First Time Investor Seeking Suggestions

35 Replies

Hey everyone. I’m new to bigger pockets. I’ve been working in real estate and real estate tech for the past 7-8 years and live in the Denver metro area. 

Because the Denver housing market has been so strong over the past 5-6 years and I was fortunate enough to purchase in 2013 before things got really crazy, I have a decent amount of equity in my home. I’m interested in taking a portion of that equity and hoping to begin my real estate portfolio. BUT, the question is where to invest...

I do not want to invest in the Denver area due to property costs, so I’m hoping for a few suggestions on location and what to specifically look for in a property or two. Any thoughts on Cleveland, Kansas City, Indianapolis, or others? I have approximately 75-125K to invest accordingly.

I would very much appreciate any feedback, suggestions, or things I should make myself aware of before taking the leap to begin investing. 

All thoughts and comments are much appreciated!

-Jeremy

Think about how often you'll reasonably need to travel to a property, how much those trips will cost, and how much of your cash flow you'll have left. It may make more sense to invest with a partner or partners.

I'm not an expert on those particular markets, but if you do move forward it's important that you learn them like the back of your hand. Takes time but it's worth it

@Jeremy Helsabeck what rate of return would you consider acceptable? This could help you choose a market, then you could start researching that market. I suggest investing in a market that you know, but if you don't know any other markets, consider buying a turn-key rental under management. That way you can see the numbers based on the current rent. I do not suggest you try to buy, renovate, and manage a property from a long distance.

Hey Jeremy. What kind of properties are you looking for? Do you want something you put work into, something rent-ready/turnkey, SFR vs. MFR, etc.?

@Jeremy Helsabeck

Kansas City is a great market. It has a very strong rental market. Our metro is unusually large, has two professional sports teams, and is also benefited by an eclectic variety of industry.

To add to that, the affordability is extremely attractive. KC is one of the few markets able to provide B class property from $90k-$150k while being able to stay right around that 1% RTV.

Please reach out if you'd like to know more information. I'd be happy to help. 

@Jeremy Helsabeck

Welcome to BP! 

Smart decision of not investing in a place where property prices are high! You can get a lot of good properties in the midwest! 

Here are some things that we make sure exist in a market that we invest in: 

1. Low property taxes ( really important if you are looking for more cash flow! Low taxes and low property prices are a WIN) 

2. High rental demand( this will make filling units much easier if vacancies do occur, and also we have noticed that in areas where there is high rental demand, tenants will stick around much longer) 

3. Landlord friendly laws ( you want to invest in a state that is more landlord friendly, this will allow you to have a much more positive experience as an investor)  

4. MOST IMPORTANT ( A GOOD PROPERTY MANAGER) This is KEY, you want to work with a property manager that has a good reputation and also is able to educate you about the market. They should know the trends of the market, the demand, and overall just have a clear idea of how their market works! 

Hope that helps! 

Let me know if you have any questions 

Indianapolis checks all of the above boxes @Subbie Kaur mentioned. I'm an investor and business developer at a local property management company and we've had a lot of investors in Colorado start investing here over the last couple of years. We're actually in the middle of a 1031 exchange with a client who's selling some Denver investment properties and rolling the profits in to Indy. She's looking at purchasing 4-5 rentals with her 2 Denver property sales.

I like what @Taylor L. said about cost of travel and I can fly round trip between Denver and Indy for around $150 if I'm flexible on timing. Kansas City may be a good option as it's about an 8 hour drive or Oklahoma City for a 10 hour trip.

I think the most important thing is building the right team. The right team in an OK market will likely outperform a poor team in a great market. It's like people getting rich in stocks during the tech boom and losing it all when the market shifts. Markets always change, but teams should be consistent.

Welcome to the investment world Jeremy Helsabeck!  I am to far from Indianapolis but in the North East Corner of our wonderful state (Ft Wayne area),  if you want to invest in a smaller metropolis. I would be willing to help in anyway!

hello, I have been investing in real estate in Oklahoma city for over 30 years, has always been strong! prices are good, values are strong, taxes low, also when economic swings hit the rest of country we generally see little affects.

don't tell anyone haha I think we have a fairly well kept secret!! 

let me know if I can help

Hi @Jeremy Helsabeck I am also from the Denver area looking at the Kansas city area to invest. May I ask what you do for work in the real estate here in Denver? 

@Nicholas Parish What are some of the areas to invest in KC? I will be in the area next week for the USA vs Panama Soccer match and was thinking about driving around different areas to get an idea of how the neighborhoods are. Can you give us any pointers as to what to avoid/see while there? Ideally I would like to get a multi-unit. I also have around the same amount of equity that Jeremy has to invest. Planning on doing the BRRRR so that my money (or most of it) won't be tied down and pay back the HELOCS on my rentals. Any info is great appreciated.

@Jeremy Helsabeck

@John Woods

@Subbie Kaur

Jeremy! Exactly what Subbie said... she absolutely nailed it. And John is spot on for the perfect market.  Oklahoma - Real Estate’s Best kept secret

1. Low property taxes + prices

2. High rental demand and cap rates 

3. Landlord friendly laws ( Us definitely)

4. MOST IMPORTANT ( A GOOD PROPERTY MANAGER) I own a property management company in Southern Oklahoma and have an amazing team. Ardmore, Ok - check it out. Halfway between Oklahoma City and Dallas, near the world’s largest casino, and a beautiful lake. This town is growing like crazy. 

