My business partner and I are new to real estate investing and in need of some advise and guidance. Our goal for this next year is to obtain 2-3 rental properties to start gaining assets and positive cash flow. We are constantly doing research and learning but lack the experience which most of you have. Our concern right now is where to invest? Here is our situation:
As you may know, the New York area, especially Long Island, is very high priced. We were thinking about acquiring our first couple properties in the nearby state of PA because for the price of 1 property on Long Island, NY we could acquire 3 properties over time in PA. Obviously, we want to be near our first investments but the financial risk would be 3x greater if we started here. The idea is to start with a multi-family property between 50-100k in PA instead of 300k+ in NY. We would obviously need a property manager (although we are only a 3 hour drive away) but are not sure if this is the best move for a first property. The properties we are coming across in PA are already rented for the most part with very good cap rates (above 12%). What are your thoughts?
Also, we are still uncertain on how to properly evaluate a geographical area in terms of appreciation/vacancy. Any tips on how to determine if an area is growing or becoming more depressed?
We appreciate any and all advise. Thanks!
Wow you have a big hurdle to overcome. New to investing, new to an area. Still doable but a lot to do.
Your best deal would be to find someone to partner with in that area who has done it before. Bring something of value to the table and trade for their expertise, but be carful to get it all in writing and choose the right group.
A place to start anyway.
Welcome. Fill in the foundation below. Try to research both areas then make you decision. Check out the PA county tax repository sales I have buddies getting SFR for $500-2,500 each.
Check out the Start Here page http://www.biggerpockets.com/starthere
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Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers.
Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook
Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over
Keep in mind that PA charges a 1% transfer tax on RE and some municipalities may increase this to as much 3%. Be sure to factor this into any analysis you do of your return percentage and incorporate this knowledge into any discussions you have with sellers.
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