Looking to get into REI, starting with $140,000.
New to Real Estate · Long Island, NY · Member since 2023 · 23 posts · 14 votes
Looking to get into REI, starting with $140,000.
Most Popular Reply
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
2y@Erik R Aho, you'll need to leverage debt. As noted above, a non-QM loan product such as DSCR could be suitable if you don't have a W2 track record. However, before you do anything or speak with anyone, read "Long-Distance Real Estate Investing" by David Greene. I suppose house hacking isn't an option for you at this time? Everyone on this site will be pitching their markets. Make sure to verify all information and ideally speak with an experienced investor who acquires in the respective state before proceeding.
67 Replies
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes2yOverall, cash flow in any market is tough right now...depending of course what downpayment you are putting down. Rates are high, prices are high.
Quote from @Erik R Aho:
The thought of buying cash flowing rental properties interests me. However, I'm from Long Island, NY and cash-flowing deals are very hard to find. I'm considering purchasing out of state but don't know which markets I should look out or how to find deals in said markets. I'm 20 years old and have about $105,000 outside of retirement that I'd love to do something with. However I lack the confidence and knowledge to get started. Any tips?
I'd look into the midwest states. Those have historically been the best ones for cashflow rentals.
If you're looking in bigger cities, look into the surrounding areas that will be less expensive and provide you with a better rent to value ratio. - Member since 2022 · 6 posts · 3 votes2y
I agree house hacking will be a great place to start. Remember fundamentals like choosing a desirable market and keeping some money in a highly liquid option as reserves like a high interest savings account that should be about 4-5% currently. Also, while living there, you may want to do some value add projects. Make sure they will get you a return on your investment. This last one is important. Make sure you can afford it even when the other portion(s) are not rented. Do not over-extend yourself and risk taking a large principle loss.
With all of that said, a househack gives you more control than most other options. You will likely be able to refinance in the next 2-3 years to a lower interest rate too.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
If you're open to move in, I would still recommend house hacking even with a good amount of starting capital. Properties don't cash flow well in NY, but if you could buy a house, or better yet a duplex-fourplex with an FHA loan, live in one unit and rent out the others; well, it may not cash flow but it would be living for cheap and building equity as you do it.
Quote from @Erik R Aho:
The thought of buying cash flowing rental properties interests me. However, I'm from Long Island, NY and cash-flowing deals are very hard to find. I'm considering purchasing out of state but don't know which markets I should look out or how to find deals in said markets. I'm 20 years old and have about $105,000 outside of retirement that I'd love to do something with. However I lack the confidence and knowledge to get started. Any tips?
140K you can get 3 SF with 40k per, for about 100k each with 1200 1300 in rents, I just got two more, duplex with 18k in rent, under 100k full reno, SF 15k rent, under 80k,
Good luck
- Investor · Member since 2021 · 8 posts · 1 vote2y
@Erik R Aho, Similar situation here, living in Los Angeles with outrageous prices. Last year, my wife and I had a 10% increase on the 2bd/2ba apartment we rented, pushing it to $4,080 monthly. That felt extreme to us, especially since our money was literally going into the ether each month.
We searched EXTENSIVELY for about 7 months, starting with Zillow and open houses. Eventually, we found an agent who helped us out. We put in multiple offers and were consistently outbid. Finally stumbled upon a house we absolutely DID NOT think we would buy. Listed for over 100 days with terrible photos. We submitted a low offer, expecting less competition...
...and, they accepted!
We bought it for $675k, negotiated down from $725k, with the seller covering closing costs. We caught a slight dip and locked in a 5.75% rate. In total, we paid around $35k with a 5% conventional loan, split evenly between us. Though not cash-flow positive yet, we're building equity.
Now, we're considering out-of-state investments, but only after establishing a home base first. Might be worth some more local digging for your first investment?
- Can you share costs with someone? A partner, potential roommates, family member?
- Can you jointly qualify with someone to increase your loan amount?
- Are you renting now? If so, I agree with others here to definitely look into House-hacking first.
