What would YOUR specific strategy be to maximize your money if:
1) Someone gave you $50-75K to spend on your first investment property... and you had to look outside your local big city market (Los Angeles/San Fran/NY, etc)... but can't travel much...what cities/areas would you look at and why?
2) Would you go for Fix-n-Flip to make a lump sum of cash to invest in more properties more quickly? Would you do the BRRR strategy (Buy, Rehab, Rent, Refinance) ? Another strategy?
3) Would you do SFR? Multi-Fam? Turnkey? Other?
4) What is the best way to develop a "trusted team" more quickly?? I know there are many real estate agents or property managers who may have resources - but how to evaluate which one is the best one to go with?? Thanks!!
I would personally use the BRRRR strategy. you end up getting your equity out and keep the property, its like fix and flip but better. I am near Houston and there are dozens of smaller metro areas around HTX, so not an issue for travel. best thing to do is pick people you feel you can trust and run with it. if it doesn't work out, move on and use what you have learned.
@Robert White Thanks so much for your specific advice! And yes, since I will likely be investing long distance... what do you feel is the best and fastest way to develop a "trusted team"??
I would use the power of networking and develop a relationship with people in your target area. I haven’t had to do this yet but thats where I’d start
1) I would pick a market I know/understand well. There is no replacement for being able to eyeball a map and know what areas mean what. Maybe there is another market you have a good understanding of?
2)BRRRR offers a lot of attractive options. Will usually come with a lower purchase price and will allow you to unlock equity you can use should you wish to scale faster.
3) Echoing above advice, I think BRRRR is a great strategy and multi-family properties provide a perfect place to employ it. I know SFRs seem like a simpler place to start, but to me, there are a lot of risks with SFRs that disappear with multi-family. Economies of scale ftw.
4) Ask incisive questions. Gauge how much experience they have working with investors. Ask them what pitfalls are most common. If you ask a consistent set of questions, you will be able to quickly tell who is legit.
Also, consider checking LoopNet (for multifamily) and/or REMAX or similar (for single family). If you look at a decent number of listings and see the same names reflected over and over, those agents might be a good place to start. In the multifamily context, those listings will generally be people who are well-versed in dealing with investors.
MFR BRRRR, @Lisa Gauff . Consider a few locations where you have "boots on the ground" and then research the market fundamentals to decide which market(s) to focus on.
Wherever you decided to go, I would put as much cash down as possible for the first deal. That's contrary to a lot of the advice you'll hear, but there are several reasons why I recommend this:
* Leverage increases risk, and you don't know what you're doing yet. Moving fast will increase the number of mistakes you will make. Every one makes mistakes, even seasoned Pros, but the difference is we know 12 ways to mitigate or fix them. Take this first one slow and steady and do it right vs. jumping in and getting in over your head. You can always borrow your equity out later to grow.
* You don't know if you actually like real estate investing yet. You think it looks interesting, but you've never actually done it. It's easier to divest one deal vs. a dozen.
* Building a "team." Yes, many folks on BP push having a team, but what is a team going to do for you and do you really want to be extremely hands off this early in the game? Consider too, there are already teams ready to go: property managers and/or turnkey rental providers. They are already in the market where you will be investing and know it well and have experience dealing with all the people you'll need, such as contractors, city govt, laborers, building and zoning, material suppliers, etc. Would it be easier to interview already existing teams and hire one that fits your needs vs. building one from scratch in a market where you have no contacts or knowledge of what's going on? Also, do you really need a team for your first investment? Again, you don't know if you like this business yet.
* Trust. Trust is great, but evidence is better. Plan on traveling to get an in-person view of your investment at least 2-3 times per year. Someone far away working with your money can easily hide things even with all of the communication devices and video capability we have. Nothing like eyes on site to ensure everything is going according to plan. We call this "managing the manager."
Lots of stuff to think about. Probably more than can be adequately covered in a short post when we don't really know you, your skill set, your goals, or resources beyond this hypothetical $50K-$70K fund.
Thanks @Erik W. for your great advice! But just to let everyone know -- I'M READY! I know myself well and am ready to JUMP IN! I've done a lot in my life. If you check out my profile... I'm not new to real estate.. just real estate investing. I didn't get out of bed yesterday and decide to do this! It's been a long time coming and educating myself... plus I've worked as an agent (I still have my CA license), done extensive remodels on my homes, and currently rent out my home... so I have a little buying, selling, remodeling, designing, financing and landlording experience. And I agree, it's hard to know someone's situation in these abbreviated postings... so you don't know my personality, background, or education level. But I still consider your advice valuable... and appreciate the BP Forums as a great resource!
Thank you @Renard Miller ! All specific advice I can use... this is the type of concise, direct, advice I am looking for - AWESOME!
Kansas City is a great place to invest right now. I just got an investor client under contract on a $55k condo, needs 15k rehab and can be rented out for up to $950 a month. There is money to be made!
@Lisa Gauff , like what @Robert white said, I would multi-family BRRRR. In fact, that is what I am doing.
But, depending on your income, housing needs, etc. I might try something different. A house hack could be great, if you’re looking to get a place to live yourself.
You could do some fix and flips to build up even more money to then use as pre-approval cash on hand for hard money to do a bigger or better multi family BRRRR.
Start with a great why and go from there. Have a purpose for your investment.