What are you talking about its a sellers playground with zero inventory. OKC is for luxury investors now. 

@Landon Whitt I disagree. I see 6/7 deals a week get picked up by OOS investors. If a deeper pockets investor wants a 15 property package this week there wouldn't be a problem. Luxury is a little tough from my standpoint just because you see bigger property drops/rent drops in downturns. But everyone has a different strategy! I just see a lot of people pursuing safe/consistent C class cash flow. No matter what the economy looks like, most can afford $800/month rent. Thoughts? 

@Jeremy Helsabeck you're in a simial situation to a realtor I know in Denver named Scott Kimball. You should connect! Tell him I sent you. He's been evaluating the OKC market from several different angles and could provide some insight from a Denver perspective! 

I agree with both Sarah and Kiera even the smaller towns may have even more opportunities due to they are starving for new growth. I go at it a little different, as a developer/builder, I create my own investments ( at a much different price point). love the out of state investors, I can provide them deals below retail and I still make money

thanks 

sorry, I think we are getting off track, my advise to the first timers would be; its alright to use your home equity ( get a line of credit ), but spend as little of your cash as possible, you can use that as a carrot with the lenders, this will allow you to do more deals and really stretch out your dollars, you never know when it comes in handy to have the cash !!

good luck

while off track, I have to disagree with Sarah, not near (A) beautiful lake, she is surrounded by several great lakes nearby!!!

@John Woods There are cash flowing rentals still in the center of OKC. I see around 4-6 deals a week go to OOS investors. No need to go to a small town for growth! Since 2010, the Oklahoma City MSA is the 10th-fastest-growing large metro in the country and has grown twice as fast as the nation.

I totally agree, I would never want to rule out the biggest market in the state, I'm just saying there are even more opportunities

@Jeremy Helsabeck I’ll be the first to encourage you to take advantage of living in one of the best RE markets in the country. After all it sounds like owning CO real estate is what put you in a position to be able to invest to begin with. Keep doing what worked the first time. Risks and hassles of out of state investing aside, CO is a great market with both cash flow and appreciation. You have enough for a 25% down payment on an entry level investment property in Denver metro or if you want your money to go farther I’m seeing lots of great deals well within your price range (with leverage) in Fort Collins, C Springs, Pueblo. CO has strong fundamentals great jobs and population growth, landlord friendly, it’s been good to you so far it sounds like so why take a risk on a different market? Nothing against those other markets but there’s something to be said for knowing your local market, building your team face to face and being able to drive to your property. The major negative in this market is the barrier to entry but you have plenty to get started here. Every market across the country seems over priced right now, not just Denver and I’m finding it easier to source off market deals with built in equity here in my backyard where my personal network is whereas going out of state you’re more likely to pay retail/overpay or not even be able to analyze deals properly because it takes a long time to learn a new market and all the micro markets within an area. Just some things to consider!

also good advise, but I would still rather be fishing lol !!!

@Jorge A Amaya We like to focus on Raytown, Grandview, Lee's Summit, Belton, SE Kansas City, areas of Independence, and neighborhoods north of the river. 

It's hard to make suggestions on what to avoid. I would perhaps narrow your search to the neighborhoods you're interested in and go drive around to see them in person. 

Are you 100% sold on multi-family? We have seen that in a B- to B+ neighborhood, although the neighborhood is ideal, the tenants attracted to multi-family tend to be less desirable. I'd be happy to share my insight with you. Please feel free to reach out if you have any questions.  

Originally posted by @Jeremy Helsabeck :

Hey everyone. I’m new to bigger pockets. I’ve been working in real estate and real estate tech for the past 7-8 years and live in the Denver metro area. 

Because the Denver housing market has been so strong over the past 5-6 years and I was fortunate enough to purchase in 2013 before things got really crazy, I have a decent amount of equity in my home. I’m interested in taking a portion of that equity and hoping to begin my real estate portfolio. BUT, the question is where to invest...

I do not want to invest in the Denver area due to property costs, so I’m hoping for a few suggestions on location and what to specifically look for in a property or two. Any thoughts on Cleveland, Kansas City, Indianapolis, or others? I have approximately 75-125K to invest accordingly.

I would very much appreciate any feedback, suggestions, or things I should make myself aware of before taking the leap to begin investing. 

All thoughts and comments are much appreciated!

-Jeremy

 Hello and welcome! Yes, Cleveland is a great place to invest in at the moment. It is great for buy and holds. Many OOS investors go with a Turnkey so they can remain passive. 

@Jeremy Helsabeck I'm assuming that your goal is cash flow. That being the case, the Midwest and Southeast are generally the best cash flow markets, which is why I like Indianapolis and Kansas City so much. The first thing I recommend is researching the markets that are on your radar. Start with the economic and demographic trends. Look for markets with growing populations and growing jobs. Look for modern, diverse industries and economies. The drill down and look at property taxes and insurance rates. That will have a big effect on cash flow. Once you've chosen a market. decide what class of property/neighborhood fits your criteria. As an out of state, hands off investor, I recommend buying the best class of property that you can afford. You'll reduce the potential for tenant hassles, turn over and expenses with a better class of property. The most important thing is to know the neighborhoods or work with someone that  you trust that does. The biggest mistake out of state investors make is unknowingly buying in bad areas. You can fix any other mistake that you might make but you can;t move a house. We operate in both Indianapolis and Kansas City which has a good combination of strong economic/demographic trends as well as good cash flow. Feel free to reach out if you want some help. 

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