How to get started ? Next steps
Member since 2023 · 4 posts · 10 votes
How to get started ? Next steps
Most Popular Reply
Lender · United States · Member since 2020 · 177 posts · 26 votes
2moMy biggest piece of advice
Don't feel pressured to buy quickly. Real estate is a long-term wealth-building strategy, and patience is one of the best advantages you can have. The investors who succeed over decades are usually the ones who buy quality properties, keep adequate reserves, and let time work in their favor.
You're already ahead of many beginners because you're asking how to protect your family while building wealth. That mindset will help you make disciplined decisions. Focus on learning the numbers, surrounding yourself with experienced professionals, and buying only when the deal makes sense—not because you feel like you have to get started immediately. One well-chosen investment can teach you far more than rushing into several mediocre ones.
28 Replies
- Investor · Louisville, KY · Member since 2017 · 92 posts · 38 votes3mo
It sounds like you're actually in a pretty strong position. Having $500k in equity and $30k in cash gives you options, but I wouldn't rush to deploy all that equity just because it's available.
I'd focus first on learning how to analyze deals rather than trying to find the perfect market. Start by understanding cash flow, cap rates, debt service coverage, vacancy, maintenance, CapEx, and how to estimate realistic expenses. Analyze dozens of deals before buying one. BiggerPockets calculators and local investor meetups are great resources.
Out-of-state investing can absolutely work, but I wouldn't use it to compensate for a lack of experience. Long-distance investing introduces additional risks, and your team becomes critical. Property managers, agents, lenders, and contractors can make or break a deal.
- Member since 2023 · 4 posts · 10 votes3moThank you for the advice. Where do I learn to step by step analyze deals? Where do I get all the information? Just a general web search ? Or are there easier options?
Quote from @Christian Grosskopf:
It sounds like you're actually in a pretty strong position. Having $500k in equity and $30k in cash gives you options, but I wouldn't rush to deploy all that equity just because it's available.
I'd focus first on learning how to analyze deals rather than trying to find the perfect market. Start by understanding cash flow, cap rates, debt service coverage, vacancy, maintenance, CapEx, and how to estimate realistic expenses. Analyze dozens of deals before buying one. BiggerPockets calculators and local investor meetups are great resources.
Out-of-state investing can absolutely work, but I wouldn't use it to compensate for a lack of experience. Long-distance investing introduces additional risks, and your team becomes critical. Property managers, agents, lenders, and contractors can make or break a deal.
- 3moKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
I would recommend starting with a HELOC on that San Diego equity, since it gives you cheap capital without selling your home, then using your 30k plus that line to go after a cash flowing market like here in Columbus where prices and rents actually make sense for a first deal. From my experience, the biggest hazard for new out of state investors is buying on data alone with no boots on the ground, so build a team first (agent, property manager, lender) before you buy anything, and run every deal through cash flow and cap rate, not just appreciation hope.
Kerlous Tadres | Reafco Real Estate539 Reviews - 3moDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
I am not an agent, lender, etc. I do not profit from any decision you make on how to invest. I am a successful RE investor in San Diego. Prior to 2022, I advocated local RE investors invest in San Diego. Today, I still believe local investors who choose to invest in RE are likely best served by investing locally.
However, 2 recent studies both showed that rent compared to property values in large US cities have never been worse. Combine this with the rate increase starting q2 2022 and the result that leveraged RE costs nearly doubled and it is easy to understand the challenges of investing in RE at this time. So I question if a new investor should become an RE investor in this market. I have been investing in RE for many years and I am finding it challenging to find RE that projects the returns that I expect.
Now for the $500k equity. The average SFH is ~$1m in San Diego so there is no way to know the current LTV. If your home is worth less than $1.5m, your leverage is low. If the home is worth over $1.5m, then there is not too much equity trapped. RE's super power is leverage. Cash our refinances have a small rate hit associated with the cash out, but it is not hard to fathom investments that far exceed the cash out refi APR. lifetime sp500 is ~10%, but recently much higher. Fab 5 and mag 7 are much higher than SP500. Granted they cannot increase like this indefinitely but I am not expecting this to be the year that fab5 or mag7 performs worse than the sp500. These are just a few examples; there literally are thousands of investment options.
