Anyone try the Bay Area this year? Or just shoot for Midwest?
8 Replies
Albert Le
from Seattle, WA
posted about 2 months ago
Hello!
I'll be moving to the Bay Area later at some point this year due to a job change and recently got started on my real estate investment journey. I have yet to buy a place, but I hear that it's generally best to invest locally if it's your first time. I was wondering if anyone has had any success in SFR's or multi-family buildings this year. I'm shooting for a minimal value-add 8%+ COC. Based on what I've seen on the market on the MLS so far (I know, I should get an agent), it seems like that's not happening any time soon, and I may be better off investing in the Midwest somewhere. I imagine it's a weird time for investors right now since people are moving out of the area but there's still some bidding on SFR's. Anyone make any moves in this general area?
As far as the Midwest is concerned, I've been poking around Detroit, Cleveland, and Indianapolis. Detroit and Cleveland seem to have pretty good numbers as a first-pass. I'd still need to understand the neighborhoods. I was originally shooting for Indianapolis, but it seems like appreciation rate is somewhat outpacing the rental increase rate. Given that it would be my first investment and I'd be out of state, I imagine it would be best for me to go for turnkey SFR / multi-family buildings with a PM. Thoughts?
Darius Ogloza
Investor from Marin County California
replied about 2 months ago
If you do try the Midwest, it would be valuable to discern who is buying the SFR's in your chosen area. Is there real demand for housing due to job growth, etc. or is all the action just "investors" passing properties between and among themselves? If the latter, the long term prospects bode poorly for an area whose residents are either unable or unwilling to invest in the local housing stock. If the locals are unable to buy, you will not likely secure the kinds of rents you need to keep your cash flow from being swallowed up by capital expenditures and maintenance. If the locals are unwilling to buy, what does that tell you about the long term prospects of the area? Do you, as an outsider, really have greater insight into a market than those who live and work there?
Alora Glaze
from Indianapolis
replied about 2 months ago
You are best off making contacts in both areas before you settle on one or the other. Making an easy connection with an investment company or, even a realtor, can grant you much greater insight into the market, buyers, and what action is being seen.
Indianapolis, for example, is street-by-street - so it is important to have a boots-on-the-ground team for scopes if you're investing remotely. However, Indy is an inexpensive city to travel in and out of and has attractive prospects for landlords and property owners. Regardless, investing out-of-state isn't any more risky than investing in your own area - the difference will lie in stretching your west coast dollars a bit further. You should be doing your due diligence regardless, when entrusting a team to your property - that will include proper vetting with background checks, references, etc.
If we can be of any help - feel free to reach out!
Best of luck to you!
Albert Le
from Seattle, WA
replied about 2 months ago
@Darius Ogloza @Alora Glaze Good points. I've been reading reading some reports on those Midwest cities regarding job growth, employment, vacancy rates, etc. I imagine I'll be taking some trips out there at some point this year to get a good gauge of the neighborhoods.
Ari Hadar
New to Real Estate from Israel
replied about 2 months ago
Originally posted by @Albert Le :@Darius Ogloza @Alora Glaze Good points. I've been reading reading some reports on those Midwest cities regarding job growth, employment, vacancy rates, etc. I imagine I'll be taking some trips out there at some point this year to get a good gauge of the neighborhoods.
I tried to do the market research before i tried Cleveland and could not make up my mind because it's only statistics and each neighbourhood is different... They say that Cleveland is not growing but still prices go up...
Brian Garlington
Realtor from Oakland CA
replied about 2 months ago
Albert, get preapproved with a lender first.
Darius Ogloza
Investor from Marin County California
replied about 2 months ago
@Ari Hadar A good local real estate agent should be able to help you determine who is buying properties within a given part of the city. Are the buyer's mostly LLC's? are there many repeat buyers buying in their own names? The property records hold a lot of clues.
Noah Chappell
Investor from Minneapolis, MN
replied about 2 months ago
@Albert Le I'd make a short list of the midwestern cities you're interested in, the take advantage of pandemic to participate in on line meetups before they go back to in person, which will give you unique insight into neighborhoods and major players in each area.
Ari Hadar
New to Real Estate from Israel
replied about 2 months ago
Originally posted by @Noah Chappell :@Albert Le I'd make a short list of the midwestern cities you're interested in, the take advantage of pandemic to participate in on line meetups before they go back to in person, which will give you unique insight into neighborhoods and major players in each area.
A lot of reia meetups are paid ones