Hello folks,

I'm looking for my first property. I have some reservations of doing major rehabs but could do minor rehab without hesitancy. Ive basically only been shown or looked into turnkey or very close to turn-key homes. I have 20-25% down for a conventional loan up to a purchase price of 400k. I live in the Portland OR market and the numbers, with all reserves (taxes, vacancies, Capex, etc) seem to consistently come up very thin or negative. Ive shopped different pricepoints in the Boise ID market too with the same results. My thinking is a Boise median home at least leaves plenty of money in the bank for reserves, but still the fact is cash flow and ROI is not appealing.

I seem to heave a couple options: start inquiring on seller financing with 10-20% down on these properties or buy a lower priced home and be willing to be satisfied with market appreciation, loan paydown, and rising rental prices (potentially) as my reward.  This, nevertheless, seems to limit adding three to five properties over the next five years a feat with a tight personal budget.  

What other options do you see in this mix? Arm loans? Would you tie up 100k on a 200k home(thid doesn't seem like a good idea to me)? Get off the MLS and peruse other methods(my radar is up but not close to fine tuned).

Doing lots of reading and will gladly accept practical advice and input

Ken

Hi @Ken Vogel - I know, our market is pretty tight right now. It all comes down to the returns you are looking for. If you have cash - yes, you can definitely look beyond the MLS. Wholesalers will want a really strong idea of what you are looking for, and you need to be ready to act quickly. Also, Fall and Winter tend to bring a few more deals on market.

@Ken Vogel , perhaps consider expanding your search outside of the Oregon/Idaho markets.

@Jason G. , do you have suggestions?

@Ken Vogel
I would ask your agent to show you "less turnkey" I.e. Value add opportunities locally.

I would not suggest trying to do any exotic financing to try to turn it into a good deal. If you must do that then that's a sign that the underlying real estate just doesn't have good fundamentals as a cash flow investment.

Also out of your local market is viable as well just do your research and visit the other market if possible.

@Ken Vogel can you get your hands on more investment dollars, there might be a turn key option for larger 4-10 plex type investing. SFR even with adu will be hard in this market.

You need to get over your fear of rehab and force some appreciation, both on rental properties you purchase, and also possibly on flip properties to accelerate the accumulation of capital to invest in rentals. I know some successful investors in expensive areas that employ a "flip 3, hold 1" type model, and they force appreciation on the ones they hold as well ...

REI is NOT a passive investment, at least in so far as getting started buying individual properties go ... you have to be willing to get your hands dirty at least until you can built up your knowledge and business systems to make it more passive. If you aren't willing and able to do this, and you want passive REI, then buy an REIT and be done with it ... your returns won't likely be nearly as high as hands on local, but that will be passive and it least you will be diversified and only leveraged in a manner that is non-recourse to you personally (which is very important if you are truly hands off with no control). Going out of state as a newbie buying individual properties you are applying leverage without control or diversification, which is a recipe for disaster IMO and experience.

Originally posted by @Ken Vogel :

Hello folks,

I'm looking for my first property. I have some reservations of doing major rehabs but could do minor rehab without hesitancy. Ive basically only been shown or looked into turnkey or very close to turn-key homes. I have 20-25% down for a conventional loan up to a purchase price of 400k. I live in the Portland OR market and the numbers, with all reserves (taxes, vacancies, Capex, etc) seem to consistently come up very thin or negative. Ive shopped different pricepoints in the Boise ID market too with the same results. My thinking is a Boise median home at least leaves plenty of money in the bank for reserves, but still the fact is cash flow and ROI is not appealing.

I seem to heave a couple options: start inquiring on seller financing with 10-20% down on these properties or buy a lower priced home and be willing to be satisfied with market appreciation, loan paydown, and rising rental prices (potentially) as my reward.  This, nevertheless, seems to limit adding three to five properties over the next five years a feat with a tight personal budget.  

What other options do you see in this mix? Arm loans? Would you tie up 100k on a 200k home(thid doesn't seem like a good idea to me)? Get off the MLS and peruse other methods(my radar is up but not close to fine tuned).

Doing lots of reading and will gladly accept practical advice and input

Ken

 Turnkeys can be a great way to go if you are not ready to be a Landlord or spend 100% of your time managing a project.

I would suggest looking at:

The Best Types of Markets for Profitable Turnkey Properties

and

What to Ask When Working With a Turnkey Provider