First Rental property

5 Replies

I am in the process of saving up money. By March I will be ready to purchase. While saving, I am studying and researching the real estate business to learn more before I buy. I want to start in either Nashville or Cleveland as I live in both cities. Which would be a better city to start in? How much money is a good amount to save to purchase my first property? I would love to do this with little to no money down if possible. What ways can I make that happen ? Also what type of home should I start off with first?

First congratulations on making this investment endeavor.    Since you are studying real estate business, researching your local cities is another tool to add to your belt for investment properties.   
I personally would look at areas you know in both cities, and see if there are any city plannings or updates going that could potentially benefit in the long term.  

A good amount is one that you are comfortable with putting down on a property, and more you are skin in the game you have better it looks when you approach investors, or banks.       Try to look over a  few properties and run your numbers using different scenarios such as hard money lenders, or doing it by yourself.   

On deciding which home to purchase to start off, this is where your strategy will come into play.  Many people say multi family is the way to go.    I have met quite a few investors that swear by single family, and fixer uppers.     

You have options which is the great part.  See what it is available in your target cities and just build.

Keep up the research and the hustle my friend.

Best of Luck to you!

Cleveland would be better if you want to do rentals, Nashville would be better for flipping and development. 

In terms of how much money you need very much depends. The only answer is between $0-$10m. 

You can definitely start with no money if you find a killer deal. That's the key-finding a killer deal. 

Hey @Miyako Boyer ! Super excited that you're looking at investing in Nashville. Any way you spin it, Nashville is the place to be for flips right now. I don't think I have seen a "Top 5 Places to Invest" in the past couple years that didn't include good ole Music City. To your question about funds, it entirely depends on the deal. If you are looking at using a hard money lender, I have seen people get into properties with purchase prices around the 150's with only 30K cash. I have also seen cash to close on some houses less than 15K before refinancing to a conventional loan. However, I do have to note that every deal is entirely different. Let me know if I can be of any assistance!

Originally posted by @Miyako Boyer :

I am in the process of saving up money. By March I will be ready to purchase. While saving, I am studying and researching the real estate business to learn more before I buy. I want to start in either Nashville or Cleveland as I live in both cities. Which would be a better city to start in? How much money is a good amount to save to purchase my first property? I would love to do this with little to no money down if possible. What ways can I make that happen ? Also what type of home should I start off with first?

I cannot speak to Nashville but I've been around the block in Cleveland. There are some great rental neighborhoods and there are also some incredibly blighted areas. Prices will vary widely and you need to know why that is. As such I created The Ultimate Guide to Grading Cleveland Neighborhoods so out of state investors can get a firm grasp on the Cleveland market.

Knowing the pros and cons of each type of neighborhood is very important. Take a look at some photos below to see some of the things you should be prepared for if you engage in investing in these blighted areas. Note; these are all photos of properties in my company's rental portfolio. We have a portfolio of over 1,000 rentals in a wide range of neighborhoods in Cleveland.

Tenants got into a fight over a nominal sum of money. Burning one parties car was the way one of the parties involved decided to handle the situation.

Tenants got into a fight over a nominal sum of money. Burning one parties car was the way one of the parties involved decided to handle the situation.

 Best part about the car fire was one of the parties forgot which car was owned by the tenant. They just knew it was gold. So they set all of the gold cars they saw in the parking lot on fire.

Best part about the car fire was one of the parties forgot which car was owned by the tenant. They just knew it was gold. So they set all of the gold cars they saw in the parking lot on fire.

 No caption necessary for this toilet from hell.

No caption necessary for this toilet from hell.

This is what a kitchen can look like when a low income tenant moves out of it.

This is what a kitchen can look like when a low income tenant moves out of it.

This is what a backyard can look like when a low income tenant moves out of it.

This is what a backyard can look like when a low income tenant moves out of it.

If tenants in these tough neighborhoods don't have yards, don't worry they will light off their fourth of July fireworks in their bathrooms.

If tenants in these tough neighborhoods don't have yards, don't worry they will light off their fourth of July fireworks in their bathrooms.

Don't worry though. Sometimes when they move out they forget about their unregistered firearms.

Don't worry though. Sometimes when they move out they forget about their unregistered firearms.

Another point i'd like to make is you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.