Need advice on buying my first rental property

Buying & Selling Real Estate
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Need advice on buying my first rental property

Vamseedhar Vuppu
Member since 2024 · 4 posts · 1 vote

I'm planning to buy my first rental property. Below is my budget.

$$ Range = max 350k

Down payment = max 25%

Goal = Positive cash flow and appreciation(if possible)

I'm thinking about 2 options. 1. Buying rental in southern California(I live here) 2. Out of state in Raleigh,NC(Have a friend here)

In southern California(orange county) not able to find any thing affordable in our budget. If we find anything, no cashflow and only thing I'm banking on is home appreciation in future. Thats a lot of risk for first rental.

In Raleigh, NC. I could find property that is in my budget. I have contacted couple of real estate agents, they want me to fly in to look at properties.  Is that how it works for out of state investment? do you guys has to fly in to checkout the properties 

What are the areas I should look around Raleigh for good rental property?

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Benjamin Carver
Real Estate Agent · Raleigh, NC · Member since 2019 · 303 posts · 288 votes
2y

Honestly I've never met out of state investors in person. Easily done from a distance. As an agent, my value is boots on the ground w video tours, comps, rental data, and everything else needed to invest from afar. 

In Raleigh, I have my investors focus near RTP as that is our economical hub and where the appreciation historically is highest (and easiest to rent). Assuming you want long term renters, then staying around $400k or less is where you need to be anyways. Townhomes are a viable option, as sing family houses in the best areas can easily get in the mid 400s and up real quick.


I focus on North Raleigh, Brier Creek, Bethesda (durham county) to name a few spots. Raleigh investing is my bread and butter, so please feel free to reach out and I'm happy to answer any questions you have about the area

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  • Brandon Croucier
    Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
    2y

    I wouldn't be buying in CA.

    Growing up in the SoCal area, yes the appreciation has been great the past 20 years; but they way the state is headed, people continue to leave.

    Red tape in California has caused business to evacuate, high net worth individuals are also beginning to exit the state.

    Food for thought.

    1Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    2y

    Hey Vamseedhar, I would do research on different growth trends, employment rates, avg. rent and price history, and ect. 

    This will help you identify what market will have the most ideal factors for what you're trying to achieve with real estate. 

    [email protected]614-662-1652
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  • Benjamin Carver
    Real Estate Agent · Raleigh, NC · Member since 2019 · 303 posts · 288 votes
    2y

    Honestly I've never met out of state investors in person. Easily done from a distance. As an agent, my value is boots on the ground w video tours, comps, rental data, and everything else needed to invest from afar. 

    In Raleigh, I have my investors focus near RTP as that is our economical hub and where the appreciation historically is highest (and easiest to rent). Assuming you want long term renters, then staying around $400k or less is where you need to be anyways. Townhomes are a viable option, as sing family houses in the best areas can easily get in the mid 400s and up real quick.


    I focus on North Raleigh, Brier Creek, Bethesda (durham county) to name a few spots. Raleigh investing is my bread and butter, so please feel free to reach out and I'm happy to answer any questions you have about the area

    2Reply
  • Avery Heilbron
    Realtor · Raleigh-Durham, NC · Member since 2018 · 324 posts · 218 votes
    2y

    @Vamseedhar Vuppu Typically with out of state folks I will do video tours. More or less your preference if you want to see the property to get a feel for the areas yourself but not a requirement

    1Reply
  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 712 votes
    2y

    @Vamseedhar Vuppu

    Both would have their advantages.  Are there other areas in CA that you could drive to and find a multifamily in your budget like in San Bern? There is still money to be made in CA. The downside to the east coast is that looking at properties and meeting with people takes time and effort at a minimum 2-3 day trip. You have to trust your team or get a lot of help from your friend.  Maybe you can do a joint venture first in NC to test the waters and build your team there. Then he would have a vested interest in the property as well and lowering your risk. 

    0Reply
  • Mike PaolucciBusiness Member
    Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 491 posts · 549 votes
    2y

    I would avoid CA personally. I'm originally from San Francisco and agree with what @Brandon Croucier said about the direction the state is headed in. Here's an example of what I'm talking about coming up on the November Ballot --> "Justice for Renters Act". If you can find something to house hack then do it, just make sure you're aware of what the state is trying to do moving forward when it comes to being a landlord. 

