I am a new physician just moved to NC and would like to get into real estate investing. The area I am in has been growing for the past 5-10 years and I see a lot of potential. I have starting listening to podcasts/reading books to learn the process and was debating just purchasing a relatively cheap SFH property (80-120k) to just jump into it (trial by fire?). I have seen some older posts with similar situations but given the pandemic, eviction moratoriums, scarce inventory on the market, I felt some more up to date info was needed. I do have a ton of debt, but am pursuing the PSLF pathway. My COL is pretty low so I can easily afford maintaining a cheap property. My schedule would likely allow me to manage a property, but I would rather do property management company if possible (cash flow isn't my #1 priority at this time). Do you think it would be worth waiting or should I do it even though it is a weird market? If any other physicians here please share your experience on here as well!
Cash flow is always important. It's what keeps your properties working for you, rather than you working for your properties. It sounds like your goal is more to reinvest any cashflows, which is great. Please avoid negative cash flowing deals, though. There be dragons.
If I were in your shoes I would look at more units and a more passive investment strategy. Consider what you earn per hour at your profession. Then seek an investment strategy that has comparable dollar-per-hour return.
I believe syndications are the best strategy for high earning busy professionals who want to invest directly in real estate but don't want to buy themselves another job or take out debt in their own name.
Individual landlords have struggled due to new regulations more than those of us who own apartment complexes. Primarily because we have enough scale to afford attorneys and professional guidance on navigating these new regulations, and smaller individual property owners tend not to have those margins.
Hey Greg, welcome to NC! I'm here in Cary. What area are you in?
Each situation is different, but my opinion is to make sure the "fundamentals" are good on your rental property; meaning that you are purchasing based on a healthy forecasted cash on cash return. You don't want to buy based on expected market appreciation alone. You don't want to be burned.
Feel free to PM me - I have experience purchasing rentals here in NC and I can share the good, the bad and the ugly.
Hi, Greg. I am a physician also and by no means close to an expert on RE investing. Now just approaching 1 year and soaking up as much education as possible. We have obtained 8 rentals in one year. Even though you may be considered a high net worth individual it does not mean that you have a large amount of cash sitting around for investments. My net worth is tied to investments in 401K, 457, self directed IRA, my home and land. Emergency cash fund is sufficient but otherwise I choose for my money to make me money and not just sit in the bank for bragging rights
I am most interested in properties for cash flow. Not as vacation money but to fund the next rental purchase. Where I live is slow to grow in home values. So we buy class C, rehab to class B and still manage to have CoC returns between 11-25%. I will never be a slum lord. The home has to be habitable to my standards when we finish the rehab. As a physician I would never want people wondering how I would tie my name to a trashy living quarters.
Now granted my husband is a know-how-to-fix almost anything type and you may not have that available to you. Consider PM company so you can focus on the purchases and directing rehab. I will say I love to get involved in the planning of rehab and running all the numbers, but your time will be limited so spread the wealth on things that require too much time.
My goal is lots of doors in 10-15 yrs, when I retire. I will then likely use the cashflow for living and only taking out minimum required distributions from retirement funds while allowing our rentals slow equity growth in this town. But that's ok because I will likely include them in the estate to be passed onto my children and hopefully be able to by pass the estate tax at that time in the future.
DO NOT delay starting this process. Wish I would have jumped on it when I graduated residency at age 32. I would have been contemplating retirement sooner. I'm addicted to this RE investing now. So go for it.
Thank you for your story. Do you do mainly SFH or multi units? Do you use property manager? Any out of state investments?
Greg, I do SFH at the moment, due to limited inventory on multifamily (at least those that make financial sense). If we place the renters because we know them (small town living) then we manage the property. The inherited renters we have maintained with property manager that was already in place. No out of state or even out of town investments at this time. My husband cannot find reliable help and his passion is in the rehab as he is a construction engineer. So driving too far right now is not worth the time lost on the road.