Best option for first time investment?? Sweat Equity/relocation

10 Replies

Hi, all! 

First time investor question: 

I am seriously looking at the Denver market for a first investment, because it's such a good deal for the money and a perfect place for a property since the market seems to be exploding. The only issue - since I am going to be a first-time investor, I would highly prefer to go in with a more experienced partner/investor, and put in plenty of sweat equity to the property to get it going. I've done something similar before (no equity, but on-site property management & flipping in college on one of my parent's properties. Refurb bathroom, backyard, & keep tenants in the home) Parents are capped on properties as of yet (7) so they regretfully declined the opportunity. 

I still want to invest while the market is good, I don't know whether it'd be a better idea to 

1. Stay in Los Angeles & save enough money to go into the property alone on an FHA,

2. Relocate first and then hopefully foster relationships that could turn into a partnership once I'm there, or 

3. Start looking for an investor while I'm still in LA and move once that's secured (which seems the most challenging in terms of networking, but least risky in terms of income). 

Any and all recommendations would be super helpful. 

(P.S. I was planning to relocate to Denver eventually anyway, I'm not JUST moving because of the RE market.)

Number 2 = There is nothing like building personal experience,contact and knowledge by being there .Chasing hot markets without direct knowledge is a recipe for failure 

Awesome thank you @Steven Picker so much for the feedback. Maybe I can even rent from someone on BP looking for tenants to start my first relationship out there haha! 

@Alison Shurter I think you would gain so much from actually living here for a little bit before investing. That gives you time to build relationships with local people. Plus you can learn the areas that might make good investment opportunities and which to avoid.

One thing you might want to keep in mind is what your employment will look like when you transition here. Are you planning to stay in the same line of work? That will impact your ability to qualify for a mortgage. Another thing that will impact your mortgage is whether or not you intend to occupy or "house-hack". Down payment options are much lower if you can occupy the property and rent out rooms or units (Multi-Family).

Just as a note, you must occupy the property to use FHA financing. I guess I'm not entirely clear from point #1 above if you knew that or not.

How are you going to qualify for the loan? Are you going to be able to find work in the same field that you are currently in? Make sure your financing is set before making the leap. I'd recommend renting here to get a better feel for the area. Once you're comfortable, look into buying something that fits your goals. You don't need a partner. It's easier than you think.

@Alison Shurter another vote here for getting your boots on the ground before doing a deal. I laughed when you said you were looking at Denver "because it's such a good deal for the money". I can't count how many folks here keep saying the market is over valued and going to correct because prices are so high. Fundamentals (population growth and housing supply) say prices will continue to rise BTW. At any rate, knowledge is power and I would recommend learning and growing while you make your transition to actually living here. Once you land then you will be well ahead of the curve.

Originally posted by :

Just as a note, you must occupy the property to use FHA financing. I guess I'm not entirely clear from point #1 above if you knew that or not.

 Yes, I was definitely planning on a live-in situation, in Denver, but waiting here in Los Angeles on my current situation until I can fully afford going into a house without a partner/financier of any sort. 

Super helpful tips, thanks so much for your input! 

@Matt M. When I first move I was definitely going to rent for just a bit regardless, just because I wouldn't want a situation where I'm looking for actual homes out-of-state, especially if I go in with someone else I would want to give as much to the deal as possible in terms of sweat-equity, which would include some scouting! 

What risks are there to going it alone? I am apprehensive on going it alone simply because of my real-life knowledge of it all, I don't want to sign into something that's over my head without knowing it- Theory to practice is always a big leap!

Why note live in LA and invest remotely? 

I used to live in Tel Aviv, SF Bay and now in OC CA.

As far back as Tel Aviv I bought rentals I  multiple states but wants to live in California,  at least for now.

To date I flipped about 100 houses in multiple parts of the country, all remotley.

I'd say live where you want to live and invest where the numbers makes sense,  Denver or other.

@Bill S. Looking at Denver, it's a dream compared to Los Angeles! 

I was pretty convinced I would have to kiss my dreams of home ownership & REI goodbye once I got a feel for things out here. Being able to get your hands on a 3BR for 300k or less is mind-boggling (especially since I'm currently spending $1000 to rent ONE bedroom of a small 2BR apt in a not-so-good part of Hollywood.... and that's a good deal! o.o)

I'll definitely try to learn as much as possible before my move, and save save save! Trying to get an idea of Denver vs. here, how many first-time homebuyers do you usually come across at Reliant? Are they younger like me, or more established/families? Price range & neighborhoods they usually prefer?

I'm also curious to know if there are any buying anomalies in Denver vs. other markets - do you see any trends in Denver that you haven't heard of in other markets?

Thanks so much for any insight that you have on these things!!

You are on the right track by focusing on doing things local. Denver is a great investment market, as is LA ... I would move where you want to live long term, then invest there. I would not move just to invest, but because you want to live there (and this sounds like what you are doing). So, if that is Denver, I'd move there, rent for a year, then start investing there once you get the lay of the land, build a network, and find a great deal that you can afford ... study up, save up, and build your network in the meantime. Not trying to scare you, but moving out of SoCal is a serious decision and may be a one way ticket ... I have several friends who moved out of state, didn't like it, but can't move back now because they are totally priced out. Having said that, everyone I know that lives in Denver loves it there.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here