    As for properties in NC, it's up to you whether or not you want to visit. Majority of my clients haven't had to fly out to take a look at the properties they purchased. With the right teams in place - investor focused realtor / inspector / PM / Lender - you should be able to get a good idea of the quality of investment it will be. 

    With that being said, if you think it's more beneficial to take a look at the neighborhoods for yourself, then it might be worth the trip. Kind of a personal preference imo. 

    [email protected]614-892-9184
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  • Jana Crum
    Realtor · Phoenix, AZ · Member since 2017 · 117 posts · 78 votes
    2y

    @Vamseedhar Vuppu Most of my out-of-state clients rely on video home tours & video calls to run through numbers. Once we find a few properties that work, we put in offers. Some of them have the desire & extra cash to fly out to attend the inspection. Others don't want to & elect to have it done via video call. It's not a requirement for my out-of-state clients to fly in. Please don't let anyone pressure you to fly in, it's a bonus but not necessary!

    0Reply
  • Chad Gray
    Raleigh, NC · Member since 2019 · 57 posts · 54 votes
    2y

    You'll have a tough time finding decent cash flow in Raleigh given your numbers if your approach is buying turn-key on market properties. Generally speaking long term rental rate hasn't kept up with price increases. If you're keen on Raleigh I would recommend expanding your search to some of the surrounding markets.

    1Reply
  • Sean O'KeefePro Member
    CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 870 votes
    2y

    Following - I'm based in California

    [email protected]628-241-0888
    0Reply
  • Pat LulewiczBusiness Member
    Realtor · Raleigh NC and Greensboro, NC · Member since 2019 · 391 posts · 392 votes
    2y

    Flying in can be a good idea to get a feel for areas, neighborhood, etc. I think it shows agent(s) that 1) you're real (fraud schemes), and 2) you're serious (we get tens/hundreds of requests from investors to help them buy rental property. 

    Like most have said, cash flow in Raleigh will be tight on cash flow, if any. That's before considering capex/maint, vacancy (almost guaranteed when buying a vacant home), or any even improvements needed to get it rent ready. If you're going to buy for break-even cash flow, you at least need to buy with some equity or force the equity so that you're not buying a lose-lose.

    If you like NC, look at Triad - Greensboro, Winston, High Point - or Alamance - Burlington, Mebane, Graham. I usually point my investors that direction these days for LTRs because you're still getting a great, large market but a lower price point where you can find positive cash flow.

    1Reply
  • Vamseedhar Vuppu
    OP
    Member since 2024 · 4 posts · 1 vote
    2y
    Quote from @Brandon Croucier:

    I wouldn't be buying in CA.

    Growing up in the SoCal area, yes the appreciation has been great the past 20 years; but they way the state is headed, people continue to leave.

    Red tape in California has caused business to evacuate, high net worth individuals are also beginning to exit the state.

    Food for thought.

     Thanks Brandon. Do you think in Dallas or Austin TX will I be able to find properties that can generate some cash flow? 

    0Reply
  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    2y

    Good to meet you.  

    Great question.  Apartments.com has a list of the top 100 markets.  Grab that.  

    Go to trulia and run median rent and SFR costs based on the 100.

    Then determine which areas fit cost:rent using your accepted finance model 

    Then run an algorithm on those areas to determine viability.  

    This should tell you everything you need to jump.  

    Happy hunting. 

    1Reply
  • Todd AndersonPro Member
    Real Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
    2y

    Vamseedhar,  You have many of the same goals and strategy's that many of the investors I work with have.  They are in areas that are difficult to make investments work.  Many out of state investors can find both cashflow and appreciation with investments when they leave their market.  

    As said above look for an agent or investment that offers a proven turnkey process with "boots on the ground" in the market you're looking at.  We work with a number of builders that offer off market new construction investment properties with a proses that makes investors comfortable in not being in the area of investment.  I work with many investors from the West coast and many from outside the country.  All have expresses that they are very comfortable with the process. 

    We have a great builder partner in North Carolina that has inventory that cashflows day one.   

    Please connect if I can be of more help.  

    Good luck on your first deal.  

    [email protected]651-492-5652
    1Reply
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