- New to Real Estate · Long Island, NY · Member since 2023 · 23 posts · 14 votes2y
Quote from @Steven Henao:
@Erik R Aho, Similar situation here, living in Los Angeles with outrageous prices. Last year, my wife and I had a 10% increase on the 2bd/2ba apartment we rented, pushing it to $4,080 monthly. That felt extreme to us, especially since our money was literally going into the ether each month.
We searched EXTENSIVELY for about 7 months, starting with Zillow and open houses. Eventually, we found an agent who helped us out. We put in multiple offers and were consistently outbid. Finally stumbled upon a house we absolutely DID NOT think we would buy. Listed for over 100 days with terrible photos. We submitted a low offer, expecting less competition...
...and, they accepted!
We bought it for $675k, negotiated down from $725k, with the seller covering closing costs. We caught a slight dip and locked in a 5.75% rate. In total, we paid around $35k with a 5% conventional loan, split evenly between us. Though not cash-flow positive yet, we're building equity.
Now, we're considering out-of-state investments, but only after establishing a home base first. Might be worth some more local digging for your first investment?
- Can you share costs with someone? A partner, potential roommates, family member?
- Can you jointly qualify with someone to increase your loan amount?
- Are you renting now? If so, I agree with others here to definitely look into House-hacking first.
Thanks for the comment. I'm actually still living at home. Yes definitely some more local digging.
- New to Real Estate · Long Island, NY · Member since 2023 · 23 posts · 14 votes2y
Quote from @Bob S.:
Quote from @Erik R Aho:
The thought of buying cash flowing rental properties interests me. However, I'm from Long Island, NY and cash-flowing deals are very hard to find. I'm considering purchasing out of state but don't know which markets I should look out or how to find deals in said markets. I'm 20 years old and have about $105,000 outside of retirement that I'd love to do something with. However I lack the confidence and knowledge to get started. Any tips?
140K you can get 3 SF with 40k per, for about 100k each with 1200 1300 in rents, I just got two more, duplex with 18k in rent, under 100k full reno, SF 15k rent, under 80k,
Good luck
Killing it man, thanks for the wishes
- New to Real Estate · Long Island, NY · Member since 2023 · 23 posts · 14 votes2y
Quote from @Andrew Syrios:
If you're open to move in, I would still recommend house hacking even with a good amount of starting capital. Properties don't cash flow well in NY, but if you could buy a house, or better yet a duplex-fourplex with an FHA loan, live in one unit and rent out the others; well, it may not cash flow but it would be living for cheap and building equity as you do it.
Thanks Andrew, yes definitely I need to look into.
- New to Real Estate · Long Island, NY · Member since 2023 · 23 posts · 14 votes2y
Quote from @Jonathan Jones:
I agree house hacking will be a great place to start. Remember fundamentals like choosing a desirable market and keeping some money in a highly liquid option as reserves like a high interest savings account that should be about 4-5% currently. Also, while living there, you may want to do some value add projects. Make sure they will get you a return on your investment. This last one is important. Make sure you can afford it even when the other portion(s) are not rented. Do not over-extend yourself and risk taking a large principle loss.
With all of that said, a househack gives you more control than most other options. You will likely be able to refinance in the next 2-3 years to a lower interest rate too.
Yeah the househack in my area with no rents covered would give me a 5k-6k payment with no help from the rents. Would be a squeeze
- Detroit, MI · Member since 2020 · 150 posts · 68 votes2y
Hey there, Native New Yorker here (grew up on the island as well). Out of state is probably the best way to go right now. I would peek into markets in the midwest as they offer lower entry price points, and positive returns. The key though is to make sure you have a good team on the ground and you are also aware of the risks in the marketplace you will enter along with investing from out of state. As long as you have a clear picture of what you are walking into and are comfortable with it, out of state investing works.
My team and I have had a tremendous amount of success in the midwest , specifically in the Detroit , MI marketplace. Happy to chat anytime.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Quote from @Michael Smythe:
@Erik R Aho investing OOS as a newbie is a recipe for disaster! :(
So, many agents, property managers, contractors, etc. will either try to screw you deliberately or via their incompetency.
