Looking to start investing on rentals... any thoughts?

Starting Out
5yFollow

Looking to start investing on rentals... any thoughts?

Amado Cruz
Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes

Hello to the BP community. I have been so impressed by many of you that have simply given back to the community with great guidance and worth a lot! Looking for your guidance once more on a simple topic: Where should I invest (markets) or should I hold? I am looking to BRRRR or simply buy and rent with a high cap rate.

A) Any suggestions which markets have the best opportunities?  Looking to buy a couple of properties with the goal of increased cashflow, high cap rate, etc. 

B) I have heard from some of you to hold for a few months as inventory is likely going to start opening up due to foreclosures/shortsales, gov restrictions on evictions, etc.  Should I hold or should I continue with A)? Looking for your hones opinion. 

Thank you very Much!

6Reply
45 views

Most Popular Reply

Jody Sperling
Omaha, NE · Member since 2020 · 611 posts · 665 votes
5y

Omaha is great. It's my home market. I'd actually not be afraid of Denver, even though it's quadruple my prices here. Denver has plenty of upside left, but a bit more risk in a downturn. Kansas City is super hot. Des Moines, Sioux City, and Sioux Falls are all stable and consistent. Those would be my pick. Iowa is better for taxes. Nebraska is better for appreciation, based on my research.

3Reply
See this reply in the discussion

33 Replies

Jump to latestLatest
  • Jody Sperling
    Omaha, NE · Member since 2020 · 611 posts · 665 votes
    5y

    I don't know anyone who tries to time the market (real estate or Wall Street) who is tremendously successful. Those with great wealth can snatch up cheap inventory (stocks or dwellings) when the market is down because they've spent so much time while the market is up accumulating cash producing assets.

    If you buy smart today, your asset will produce even when the market dips. If you are afraid of a crash, don't flip, but get a bit of extra equity in your purchase to drive the mortgage payments down, making it more affordable if rent prices decrease. Hold a little extra in reserve for vacancy. 

    Ultimately, if you wait, the cheap inventory might never come. Or you'll be too afraid to buy it when it does because everyone will be forecasting doom and gloom. Be brave; be smart; buy as soon as you're able to, and be faithful to the numbers. Best of luck!

    2Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    Thank you so much @Jody Sperling that's what I thought...  I appreciate your candor and guidance.  Any thoughts on markets?  thank you again.

    1Reply
  • Jody Sperling
    Omaha, NE · Member since 2020 · 611 posts · 665 votes
    5y

    Omaha is great. It's my home market. I'd actually not be afraid of Denver, even though it's quadruple my prices here. Denver has plenty of upside left, but a bit more risk in a downturn. Kansas City is super hot. Des Moines, Sioux City, and Sioux Falls are all stable and consistent. Those would be my pick. Iowa is better for taxes. Nebraska is better for appreciation, based on my research.

    3Reply
  • Jonah Kolsrud
    Ladson, SC · Member since 2017 · 53 posts · 22 votes
    5y

    @Amado Cruz

    My advice for finding a specific market would be to identify where you have a competitive advantage (especially if you're just starting out). For instance, wherever your home market is you likely have a competitive advantage because you know the neighborhoods. One street may be significantly better than another. Also consider where you have friends/family that you could rely on to look at potential opportunities if you plan on investing out of state. There are deals in every market, the key is to figure out how to uncover those. 

    2Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    Thank you @Jonah Kolsrud for the advice. That's the key as you mentioned.  I live in near the south Florida area, and the properties here are way out of range for me. Hence, why I am lookin elsewhere.  That said, any thoughts of your own where to focus (States/cities are good) that way I can have a reference where to increase my success factor.   Thank you again.

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    Two things I picked on your questions are: 

    High Cap Rate AND Hold For A Few Months. 

    For the high cap rates, those may be a little tricky right now especially with the current market. Moreover, Caps should be used as a guide when evaluating an asset and not the end all be all metric. In addition, the interest rates are relatively low right now so cap rates will most likely stay compressed over the nearest future. 