If you want to improve your family's finances, optimize the wealth you already have (and it does not have to be in RE, sp500, fab5, or mag7). However, it should not be sitting unoptimized in your OO home if you want to optimize your finances.
You need to evaluate if you are best using your current financial resources. If you are not, then you need to determine how to best use your current financial resources and I personally am not convinced that RE is the best option at this time. If you decide RE is the best option, evaluate the various challenges of OOS RE versus the benefits of local RE investing. I would never suggest a new RE investor start with OOS RE.
Note agents and lenders have a vested interest in convincing you their market is superior and to invest in their market and ideal,y use them as your agent or lender.
Good luck
- Investor · Louisville, KY · Member since 2017 · 92 posts · 38 votes3mo
Quote from @Dan H.:
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
I am not an agent, lender, etc. I do not profit from any decision you make on how to invest. I am a successful RE investor in San Diego. Prior to 2022, I advocated local RE investors invest in San Diego. Today, I still believe local investors who choose to invest in RE are likely best served by investing locally.
However, 2 recent studies both showed that rent compared to property values in large US cities have never been worse. Combine this with the rate increase starting q2 2022 and the result that leveraged RE costs nearly doubled and it is easy to understand the challenges of investing in RE at this time. So I question if a new investor should become an RE investor in this market. I have been investing in RE for many years and I am finding it challenging to find RE that projects the returns that I expect.
Now for the $500k equity. The average SFH is ~$1m in San Diego so there is no way to know the current LTV. If your home is worth less than $1.5m, your leverage is low. If the home is worth over $1.5m, then there is not too much equity trapped. RE's super power is leverage. Cash our refinances have a small rate hit associated with the cash out, but it is not hard to fathom investments that far exceed the cash out refi APR. lifetime sp500 is ~10%, but recently much higher. Fab 5 and mag 7 are much higher than SP500. Granted they cannot increase like this indefinitely but I am not expecting this to be the year that fab5 or mag7 performs worse than the sp500. These are just a few examples; there literally are thousands of investment options.
If you want to improve your family's finances, optimize the wealth you already have (and it does not have to be in RE, sp500, fab5, or mag7). However, it should not be sitting unoptimized in your OO home if you want to optimize your finances.
You need to evaluate if you are best using your current financial resources. If you are not, then you need to determine how to best use your current financial resources and I personally am not convinced that RE is the best option at this time. If you decide RE is the best option, evaluate the various challenges of OOS RE versus the benefits of local RE investing. I would never suggest a new RE investor start with OOS RE.
Note agents and lenders have a vested interest in convincing you their market is superior and to invest in their market and ideal,y use them as your agent or lender.
Good luck
As always, I appreciate your different perspective on things Dan. Are you saying that you don't think RE investing is the best option at this time because he is in a state where investing is difficult, and because you don't suggest a new investor to go out of state? Or you don't think RE investing is the best option for any new investor no matter what market they are in?
- 3moDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Christian Grosskopf:
Quote from @Dan H.:
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
I am not an agent, lender, etc. I do not profit from any decision you make on how to invest. I am a successful RE investor in San Diego. Prior to 2022, I advocated local RE investors invest in San Diego. Today, I still believe local investors who choose to invest in RE are likely best served by investing locally.
However, 2 recent studies both showed that rent compared to property values in large US cities have never been worse. Combine this with the rate increase starting q2 2022 and the result that leveraged RE costs nearly doubled and it is easy to understand the challenges of investing in RE at this time. So I question if a new investor should become an RE investor in this market. I have been investing in RE for many years and I am finding it challenging to find RE that projects the returns that I expect.
