I have been an active listener to the BP podcasts the last few months and now i'm finally getting involved in the forums. I have 2 questions about my current status as a novice real-estate investor and looking for some guidance. Here it goes...
Background: I own one property: A tri-plex in San Diego with my business partner (50/50 split). We got a great deal and have a solid cash flow every month.
Goal: Have enough cash flow to cover my everyday expenses (lets call it 5k) a month. After much thought and consideration, I would like to invest in buy and hold, multi family properties. Reason fir this: I would like have the positive cash flow now and still be flexible for retirement when they are close to paid of (i'm 27). I am very passionate about my career and want to keep real estate as a part time hobby.
Question 1) With the industry I work in, it doesn't allow me to stay in the same place for a long period of time. If you were me and you couldn't commit to living some where for 5-10 years, is it a bad decision to go for the best deal in my current city (fort lauderdale) or should I focus the best deal in any city?
Question 2) I have $10k I feel comfortable putting into my next investment (which I would like to do on my own), should I wait and save more or start seriously looking for deals? It wont take me forever to raise the funds but it wont be immediate.
P.S. just got done reading the ABCs of real estate investing and millionaire next door. Got the fever!
Thanks for reading!
If you can get decent returns where you are, invest where you live now and (I'm assuming) know well. You've got a much better chance of buying right when you know the area and can at least ride by your place once in a while and check on it. Accumulate a couple where you live and buy with the intention of hiring management. If you have management in place you can move to your next hometown and leave these properties in the capable hands of your PM. Once you're set up in your new town you can still purchase properties in the old place (you'll know the area, have a PM, etc.) or, you can start buying in the new location if lends itself to rentals.
Welcome to BP. This is the place to be to assist you with fulfilling those goals; so long as you are willing and able to put in the time and energy. Happy and prosperous investing.
You'll know yourself best.
And this is a time to be honest with yourself.
Are you disciplined?
Do you follow through?
Are you an organized problem solver?
If you answered yes to all three then you can buy property where you wish.
It will be best to buy where your knowledge of the place gives you an advantage.
We own property away from where we now live.
But our knowledge from ten years there makes management today simple.
We can get almost anything done by email or phone by leveraging our knowledge of the place and our network.
Real estate is a slow game.
If you set it up like a system, and tend to the system, it will treat you well in most cases.
We are 15 years in and we've been treated well to date.
Consider a house hack where you are.
Use your funds to put a roof over your head that you also rent room shares in.
If not, think about a small multi-family where tenants pay for your living expenses.
The purchase math will tell you whether you need to save more or have enough equity.
An FHA loan with a low required down payment will get you far with little to put down.
Don't gamble. Just set up a disciplined approach that will work well long-term.
I recommend investing in areas where you personally are familiar with and that offer good returns. Next, you should determine the type of return on your investment that you want to receive. Once you have that realistic number, it is a matter of analyzing the profit and loss statements (that you create not that the owner gives you) to see if they meet your ROI or Cash on Cash return. If you can swing it with only a $10k investment, then great. If not, then save every penny until the right deal comes around.
thanks for the replies!
Hello Joel, I am very interested in learning how you found your tri-plex deal in San Diego. I am living in San Diego, but have been focusing on investing in out of state. Could you please share your story of San Diego tri-plex?
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