    As for holding on, the best time to buy is now, and have a long time perspective. Obviously, you will follow a strict and conservative underwriting guideline so that you don't overpay but waiting should never be a strategy.

    So, I won't hold my breath if I were you. Jump in! 

    2Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    Thank you so much for those ideas @Jody Sperling those are fantastic suggestions.  I appreciate you sharing and would love to research them asap. I appreciate it.  

    2Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y


    Thank you @Ola Dantis for your great advice. I do have a long term perspective, but worried about market downturn... but based your comment, if I am buying long term this should not be an issue. With regards to cap rate, correct.. is one of many metrics I am looking for...Any others you use?

    With that said, any suggestions on market where I can invest $50-$100K with high ROI? I heard Omaha is great. Denver, Kansas City, Des Moines, Sioux City, and Sioux Falls being good, stable and consistent. Iowa and Nebraska is better for taxes and appreciation options. Any thoughts on Atlanta and Houston?

    @Jody Sperlingundefined

    @Ola Dantisundefined

    0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    @Amado Cruz

    KC is a good mix of cash flow and appreciation ;)

    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    5y

    @Amado Cruz buy when you find a good deal, regardless of where we are in the market cycle, and avoid extremely high cap rate properties unless you like owning Class D (cap rate is a function of risk: the higher it is compared to the market average, the less desirable the property is and the reason for that is usually that it’s in a bad location).

    1Reply
  • Darson GranthamBusiness Member
    Realtor · Des Moines · Member since 2018 · 304 posts · 253 votes
    5y

    @Amado Cruz when you say invest 50-100K are you talking about a cash purchase or using that for a 20-25% down payment?  If a downpayment, you can buy something with a 9-11 cap in any of the Iowa cities listed above, all day long.  if you are using that as a cash purchase, it is going to be difficult to find those lower-cost rent-ready houses in Des Moines but is possible in the other Iowa markets. 

    [email protected]515-612-6013
    1Reply
  • Jason Merchey
    Investor · Hendersonville, NC · Member since 2013 · 754 posts · 281 votes
    5y

    Thanks for the compliment Armando, and welcome. 

    One thing I might look into if I were wanting to own SFDs -- which I do not! -- would be https://www.roofstock.com/one

    I can't recommend it but I did run across it.

    1Reply
  • Brianne Leichliter
    Rental Property Investor · Cincinnati, OH · Member since 2019 · 59 posts · 77 votes
    5y

    @Amado Cruz if you’re looking out of state, Ohio is great. I started off as an out of state investor and ended up in Cincinnati.

    As for timing of the market, that’s tough. If you wait for the right time, you might be waiting for forever. Investing is entirely a numbers game. If you are looking to buy and hold, focus on cash flow. Even with low inventory there are a lot of opportunities.

    Do you want to start with SFH or multi family?

    2Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    @Amado Cruz Once you’ve picked your location and begun to narrow down your search to individual properties my advice is to become a BP Pro if you’re not already. Sorry can’t remember if you are. Then make sure you use the calculators to run the numbers on each individual deal to make sure they work and what type of returns you’re getting.

    You can start doing this now with listings off your local MLS, or any listings you're interested in. It's helpful to gain confidence in analyzing deals.

    Personally I started with a SFH before my market just absolutely exploded and now I'm going to flip it for a 150% return in less than a year. I've since bought a duplex and a 4-plex which have better tax benefits and stronger cash flows.

    I’ve stayed local so far, I live in an area with about 15,000 people in a 30 mile radius but if my lead on another multi dries up I may move to another market.

    If you want to invest out of state I’d read the book BP has on Out of State Investing. I don’t remember who wrote it, but it’s in their book store. Best of luck!

    1Reply
  • Brandon GoldsmithBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    The best market will be different for everyone even with the same strategy. It all depends on your goals with cash flow and appreciation as well. I know a lot of people who have done this successfully here in Columbus, OH but it can be pretty competitive for those properties. I would narrow down a few markets and have some conversations with people to start building a team and see if it's a good fit. As for timing the market, I don't know too many people where that is a priority, there will never be a perfect time to enter. @Amado Cruz

    [email protected]614-963-3340
    2Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    5y

    @Amado Cruz for $50-100k purchase price, I will suggest some parts of Columbus, Cleveland, Cincinnati Ohio.

