Looking to buy and hold real estate. Help a newbie out? :)

Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes

I would suggest to find a good turnkey company. $20k might be a bit tight though. Regarding to the books and materials, just pick and read. Same with the podcasts. Just pick one and start listening all the time. I do it all the time when I'm cooking, washing dishes, driving, etc. Buy some Bluetooth headset, and you are good to go!

0 Reply

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes

8y

Originally posted by @Arley Collado:

Greetings all!

Long story short: I'm highly interested in pursuing the buy and hold route as a real estate investor, however, trying to buy in my own backyard (Orange County, CA) is a bit of a challenge due to the insane housing costs here. With that being said, I have turned my attention to other areas across the country in search of properties that I can take down without shelling out $500k for it.

For those of you who hold rental properties (SFR, multi-family, etc.) in parts across the country, what advice would you give to someone like me looking to pursue this route? I have about $20,000 liquid that I can tap into from savings, which I would use a portion for the down payment, and my credit score is 710-714 so I'm not opposed to obtaining financing through a local bank or credit union for financing.

Also, what additional books, materials, or resources would you recommend that I could read to get myself more familiarized with this form of real estate investing? I know these questions have been asked over and over again in these forums so I apologize in advance for the redundancies.

Looking forward to connecting and leveraging knowledge with all of you!

Happy investing!

-Arley

$20k would best be used as a downpayment to buy an $80k SFR or Duplex in the midwest.

1 Reply

Arley Collado

OP

Financial Analyst · Irvine, CA · Member since 2011 · 5 posts · 9 votes

8y

@Soh Tanaka Thanks for the input! Yes, I've been listening to a lot of different podcasts during my commute, down time at work, etc. It's a great way to get educated while still being productive.

@James Wise You read my mind! Appreciate your input. I'm focused right now on areas around Fort Wayne, Indiana and Columbus, Ohio. Any thoughts on either of these markets? Thanks

1 Reply

Brittney Johnson

Real Estate Professional · Costa Mesa, CA · Member since 2017 · 11 posts · 13 votes

8y

Loopholes of Real Estate by Garrett Sutton is a great informative read for starting out. Breaks down taxes and asset protection.

6 Reply

Arley Collado

OP

Financial Analyst · Irvine, CA · Member since 2011 · 5 posts · 9 votes

8y

Thanks for the recommendation, @Brittney Johnson! Just ordered it on Amazon right now. Are you investing outside of CA as well?

1 Reply

Shawn Q.

Rental Property Investor · Champaign, IL · Member since 2015 · 146 posts · 80 votes

8y

I would strongly consider house hacking and leveraging friends as co-living tenants. With that amount of cash you should be able to meet the 3.5% down for an FHA - aim for something that may or may not need work with plenty of beds for your friends. Ideally something that could come in range of a 1:1 bed:bath ratio after a long-term live-in rehab. Keep an eye out for an airbnb possibility - mother-in-law suite, etc. if you live in a conducive area. Resolve to be the least comfortable of the people living in your house. Collecting rent to cover expenses and saving what you would have spent on rent is a great way to accelerate your real estate. I would look at Set for Life by @Scott Trench as a starting point, then do a deep dive into house hacking here on the site.

As for investing our of area, I think you'll need a little more dry powder. Remember you're going to want reserves, and any bank will largely require 3-6 months of expenses in a cash account (although some banks like mine allow a Roth IRA or brokerage to stand-in for cash reserves, so make sure to ask about that). I'd hesitate to go turnkey or remote at the B- and below levels - which is what that cash amount will get you. In any case, good luck with your journey and let us know how it goes!

1 Reply

Art Mimnaugh

San Ramon, CA · Member since 2017 · 78 posts · 97 votes

8y

@Arley Collado Real Estate like many other areas is constantly changing and we are always all learning. Spend some time listening to the podcasts, and reading but would really recommend networking and meeting with investors in the markets you are looking at. You can only do so much behind a screen and really need to get feet on the ground. So many properties numbers look great until to realize the impact of being one street to far and have triple the water costs. As an out of state investor myself getting a solid team together is important but at the same time spending time yourself in those cities to understand the nuances of each of the areas as well as your risk tolerance is also going to be important. I am happy to discuss with you my experience as a CA investor owning multifamiles in the Columbus market. I am still relatively new at this so I can relate to many of the feelings I am sure you are going through at the moment. PM me and happy to chat.

Cheers,

ART

1 Reply

Andrew Johnson

Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes

8y

@Arley Collado Okay, here goes the "wet blanket" comment: read books and save your money. Look at that $20K as your reserve funds and start saving up for a 25% down payment. You can use the time figure out what market(s) you might want to invest in. In my opinion you should start first with the market (geography) and then start to look at property types, prevailing cash-on-cash returns, etc. to start to figure out your definition of a "good deal". Don't forget to factor in travel costs. Las Vegas is a "long drive" from Orange County and Memphis is a decently long flight. If you're visiting 1-2 times a year (I visit my out of state properties twice) the costs aren't small relative to the cash-flow. Well, they are once you get 20+ units but if you're starting with 1 SFR or 1 duplex you have to factor in how much those plane tickets will eat into your "$100/month cash-flow" (just to pick a random metric some people use here on BP).

