Best First Investments

9 Replies

Hey everyone,

I am a young investor and want to make sure I start with my best foot forward in the best direction. Does anyone have any recommendations on what would be the best first investment for a young investor like myself with limited capital? What type of properties in what area perhaps? Any feedback would help.

Thank you

@Mike James Giancola

Welcome from a fellow New Yorker.

This is a hard town to get started in, given the high cost of everything. In addition, aside from a few small pockets, the inventory of NYC metro has gotten a bit too crazy to make sense at this point. When retail buyers will come in an offer 20% above asking, it gets harder to find a deal.

Furthermore, if you like your day job (as I do), you're going to have less time to manage these deals and travel around. Given that, turnkey is a good way to start with management packaged for you. I just recommend doing very good due diligence on the property management side of the operation.

An even better option is finding a partner who does have the time and ability to chase down deals and do work. In this regard, you can become the money partner, and it's very valuable in any real estate relationship.

If you really want to do something in the NYC metro, then within 2 hours you have central Connecticut, Philadelphia, and several markets in NJ that are attractive. I will say, NJ is a gamble with crazy property taxes, but there are loads of people making it work.

Originally posted by @Mike James Giancola :

Hey everyone,

I am a young investor and want to make sure I start with my best foot forward in the best direction. Does anyone have any recommendations on what would be the best first investment for a young investor like myself with limited capital? What type of properties in what area perhaps? Any feedback would help.

Thank you

First post...Welcome to BP...introduce yourself!! You have NYC listed, as well as limited capital. Are you looking to invest in the city? What are your goals? Experience? Connections?

As Trevor said, you will definitely be able to find great areas to invest with little money down within a 2 hour radius of NYC. Up here in CT, you can find small multifamilies (2-4 units) in the $150k to $250k range with little work needed. If you are living in the city and are only planning on investing (and not owner-occupying), with conventional financing, you will most likely be required to put down 20 to 25%.

@Mike James Giancola

Hello Mike, I would second what Trevor said about turnkey properties, and I would suggest turnkey properties in the midwest because they are extremely affordable (SFR rental outright and get similar cash flow.

How little of capital? It will have to be out of NYC, almost certainly! Which is fine if you go the rental property route because NYC (and most of NY) won't cash flow anyway. In terms of being new, just make sure you know how to run numbers and are up on risk factors. If you know those two things, you'll be in a great position to analyze deals!

@Mike James Giancola

BP is full of useful resources such as forums and blogs. Welcome to the Bigger Pockets community-be sure to check out all the awesome BP blogs under “Learn.”

Welcome to BP.  In the high cost of entry areas such as NYC or the West coast little money means little chance to buy.  Going out of your area to buy and get some experience will  get you started a lot sooner.  Wishing you a great real estate investment career.  

@Mike James Giancola

The best first investment will be in yourself. Buy your first condo in NYC. Live in it for 2 years and flip it. You won't pay taxes on the first $250K in capital gains, and you'll have enough money to plow back into another primary residence and traditional investment property.

I started out like this and went from a studio to a 2BR and investment property within 5 years. 

Feel free to hit me up for more information. Here's an article about how I made it happen:

http://www.brickunderground.com/blog/2015/02/flipp...

@Mike James Giancola I have some great strategies I use outside of NY for first time investors. I buy multifamily now, but started in Tax Deeds. 

Welcome to BP!! I would start by reading a lot of the education pieces on BP and network with as many people and member you can. If you have any questions please shoot me a PM and we can set up a coffee

@Mike James Giancola

how little capital and what is your credit like? TK is a decent option but keep in mind that if you are buying one property and are limited to just buying that one (either because of cash or credit) it can be rough because of the time requirements to get comfortable and learning curve as well the lack of scale because you only have that one property. Many people have made mistakes even in "passive" TK so if you don't have a cushion or can't sleep at night because all your money is tied up in one TK and you can't sleep every time something goes wrong  it may be problematic.

While most people say being in NYC is tough to get started and they are right there is one thing that is good about NYC which is that the values are high. To you this could mean that while most areas have very low dollar margins leaving little room for a third party, in NYC margins are much higher in dollar terms so if you can find a way to work with someone they may have money to pay you out. If you are young and have more time than money this could be a great option (working with others, finding deals, etc.)

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