    The best time is now. Interest rate is very low. I just refinanced one of my rentals at 2.75% on a 15-year mortgage.

    Jump in now and you will be glad you did.

    Goodluck

    [email protected]832-776-9582Podcast Guest on Show #469
    NETWORTH BUILDERS5236 Reviews
    WebsiteView Page
    2Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Amado Cruz:

    Hello to the BP community. I have been so impressed by many of you that have simply given back to the community with great guidance and worth a lot! Looking for your guidance once more on a simple topic: Where should I invest (markets) or should I hold? I am looking to BRRRR or simply buy and rent with a high cap rate.

    A) Any suggestions which markets have the best opportunities?  Looking to buy a couple of properties with the goal of increased cashflow, high cap rate, etc. 

    B) I have heard from some of you to hold for a few months as inventory is likely going to start opening up due to foreclosures/shortsales, gov restrictions on evictions, etc.  Should I hold or should I continue with A)? Looking for your hones opinion. 

    Thank you very Much!

    Hi Amado, I would check out Columbus, OH. You can find both good cashflow and appreciation here. As far as inventory opening up, it's really hard to tell. Currently, the Columbus market is very hot.  

    3Reply
  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    Since you are looking to BRRRR you might consider looking at other metrics than just the cap rate. On smaller properties (at least right now), they are being valued from a retail eye. This uses the comparison valuation technique. Since these properties have high demand and low supply, the prices keep going up. As you know right now, rents are pretty flat. Cap rates will be very low. This might deter you from purchasing anything at all. You will still want to look for the good deals, which can be found despite low cap rates.

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Amado Cruz:

    Hello to the BP community. I have been so impressed by many of you that have simply given back to the community with great guidance and worth a lot! Looking for your guidance once more on a simple topic: Where should I invest (markets) or should I hold? I am looking to BRRRR or simply buy and rent with a high cap rate.

    A) Any suggestions which markets have the best opportunities?  Looking to buy a couple of properties with the goal of increased cashflow, high cap rate, etc. 

    B) I have heard from some of you to hold for a few months as inventory is likely going to start opening up due to foreclosures/shortsales, gov restrictions on evictions, etc.  Should I hold or should I continue with A)? Looking for your hones opinion. 

    Thank you very Much!

     I think the market is less important vs finding the right team. I have a great core 4 in Columbus, Ohio

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    Thank you @Caleb Brown.  Great suggestions!

    0Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    @Steve K. Thank you for that sound advise!  I really appreciate it... sometimes, you get focused on the metric and loose track of the overall strategy.  thank you for keeping me grounded and will keep that in mind as I look for that next opportunity.  Thanks again.

    0Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    @Steve K. Thank you for that sound advise!  I really appreciate it... sometimes, you get focused on the metric and loose track of the overall strategy.  thank you for keeping me grounded and will keep that in mind as I look for that next opportunity.  Thanks again.

    0Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    @Darson Grantham Cash investment, but open to use as down payment.  I have been approved for large purchase, but require 25% down minimum, plus closing cost.  Was thinking of using the cash to invest and then re-finance it to invest on another property.  Thank you so much for the suggestion and area recommendation in Iowa / Des Moines will have to ck that market out.  Thanks again for taking the time.  

    1Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    Thank you @Jason Merchey Let me know if you come across other opportunities.  Site info looks really interesting.. and will ck out. 

    0Reply
  • Amado Cruz
    OP
    Investor · Pembroke Pines, FL · Member since 2020 · 17 posts · 11 votes
    5y

    @Brianne Leichliter thank you for your reply. I am sure I am not doing this right... but I can tell you this community is awesome and appreciate you and others guiding me. I would like multi-family, but OK with SFH as long as there is appreciation opportunity and some cashflow. thank you so much again!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free