5 Reply

Poem Turner

Real Estate Agent · Georgetown, TX · Member since 2016 · 169 posts · 107 votes

8y

203k or a HomeStyle renovation loan may be an option for you as well. That might put you in a position to purchase a property that needs some work, but that could be rolled into the loan. Partnering and/or house hacking is a good option as well. You certainly COULD find something out of state with your 20k down, but at a distance, the tenants you might be working with might be a bit of a headache. On the other hand, if you're up for that, areas around Fort Hood or down in San Antonio have properties at that price point all the time.

0 Reply

Sam Shueh

Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes

8y

Probably not even a parcel in the dessert part of West. Suggest you save more or put in your 401K. Whatever deals you acquire will be problematic.

0 Reply

Jason Carter

Rental Property Investor · Culver City, CA · Member since 2012 · 403 posts · 246 votes

8y

Search for investors in Fort Wayne and Columbus on BP. Send them direct messages asking them about their market, their investment experience, and property managers. Hit the property managers up. Ask them questions. Build relationships while you learn about both markets, and see which one rises to the top. You'll be surprised at how this can open doors. See which doors open and GO THROUGH THEM!

3 Reply

Arley Collado

OP

Financial Analyst · Irvine, CA · Member since 2011 · 5 posts · 9 votes

8y

@Shawn Q. - Thank you for your insight! I wish I would have considered house hacking in college before I got married and had my daughter. I've read and heard so many successful stories other investors have had using that strategy.

@Art Mimnaugh - Will definitely reach out to you privately with further questions about your own experience working the Columbus market. Thanks for sharing!

@Andrew Johnson - The rain was supposed to come tomorrow, not today! :) In all seriousness, I value everything you mentioned in your reply. I haven't ruled out Las Vegas as a potential market to enter because I believe it's trending in the right direction but as you mentioned, I would like to do more research in areas where the ROI and cash-on-cash returns fit my criteria.

@Poem Turner - Thank you for mentioning the 203k and HomeStyle renovation loans! With those loans, do they require me to live in the property, though? Doing a little work to bring a property up to date doesn't rattle me, but as you mentioned, screening tenants from a distance is going to be a challenge and I hope to find a good property management company to help with the legwork. Great advice!

1 Reply

Scott HallPro Member

Real Estate Agent · Newport Beach, CA · Member since 2017 · 13 posts · 1 vote

8y

Arley Collado You and I have a similar situation as I too am in Long Beach, CA, but currently analyzing deals in Cleveland, OH. Do you have any family/friends in other parts of the country?

0 Reply

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes

8y

Originally posted by @Arley Collado:

@Soh Tanaka Thanks for the input! Yes, I've been listening to a lot of different podcasts during my commute, down time at work, etc. It's a great way to get educated while still being productive.

@James Wise You read my mind! Appreciate your input. I'm focused right now on areas around Fort Wayne, Indiana and Columbus, Ohio. Any thoughts on either of these markets? Thanks

Negative. I operate in the Cleveland market so I don't have any expertise in any of the above mentioned markets. I hear good things but again have no value to add to the convo in that regard.

1 Reply

Caleb Heimsoth

Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes

8y

I had a similar issue when I bought my first property so I went the turnkey route and got my first property for about 20k all in, including closing costs. Then I decided I wanted to buy something with a bit more built in equity, so I bought my second one in a different city and state. If you’re willing to go out of state it opens a whole new set of options. Just make sure you do your due diligence. PM if you want to talk more.

1 Reply

Poem Turner

Real Estate Agent · Georgetown, TX · Member since 2016 · 169 posts · 107 votes

8y

@Arley Collado - 203k, yes. HomeStyle Renovation loan, no; they can be investment properties up to the 4th one you own, I believe. Talk with a loan officer who has worked with the products before; it'll save you a lot of headache! Not every one can offer them or knows how to work with them!

Good luck!

0 Reply

Enes Arslan

Los Angeles · Member since 2017 · 1 post · 1 vote

8y

I would suggest aggressively saving up a larger amount to invest and spending most of 2018 studying the markets you want to go into.

$20k gives you zero room to move in case you have unforeseen issues.

1 Reply

Rashard Alomari

Investor · Memphis, TN · Member since 2016 · 215 posts · 128 votes

8y

Welcome! BP is a great platform to get all of your real estate answers!

1 Reply

Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

8y

Originally posted by @Arley Collado:

@Soh Tanaka Thanks for the input! Yes, I've been listening to a lot of different podcasts during my commute, down time at work, etc. It's a great way to get educated while still being productive.