Now for the $500k equity. The average SFH is ~$1m in San Diego so there is no way to know the current LTV. If your home is worth less than $1.5m, your leverage is low. If the home is worth over $1.5m, then there is not too much equity trapped. RE's super power is leverage. Cash our refinances have a small rate hit associated with the cash out, but it is not hard to fathom investments that far exceed the cash out refi APR. lifetime sp500 is ~10%, but recently much higher. Fab 5 and mag 7 are much higher than SP500. Granted they cannot increase like this indefinitely but I am not expecting this to be the year that fab5 or mag7 performs worse than the sp500. These are just a few examples; there literally are thousands of investment options.
If you want to improve your family's finances, optimize the wealth you already have (and it does not have to be in RE, sp500, fab5, or mag7). However, it should not be sitting unoptimized in your OO home if you want to optimize your finances.
You need to evaluate if you are best using your current financial resources. If you are not, then you need to determine how to best use your current financial resources and I personally am not convinced that RE is the best option at this time. If you decide RE is the best option, evaluate the various challenges of OOS RE versus the benefits of local RE investing. I would never suggest a new RE investor start with OOS RE.
Note agents and lenders have a vested interest in convincing you their market is superior and to invest in their market and ideal,y use them as your agent or lender.
Good luck
As always, I appreciate your different perspective on things Dan. Are you saying that you don't think RE investing is the best option at this time because he is in a state where investing is difficult, and because you don't suggest a new investor to go out of state? Or you don't think RE investing is the best option for any new investor no matter what market they are in?
I think RE investing is challenging to enter in all markets. This does not imply impossible.
Finding a good deal off market. A good brrrr in a market that does not project crazy negative cash flow after the high LTV refi. A smart sophisticated value add or a good traditional value add. Non residential RE. obtaining below market financing. The reality is there are literally thousands of opportunities in RE and I am certainly not stating there are not many paths to make money in RE today.
However the typical new RE investor is going to use an agent to purchase a residential property without a value add that is listed on the mls using conventional financing. It likely (almost certainly) will have negative cash flow when properly allocating for sustained expenses and realistic conservative vacancy. This negative cash flow has to be subtracted from the sources of return.
Next recognize that the appreciation has been flattish in most markets and declining in some markets. The implication is in the near term appreciation may not be the profit source that many of us have experienced since 2010.
Now look at other investment opportunities. What is the sp500 recent returns? Google indicated 13.7% to 15.2% annual return for last 5 years, not sure why they could not calculate it to a more narrow range. This is passive, sit on your couch return. Same for fab 5 is 16% to 20%+ per year which seems way lower than reality to me. Mag 7 Google has as 30% to 36% per year (less than 3 years to recover investment). Of course these options are not going to return these values indefinitely but I list them as examples of what is possible and not necessarily the best options going forward. The point is there are a lot of investment options and RE will not always be the best option. I question if RE is the best investment option for someone first starting in RE at this time. Residential RE is not passive. I personally believe most (definitely not all) new RE investors could find better investment opportunities than RE.
Good luck
- Investor · Louisville, KY · Member since 2017 · 92 posts · 38 votes2mo
Quote from @Dan H.:
Quote from @Christian Grosskopf:
Quote from @Dan H.:
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
I am not an agent, lender, etc. I do not profit from any decision you make on how to invest. I am a successful RE investor in San Diego. Prior to 2022, I advocated local RE investors invest in San Diego. Today, I still believe local investors who choose to invest in RE are likely best served by investing locally.
However, 2 recent studies both showed that rent compared to property values in large US cities have never been worse. Combine this with the rate increase starting q2 2022 and the result that leveraged RE costs nearly doubled and it is easy to understand the challenges of investing in RE at this time. So I question if a new investor should become an RE investor in this market. I have been investing in RE for many years and I am finding it challenging to find RE that projects the returns that I expect.
