I am looking to buy my 1st SFR I have been researching 3 areas
Milwaukee Wisconsin, Indiana, & Oklahoma I have about 50k to start no sure how or best way to get started buying from wholesaler homes already rented or buying something to fix then rent out??. Any advice would be greatly appreciated!
We've found that we get the most "bang for our buck" when we buy a distressed property, fix it up, and either flip it or rent it out. The best way to facilitate this purchase is usually a private money or hard money loan (depending on your qualifications as a borrower). Private money will typically require a bit more documentation and better income/credit, but you will get a lower interest rate. Hard money tends to be more cut and dry, and you will likely qualify with slightly lower income/credit, but you will pay a slightly higher interest rate. These options will also be beneficial since certain lenders have expertise in project evaluation and should be able to assist you in picking the right property depending on your goals. Not sure about Wisconsin and Oklahoma, but Indiana is a great market for these types of things.
Hope that helps!
There is no right or wrong answer here, only what is right for you. Depending on your desire of how active you want your role would determine which way is better for you. If activity is ok and you have skills to rehab, you are likely going to create more equity the more you do yourself. Buying from another investor or wholesaler,myounmisspelled likely will pay more. Doing the rehab yourself, you likely would create more equity and have a better cash flow position on the hold.
I agree with @Will Barnard
Starting out...do as much work as possible for yourself, so you gain experience. You need experience first. Once you have this, you'll now know how it's done and you can hire people to do it. Real estate is not a passive investment; it is an extremely active investment. Any really successful investors will agree with me.
Best of luck.
@Hank Valdez what's wrong with Vista? I just did a quick search on Zillow and found 12 properties below 200k, half of them arround 100k. I agree with @Account Closed you need to learn as much as you can and I will ad that you do that best in your backyard (or at least close by), maybe within 30 min to an hour. Tons of deals in San Jacinto and Chedral City (according to Zillow). I bought my first property in West Milwaukee which is a 30 minute drive for me, but can easily be 60 minutes during rush hour (guess when I have time to go). I got smarter and focus now on an area about 15 minutes away in any traffic, because investing close by makes your life a lot easier. In any case, I dont need a plane...
If you go out of State, be careful who you partner with. Generally speaking MOST of the people you will attract are either newbies or people who, well, have not been so succesful in the past, probably for a reason. Most people you would want to partner with get money from their bank for 5.5% and I am sure you'd expect more in return. Please note that I said "most", because there are GREAT investors out there who rely on PM for resons beyond their control or simply prefer it.
So if you find a local deal and get it under contract you will find the the comunity here on BP is always happy to help you out with any questions or issues you run into (and you dont even have to pay anything!!). Post your numbers and people will tell you if you should sign or run. So if you go on your own be confident that you are not really alone. Good luck!
Thanks. FYI: I've been investing for over ten years and a majority of my properties are out of state. All properties generate 20%+ IRRs. And I don't use a property manager, so it seems I'm an exception to your recommendations.
@Account Closed congratulations, that's a tough one and requires a lot of discipline and patience. I see you are from SFO so I understand why you have to, but it would not be my first choice. If I would see any chance to invest within driving distance I would stick to that.
How much would I pay myself for travel for a showing or to meet a contractor? How much would I spend for gas and milage or airfare? How much more do I have to pay for contractors and materials (on a rehab) because I can't easily shop around.
Ok, there are many different ways to deal with this, I assume you invest in newer buildings? I am dealing with homes built in the 50s and 60s, I could never do it from afar.
It is not as difficult as you might think. All can be done over the phone and Internet. It's important to built systems that work for you. I'm confident that I duplicate my results in any city meeting my investment criteria. It's actually just as easy for me to invest in Austin than it is in San Francisco where I live, however SF doesn't have properties meeting my criteria...so I go where the best deals are, not where I would have them.
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