@James Wise You read my mind! Appreciate your input. I'm focused right now on areas around Fort Wayne, Indiana and Columbus, Ohio. Any thoughts on either of these markets? Thanks

What types of properties are you looking at in these markets? especially Cbus

[email protected]786-494-6766

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0 Reply

Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

8y

Originally posted by @Art Mimnaugh:

@Arley Collado Real Estate like many other areas is constantly changing and we are always all learning. Spend some time listening to the podcasts, and reading but would really recommend networking and meeting with investors in the markets you are looking at. You can only do so much behind a screen and really need to get feet on the ground. So many properties numbers look great until to realize the impact of being one street to far and have triple the water costs. As an out of state investor myself getting a solid team together is important but at the same time spending time yourself in those cities to understand the nuances of each of the areas as well as your risk tolerance is also going to be important. I am happy to discuss with you my experience as a CA investor owning multifamiles in the Columbus market. I am still relatively new at this so I can relate to many of the feelings I am sure you are going through at the moment. PM me and happy to chat.

Cheers,

ART

Well said Art. I think one of the smartest things you can do from investing abroad is taking the time to book a 2 day trip to that market and check it out. Meet with local property management, attorneys, agents, and see if it's a market you like. Start watching inventory every week to see if there are deals that are there or not.

[email protected]786-494-6766

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1 Reply

Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

8y

Personally with $20k only and no experience trying to go out of state - I would not do it. Now if you heard my podcast interview on BP #248, you may remember that I bought my first rental with $20k and spring boarded from there. Time are different and it was in state, which is a big difference. Personally, I would use that $20k to flip a house locally or keep it and build up your savings so that you can have at least $40k in for a down payment and $15-$20k in savings for reserves.

One flip could allow you to get there

4 Reply

Brittney Johnson

Real Estate Professional · Costa Mesa, CA · Member since 2017 · 11 posts · 13 votes

8y

I am looking out of state. Still in research mode. Let me know how you like the book. Hope it brings some new insight on a few topics. It did for me.

2 Reply

Ali Boone

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

You aren't necessarily going to find books specific to out-of-state investing. You can definitely read books on rental properties in general, and maybe a little bit on management (out-of-state you'll likely be needing to manage the property manager as your main duty).

While I can't think of books specific to it, there are still lots of resources. There's lots on BP, but to get you started, here's some of my old articles that hit on things related to out-of-state investing (it's all I've done from LA).

Out-of-state buying options:

https://www.biggerpockets.com/renewsblog/2012/12/2...

Choosing markets:

https://www.biggerpockets.com/renewsblog/2014/02/2...

https://www.biggerpockets.com/renewsblog/2015/12/1...

Running numbers (applicable to any property, but especially if you're buying for cash flow elsewhere):

https://www.biggerpockets.com/renewsblog/2013/01/1...

I have lots more on various topics but will leave it at that for now. Reach out anytime if you have any questions I can help with.

1 Reply

Adam Widdicombe

Investor · Farmington, MN · Member since 2017 · 57 posts · 26 votes

8y

@Arley Collado

Welcome to the world of RE investing! You will find (most) people on this site very helpful and informative.

I own a few properties and am closing on a few more in the next 60 days.

In the middle of my investing I purchased two turn key houses in Kansas City. I would caution anyone that is going to do this to stop and really evaluate the type of investor you want to be. All of these providers have "sold" out of state investors(mostly from CA) that there is no investment play in CA so come and bring your money to us and we'll hand you this gem. Which they have sucked the equity out of, manage and charge a fee, all while you think you are sitting back and making a decent cash flow. Meanwhile while you go under contract they are already trying to sink their hook in the next guy and your property might take 3-6 months longer to get completed.

Now there are nah-sayers on here that think its the golden ticket and the bread and butter for them. I think in a few years they are going to realize that the areas and companies they invested in are not that great of a deal. There will be people on here that also try to "refer" you to turnkey companies, be weary of that as well. If you want to PM me I can share details on my own experience and also put you in contact with a few people that do alternate types of investing for out of state folks such as yourself

In the end...I would take the time and money back and invest it in networking and building my own team. (banker, property manager, inspector, rehabber, wholesaler) I can tell you this can be done right from BP and from taking a few trips to meet people in person.

Happy hunting!

1 Reply

Tom Ott

Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes

8y

Originally posted by @Arley Collado:

Greetings all!

Long story short: I'm highly interested in pursuing the buy and hold route as a real estate investor, however, trying to buy in my own backyard (Orange County, CA) is a bit of a challenge due to the insane housing costs here. With that being said, I have turned my attention to other areas across the country in search of properties that I can take down without shelling out $500k for it.

For those of you who hold rental properties (SFR, multi-family, etc.) in parts across the country, what advice would you give to someone like me looking to pursue this route? I have about $20,000 liquid that I can tap into from savings, which I would use a portion for the down payment, and my credit score is 710-714 so I'm not opposed to obtaining financing through a local bank or credit union for financing.

Also, what additional books, materials, or resources would you recommend that I could read to get myself more familiarized with this form of real estate investing? I know these questions have been asked over and over again in these forums so I apologize in advance for the redundancies.

Looking forward to connecting and leveraging knowledge with all of you!

Happy investing!

-Arley

Investing out of state can be great when you live in a market like CA. Trying looking into the Midwest. Homes there are often under $100k and can rent at $1,000 or so. (of course those number can change depending on a lot of factors)

Good luck to you!

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Looking to buy and hold real estate. Help a newbie out? :)

Looking to buy and hold real estate. Help a newbie out? :)

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