Now for the $500k equity. The average SFH is ~$1m in San Diego so there is no way to know the current LTV. If your home is worth less than $1.5m, your leverage is low. If the home is worth over $1.5m, then there is not too much equity trapped. RE's super power is leverage. Cash our refinances have a small rate hit associated with the cash out, but it is not hard to fathom investments that far exceed the cash out refi APR. lifetime sp500 is ~10%, but recently much higher. Fab 5 and mag 7 are much higher than SP500. Granted they cannot increase like this indefinitely but I am not expecting this to be the year that fab5 or mag7 performs worse than the sp500. These are just a few examples; there literally are thousands of investment options.
If you want to improve your family's finances, optimize the wealth you already have (and it does not have to be in RE, sp500, fab5, or mag7). However, it should not be sitting unoptimized in your OO home if you want to optimize your finances.
You need to evaluate if you are best using your current financial resources. If you are not, then you need to determine how to best use your current financial resources and I personally am not convinced that RE is the best option at this time. If you decide RE is the best option, evaluate the various challenges of OOS RE versus the benefits of local RE investing. I would never suggest a new RE investor start with OOS RE.
Note agents and lenders have a vested interest in convincing you their market is superior and to invest in their market and ideal,y use them as your agent or lender.
Good luck
As always, I appreciate your different perspective on things Dan. Are you saying that you don't think RE investing is the best option at this time because he is in a state where investing is difficult, and because you don't suggest a new investor to go out of state? Or you don't think RE investing is the best option for any new investor no matter what market they are in?
I think RE investing is challenging to enter in all markets. This does not imply impossible.
Finding a good deal off market. A good brrrr in a market that does not project crazy negative cash flow after the high LTV refi. A smart sophisticated value add or a good traditional value add. Non residential RE. obtaining below market financing. The reality is there are literally thousands of opportunities in RE and I am certainly not stating there are not many paths to make money in RE today.
However the typical new RE investor is going to use an agent to purchase a residential property without a value add that is listed on the mls using conventional financing. It likely (almost certainly) will have negative cash flow when properly allocating for sustained expenses and realistic conservative vacancy. This negative cash flow has to be subtracted from the sources of return.
Next recognize that the appreciation has been flattish in most markets and declining in some markets. The implication is in the near term appreciation may not be the profit source that many of us have experienced since 2010.
Now look at other investment opportunities. What is the sp500 recent returns? Google indicated 13.7% to 15.2% annual return for last 5 years, not sure why they could not calculate it to a more narrow range. This is passive, sit on your couch return. Same for fab 5 is 16% to 20%+ per year which seems way lower than reality to me. Mag 7 Google has as 30% to 36% per year (less than 3 years to recover investment). Of course these options are not going to return these values indefinitely but I list them as examples of what is possible and not necessarily the best options going forward. The point is there are a lot of investment options and RE will not always be the best option. I question if RE is the best investment option for someone first starting in RE at this time. Residential RE is not passive. I personally believe most (definitely not all) new RE investors could find better investment opportunities than RE.
Good luck
In that case, I definitely agree with your original point. If a new investor expects to jump on the MLS, buy a turnkey rental, and enjoy strong cash flow and steady appreciation for the next decade, they're likely going to be disappointed.
I may give newer investors too much credit by assuming they already understand that today's market often requires a more active approach—adding value through strategies like BRRRR, creative financing, off-market deals, or other methods to create equity and improve returns.
I recently read that the number of new investors entering the market is declining, and perhaps part of the reason is that many haven't yet learned this lesson. The days of buying almost any property and watching it perform are largely behind us.
- 3moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 904 votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
You're actually in a stronger position than you may think. You've already built significant equity, have capital available, and you're taking the time to learn before jumping in. The biggest mistake I see new investors make is focusing on finding a deal before they understand the numbers. Keep analyzing properties, learning cash flow, reserves, CapEx, and tenant risk until evaluating a deal becomes second nature. Since you're in San Diego, it's understandable that out-of-state investing is on your radar, as many California investors look to Midwest markets where entry prices are lower, and cash flow is stronger. The key isn't finding the perfect property, it's finding a solid first deal with conservative numbers and a strong team in place. Real estate is a long game, and taking the time to build a foundation now can save you a lot of expensive lessons later.
