New investor struggling to determine where to invest

14 Replies

Hey everyone.  I'm a brand new investor...  just started the learning process.  My names, Jacob and I'm from Cali.  Looking to get into the real-estate business.  I've been reading a ton, listening to pod casts, watching videos.  Just trying to take in as much as possible.  

I've been learning a lot about the brrrr method, reading the brrrr book...  and I like what I'm learning.  The thing I'm struggling with is figuring out how to determine where I want to start investing.  I definitely don't want to invest in California...  I'd much rather go out if state.  My question is, when looking at different cities, what information is important? What set of numbers will make an area good verses an area to avoid?  And where do you get those numbers.  I've been trying to find videos or blogs or pod casts on it and haven't been able to find much.  Maybe I'm not looking hard enough.  But if someone could point me in the right direction, I'd really appreciate it.  I dont want to just throw a dart onto the map and then suffer the consequences later.  I'm way to over analytical and would like to compare as much information as possible before I start looking at properties.  

Thanks in advance for any advice!

@Jacob Ellsworth Just stop and take a few deep breaths. The ONLY way to be successful in this business is to find a niche, trust the market, and get boots on the ground. It's either your boots or someone else and you're paying for it. It's that simple. Knowledge + money + deal = success. You need at least 2/3 pieces. 

Stop over analyzing properties. Instead focus on one property type and find/create a deal. If you can do this you're ahead of the next investor or retail buyer. Doing this is much easier in you guessed it... your local market. OOS investing has more challenges and hurdles to jump over. It's just facts. If you can't purchase a property near by that works for your strategy (flip, rental, BRRRR, etc.) what makes you think going OOS will be any easier?

I consider myself relatively new to REI and struggle to look outside my neighborhood! The reasoning is simple. I know all the numbers and look for "clues" and look for distressed properties that have potential. It's much harder to do that 1500 miles away.

@Jacob Ellsworth there are tools like Propstream and Privy that can help you analyze the numbers for OOS deals. As a fellow CA investor, I definitely understand the struggle of price points being way out of line for first-time investors. Kudos to you for not giving up and instead looking for a market that fits your budget.

To @Jaron Walling 's point, you'll need boots on the ground to see success with BRRRR. That includes a reliable agent/wholesaler to find deals, contractor to renovate the property, lenders to finance the initial purchase and cash out refi, and property manager to manage tenants. All are possible, BP and Google are your best friends to find them. Good luck!

@Jacob Ellsworth Honestly, a lot of picking an asset class, location etc is really down to personal preference. For instance I tend to favored small multi over single family because I personally like the numbers and the flexibility of income it provides. I can long term lease it, short term, move back in and house hack if I need to, and the financing is fairly simple and you are able to use and FHA loan. But that's just my preference, does not mean it's the only way to make it work.

As Brandon always says, it’s more important that you decide and start taking action than what you actually decide.

Thank you for everyone's reply.  

@jaron walling I agree it might be easier to invest locally verses going out of state, but to invest in California, I would need 4 times the capital just to get started.  And I just don't have that.  Theres a lot less risk to capital by investing out of state...  

@jimmy Woodard thank you for those tools.  That's exactly what I was looking for...  once I figure out what location I want to invest in, I'll start to work on setting up my boots on the ground.  I dont want to give anyone a run around if I'm not truely committed yet to investing I their area.  



Originally posted by @Michael K Gallagher :

@Jacob Ellsworth Honestly, a lot of picking an asset class, location etc is really down to personal preference. For instance I tend to favored small multi over single family because I personally like the numbers and the flexibility of income it provides. I can long term lease it, short term, move back in and house hack if I need to, and the financing is fairly simple and you are able to use and FHA loan. But that's just my preference, does not mean it's the only way to make it work.

As Brandon always says, it’s more important that you decide and start taking action than what you actually decide.

I also like the idea of multi-family verse single family and I think that's my plan...  lookin at quad plexes...  thank you for your advice. 

@Nicholas L. As much as I would love to move out of California, I've got 17 years left of my career before retirement... so not exactly an option. I knows it's difficult but it's been done by a lot of people. Just takes more research and work, which I'm willing to do. I will give the podcast a listen. Thanks!

There are a multitude of markets. Most investors flock to the Midwest or the Sunbelt markets. That could be a start. Then research. Narrow it down to 2-3 markets. Interview team members. Then establish a team. Start learning the market and putting out offers. Then rinse and repeat. The most crucial piece is finding knowledgeable team members who will fast track you

@Jacob Ellsworth an out of state brrr is a big first step. Without connections to the vendors and experienced people in my circle I'd be nervous doing a brrr in my own market and I work in real estate. You need to work closely with someone that can guide you in whatever market you land in. 

@Jacob Ellsworth I think it's great that your coming to this space and seeking to learn. Learning is a ton of fun but the growing part that comes next is where you will measure your resolve. Regarding your specific situation, I would back track to the seed capital you have on hand and consider what that accomplishes for you(it appears you are to some degree)? This is really the point where your considerations start with a myriad of scenarios that follow. You've referenced BRRRR investing which is a very active form of investing that carries an associated amount of risk. You may possibly consider a passive investment that exposes you to RE and allows your future funds to grow while you continue to learn. Now, you're bringing more things into alignment and getting them going in the same direction, Real Estate.

Candidly, don't discount the velocity of time and your ability to create different outcomes than what you expect. When I hear I can't move for 17 more years I will ask WHY? every single time. 

Keep learning and growing!

Hi @Jacob Ellsworth . Welcome to BP and the REI world. I'd recommend you assemble a list of criteria to evaluate locations. Like net population migration, unemployment, diversity of jobs, housing and multifamily starts, etc…. Then apply these criteria to a handful of markets easiest to get to in one nonstop flight (if possible). Good luck!

@Jacob Ellsworth BRRRR for your first deal is going to be tricky. If you don't have connection, it's hard to get someone to come out and give an estimate, and there are many no shows also.

I'm still learning about REI, but here's what I've learned so far. The criteria can be different for different investors but mostly and mainly you want to make money either from appreciation or cash flow or both. To give you an idea, these criteria may be population and job growth, school ratings, demographics/neighborhood class, tenant laws (landlord friendly or not), tax rates, etc. These information are plentiful on Google and BP, but it takes time and effort to find them.

I hope this helps!

@Jacob Ellsworth

If the Atlanta/North Georgia area is of interest you let’s connect. We are expected to double in size over the next 20-25 years. Check out my profile to see what I bring to the table. Let’s connect.