Questions about which city to start my REI journey

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Questions about which city to start my REI journey

Joey Meaux
Rental Property Investor · Midland, TX · Member since 2016 · 7 posts · 2 votes

Hi everyone, first time poster here.

I've been reading posts and listening to the BP podcast for the better part of the last 2 months and I've been researching REI off and on since finishing college.

I'm local to the Lafayette, Louisiana market and have lived here the past 8 years.  My primary interests are buy and hold on cash flow positive deals and eventually development.  Now to throw a wrench in the system, I will be moving to Denver, CO at the end of this month.  So to partially answer my own question, I've already began my journey by putting my home here in Lafayette under management.

My question is essentially which area would be better to target. As anyone in Lafayette knows, the sale market is down right now to the downturn in oil and gas. Moreover, anyone local to Denver knows how hot that market still is, albeit highly priced for entry. So would it seem more effective for me to keep growing my portfolio in Louisiana, or concentrate on potential large ROI investments in the Denver market? I realize that not everyone will have experience in both areas, but any advice helps!

Thanks and I'm very excited to start the journey!

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Bill S.Pro Member
Moderator
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
10y

@Joey Meaux in the long term oil prices will go up again but I don't think we are through the pain yet. Now you can not time the market but it's clear that riding it down is not a game you want to play. The Denver market still has some legs. My advise is to be in a rising market unless you are strictly looking at cash flow. For example $300K property appreciating at 10% a year will win hands down over $300K property in a declining market even if the one in the declining market puts $2,000 per month in your pocket. I know it's a bit more complicated than that and you can't bank on appreciation nor with the 10% appreciation last forever.

That said, knowledge is power and knowing your market is key to making deals so leveraging your knowledge of Lafayette could keep you in the game while you are learning the Denver market maybe something to consider. That said, I am very leery of declining markets.

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  • Robert Leonard
    Investor · Lafayette/Baton Rouge, LA · Member since 2013 · 1k+ posts · 915 votes
    10y

    Welcome to BP @Joey Meaux!  My recommendation is to be an opportunist.  Buy wherever opportunity presents itself.  You know the Lafayette market well enough to know about what's a good deal or not.   Plus you have a ground team of local contacts to work with.  If you study the market, before long you'll know the Denver market well enough to know a good deal when you see one.

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  • Joey Meaux
    OP
    Rental Property Investor · Midland, TX · Member since 2016 · 7 posts · 2 votes
    10y

    @Robert Leonard, thank you for the advice.  Deep down I agree with the sentiment. I think the current market in Lafayette presents a great opportunity and I would need a bit of time to learn Denver.

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  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    10y

    @Joey Meaux in the long term oil prices will go up again but I don't think we are through the pain yet. Now you can not time the market but it's clear that riding it down is not a game you want to play. The Denver market still has some legs. My advise is to be in a rising market unless you are strictly looking at cash flow. For example $300K property appreciating at 10% a year will win hands down over $300K property in a declining market even if the one in the declining market puts $2,000 per month in your pocket. I know it's a bit more complicated than that and you can't bank on appreciation nor with the 10% appreciation last forever.

    That said, knowledge is power and knowing your market is key to making deals so leveraging your knowledge of Lafayette could keep you in the game while you are learning the Denver market maybe something to consider. That said, I am very leery of declining markets.

    1Reply
  • Travis Sperr
    Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
    10y

    @Joey Meaux I would typically advise someone to invest in their own backyard, but because you are already investing in Lafayette and understand the market, I would not rule out looking at both. As @Bill S. stated - very different strategies in each market. Denver is hot, but deals still exists, it all depends on how hard you will work for a deal. Most people stating how impossible and over priced our market is are not willing to do what it takes. If there is anything I can do to help you once arriving in town please let me know.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    10y

    My advice would depend on your level of expertise in both investing and being a landlord. If this is your first venture I would not hold on to the property you have as you do not know if it is a good rental candidate. You would have no experience managining a property or a PM. I would sell and begin investing in Denver. Mistakes learned long distance are often the most difficult to recover from. 

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  • Joey Meaux
    OP
    Rental Property Investor · Midland, TX · Member since 2016 · 7 posts · 2 votes
    10y

    @Bill S. I would agree about commodity price, historical data reflects an approximate 10 year occurrence of the dip we're seeing now.  In '08 it took about 2 years for full recovery in the area if memory serves me correct.  Note I was also still in college at the time and not highly affected by the market.  I would also tender that I believe the rental market remains fairly strong from a demand side here.  Sales have dropped considerably but people still need to rent, albeit at a cheaper price if they can find it.  My only thought-was thought the current buyer's market represented a clear opportunity to get cheaper deals in respectable areas

    I don't think the Denver market is impossible. I just think the entry point is notably higher than Lafayette and everything I've read, whether it be general business or REI leads me to the conclusion that acting now is nearly always better than acting later. Yet, I am a newbie and might not be aware of how much opportunity is in Denver until the move is finalized.

    @Travis Sperr thanks for the insight and I do intend to reach out to folks and join meetups once I move.

    @Thomas S. market conditions make selling a highly unattractive option at this point. 

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  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    10y

    @Joey Meaux

    Find a good property manager in both locations go to IREM.org search for ARM certified property managers. Call 5 ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

    You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

    Paul

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