If you want to chat about how to navigate OOS investing as best as possible, with the full brutal truth, PM us.
This! Not even as a newbie but I've talked to several experienced California investors that have lost money from OOS. Dishonest contractors that didn't finish the job and ran off with their money, nightmare tenant stole the water heater and all the appliances after being evicted, etc. Exaggerated ARVs, "this area will appreciate more with gentrification" - the last statement is from a CA investor who bought 2 apartment complexes in the Midwest Class C and wound up selling after 3 years after non-stop repairs and tenant issues. She even changed property managers and that didn't help.
Video tours and photos aren't equivalent to seeing the property or neighborhood in person - they make the house look a lot better. My AC unit was stolen right before the tenant moved in, back door and frame broken and needs to be replaced from an attempted break in (alarm scared off intruder) on a different house. These were in Class C areas. If I ever buy OOS again, I'd go Class A or B.
I get that Long Island is expensive. Can you find something within a 2 hour drive? I suggest networking with local investors (someone unbiased not trying to sell you something) for feedback on the markets you're considering.
- Developer · Albany, NY · Member since 2016 · 30 posts · 14 votes2yIf your ever intereested in investinng in Upstate NY Capital Regionn area shoot me a dm. I have multi unit buildings nd im flipping SF homes in the area. Great Cap rates i believe the capital region is a goldmine and im boots onn the ground born and raised here. I get TONS of people from NYC/ Long Island Areas to invest up here hit me up
- Member since 2024 · 3 posts · 1 vote2y
@ Milton Chamberlain- Am looking for Out of State Rental opportunities particularly in Missouri.
Can we connect sometime to discuss??
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Becca F. thanks for confirming our warning!
Will say though, that you can be successful investing OOS in Class C rentals if:
1) You buy at the right price, using +20% for Vacancy & Tenant Nonperformance
2) You build a good team that's transparent and supplies narrated videos for maintenance, annual evaluations, etc.
3) You buy in the "better" Class C neighborhoods adjacent to Class B areas, so you catch the overflow from those Class B areas. You can get better tenants and they should be the first neighborhoods to gentrify from Class C to Class B:)
There will still be breakins and tenant-caused damages, with bad tenants even stealing the mechanicals when they move out. If you buy at the right price and build these issues into your ROI, you'll still make money.
Logical Property Management4.9455 Reviews - 2yShawn McenteerBusiness MemberRealtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
Hi @Erik R Aho not sure if this is for you but house hacking has been the unfair advantage in the greater NYC area. My wife and I started with about 100k in liquid cash, since then in a relatively short period of time we have acquired multi properties, businesses and have help other achieve similar results. House hacking new jersey is the main contributor for our success. With that being said very little of this at first had to do with cash flow, equity is what got us to FI.
House Hacking New Jersey563 Reviews - 2yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
When you begin investing in real estate at a young age with a good amount of capital, it can be a fantastic opportunity. Look for rental properties in different states that generate income, especially in markets outside Long Island, NY. Concentrate on areas with a high demand for rentals, a growing job market, an increasing population, and affordable housing costs. Connect with seasoned real estate investors, mentors, and professionals in the area to learn from their experiences. Collaborate with local real estate agents, property managers, and contractors to locate appropriate properties, evaluate potential deals, oversee investments from afar, and comply with local regulations.
It's important to establish criteria such as budget, desired cash flow, return on investment goals, risk tolerance, property preferences, location preferences, and approach to property management. Utilize online tools and resources to search for investment opportunities, analyze potential cash flow, explore property management options, visit and assess properties, diversify your portfolio, and keep up-to-date on market trends, economic conditions, and real estate strategies. Be flexible and make well-informed investment choices that align with your objectives and criteria.
Good luck!
NETWORTH BUILDERS5236 Reviews - Member since 2018 · 3 posts · 1 vote2y
@Maureen McCann
Hello Maureen,
You seem to have a long and very successful track record in RE.
Would love to connect, I’m from the NYC metro area and looking to invest out of state.
Will send you a request.
Thanks!
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