need some cosmetic work & you'll have to make sure the real estate taxes are reasonable.  So yes it's possible to spend your $250K and get 2 homes. You will also have an advantage if you pay cash.  A caution- At this price point expect it to be a cash flow play, not an appreciation play. 

Regarding getting financing after the fact-  yes you will be able to get a loan and pull much of your cash cash out of the properties. 

@Crystal Smith thank you for your comment. I'm just starting out on this journey and do not intend to make any quick judgments or rushed calls - I'm still gathering information for different strategies. I agree with you that having a local partner can go a long way. I'm curious to know which city that I can purchase 2 doors with 100K and can rent them out between 1.5K to 2.5K. 

You're saying theoretically after I purchase 2 doors with cash I will be able to get a loan that I can invest in other strategies? 

[Crystal Smith]

Quote from @Minho Lee:

Quote from @Crystal Smith:

Quote from @Minho Lee:

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!My advice- 

Tips:  Set aside some time and a little cash and visit each market you are considering. The objective- Establish some boots-on-the-ground support and potentially some partners. We found that our out-of-state investments always worked the best when we had a local partner or partners that had an interest in the project.  It's not necessary but it helps.

 I cannot speak for Cleveland, Columbus or Kansas City as I do not know the rental rates in those markets. You can however as a cash buyer purchase a home near Indianapolis and some of the suburbs of Chicago (which includes Indiana) for $100K and rent them out between $1500 to $2500 per month. The homes may need some cosmetic work & you'll have to make sure the real estate taxes are reasonable.  So yes it's possible to spend your $250K and get 2 homes. You will also have an advantage if you pay cash.  A caution- At this price point expect it to be a cash flow play, not an appreciation play. 

Regarding getting financing after the fact-  yes you will be able to get a loan and pull much of your cash cash out of the properties. 

@Crystal Smith thank you for your comment. I'm just starting out on this journey and do not intend to make any quick judgments or rushed calls - I'm still gathering information for different strategies. I agree with you that having a local partner can go a long way. I'm curious to know which city that I can purchase 2 doors with 100K and can rent them out between 1.5K to 2.5K. 

You're saying theoretically after I purchase 2 doors with cash I will be able to get a loan that I can invest in other strategies? 

 There are some Chicago suburbs, near the Indiana border and in Indiana, where you can purchase properties for $100K and cash flow them. With that said, on the Illinois side of the border you cannot forget to look at the property tax associated with a property, which includes looking at the exemptions. A mistake made by many is they purchase a home that has a senior exemption and after closing find out that as an absentee owner the low property tax they had vanishes.   On the Indiana side you will not have the tax problem but the rents will not be as high.

We are currently working with a client who is purchasing properties for around $100K; putting less than $10K to update.  The properties then appraise for $140K to $160K and she's pulling her money out with a new loan.

[Marc Rice]

Quote from @Minho Lee:

Hello BiggerPockets Community,

I'm reaching out for some guidance as I embark on my real estate investment journey with a budget of $350K. Here's a breakdown of my current plan and aspirations:

Current Situation:

- I have $350K earmarked for real estate investment.

- Currently renting an apartment in New York, but planning to relocate to Massachusetts with my wife.

- Eyeing areas like Worcester, Shrewsbury, Grafton, and Millbury for a single-family house, priced around $500K, with a planned $100K down payment. I understand this is not an easy task as the price in those areas are increasing, but we're trying our best to keep the maximum budget at $500K for the primary residence.

- We have started the pre-approval process with a lender and have a realtor we're working with to purchase the house

Investment Strategy:

- Aim to maximize cash flow while seeking appreciation.

- Ideal cash flow target is $2K+ per month.

- Planning to allocate the remaining $250K towards purchasing two properties in the Midwest market (e.g., Cleveland, Columbus, Indianapolis, Kansas City and open to exploring new areas where the entry point is affordable but the cash flow is stable).

- Seeking properties that can generate $2K+ a month in combined rent after factoring in property management, insurance, and property tax expenses.

Seeking Advice:

- Would purchasing two houses in the Midwest to achieve $2K+ cash flow per month be a sound strategy, or do you recommend alternative approaches?

- As a rookie investor, I acknowledge that I may be overlooking crucial factors. I welcome any advice or insights you can offer to refine my investment strategy.

Exploring Future Opportunities:

- Assuming I successfully acquire two properties, would I be eligible to obtain loans against these properties to further invest in real estate? I'm particularly interested in exploring the BRRRR strategy, despite the initially lower monthly cash flow.

Long-Term Goal:

- The ultimate objective is to achieve a monthly income of $15K+ through real estate investing within the next 10~15 years.

I greatly appreciate any guidance, tips, or perspectives you can share based on your experience. Thank you in advance for your valuable input!!

 If you're talking about $2k/mo before debt service in the Midwest (i.e. Columbus Ohio) then yes. If you're talking about after every expense and debt pay down, then no. You can find much better deals here than in MA (I grew up in southcoast MA). You can find some great C class duplexes for $250k here that rent for $1250/mo per side ($2,500+ total).

[Tre DeBraga]

hey Minho Lee!

I am right from the area you are looking to relocate with the wife. 500k for a single family home is definitely not a super hard task in these areas. especially with that 100k down payments. Have you by any chance looked into some first time home buyer loans or even just lower down payments options so that you can leverage more of your money into investments? 

With your left over cash I would look into... using the BRRRR method. The BRRRR method is great because once your done with 1 deal you can continue to recycle that into other BRRRS. with the capital you have I would assume you can do a couple BRRRS to start. Another option I would look at in the Worcester area is maybe a multi family or a rent by the room house situation that you can do mid term rentals out of. Worcester has many hospitals and an airport making it a great spot for mid term rentals.

Cash flow is definitely a hard thing to come across in the short term of things especially in nowadays market. so, just remember your other benefits to investing like appreciation, equity build, etc.. 

I am an investor friendly agent right in the area so ever need any help feel free to reach out my man!!