- Member since 2023 · 4 posts · 10 votes3mo
Dan H,
Thank you for your advice and perspective. I am very ignorant when it comes to this type of thing so any information is helpful. I am not a super wealthy person so if I make a decision I want it to be solid for my family. Unfortunately, if it’s not out of state for me I don’t think I can even enter the market because things are so expensive in San Diego.
Were you suggesting an option would be to take out a HELOC and invest it in the S and P ? I don't know what the Mag 7 are or the other one you mentioned. Thank you for the feedback.
Ryan
- 3moDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Ryan Stolzoff:
Dan H,
Thank you for your advice and perspective. I am very ignorant when it comes to this type of thing so any information is helpful. I am not a super wealthy person so if I make a decision I want it to be solid for my family. Unfortunately, if it’s not out of state for me I don’t think I can even enter the market because things are so expensive in San Diego.
Were you suggesting an option would be to take out a HELOC and invest it in the S and P ? I don't know what the Mag 7 are or the other one you mentioned. Thank you for the feedback.
Ryan
I listed those as options. Mag 7 and fab 5 are subsets of sp500. You can search their meaning, but they are the highest value, fastest growing of the sp500 (and some may think higher risk). I am not trying to tell you what to invest in.
What I am stating is excess equity in an OO house is not producing an optimal return. If your LTV is below 65%, I question if there will is not better options for that money (meaning I think there are better options for that money). Options that are very likely to out produce your finance rate over the long term. The 3 options I listed each have lifetime returns above the current cash out refi APR. In recent times, far higher than the cash out APR.
Note I do not want the responsibility of choosing your investment. I wanted to show options that historically illustrate my comment. There are some investors convinced stocks are currently over valued. I mostly wanted to show that producing long term returns above 7%/year is not that difficult and your excess equity is not performing optimally.
I understand about San Diego RE prices being high and a challenge. I am finding local purchases challenging and I have been doing this a while. I personally feel residential RE investing for most new RE investors is challenging everywhere.
Good luck
- 3moAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
I read the BRRRR book by david green and then rich dad poor dad and then cashflow quadrants. Those 3 books changed my life and the way I think about money now.
I own 30 rental units in Columbus and work with OOS investors buying here (sell about 100-120+ properties every year).
My advice is to self-educate then start looking into different midwestern cities that are performing very well in terms of tech/job/population growth and buy there. Make sure it is landlord-friendly.
Connect with a good strong agent and have them connect you with your core-4 team.
ReafCo | Ahmed Group 55 Reviews - 3moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
Hi Ryan, welcome to BP! It sounds like you're actually in a great position because you've already built equity, saved some capital, and spent time educating yourself before jumping in. When analyzing deals, I'd focus on understanding cash flow, expected maintenance, vacancy, capital expenditures, and making sure the numbers still work even if things don't go perfectly. One of the biggest hazards for new investors is buying a property because it "feels" like a good deal without really understanding the market, rents, or expenses. Since you're in San Diego, I would definitely consider out-of-state investing if the numbers don't make sense locally. I'd recommend taking a look at Columbus, Ohio. I moved here from Portland in 2020 specifically to invest and have seen firsthand why so many investors are attracted to this market. The macroeconomics are on fire with strong population growth, job growth, and major employers expanding here including Intel, Amazon, Google, Microsoft, Honda, LG, and Anduril. Despite all that growth, you can still find properties in the $120K-$180K range that can produce positive cash flow and often come close to or meet the 1% rule, which is becoming harder to find in many markets. My advice would be to keep learning, analyze lots of deals before buying one, build a trusted local team in whatever market you choose, and don't feel pressured to rush into your first purchase. A careful first deal is usually better than a fast first deal. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9119 Reviews - 2moAmit PrasadBusiness MemberInvestor · Member since 2026 · 20 posts · 14 votes
Hey Ryan, I'll send you a message. Do you want to do rentals or fix and flips? There's pros and cons to both but depends on what your goals are. There's a lot of great people here who are eager to help!
MyFlipOS - 2moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
Hi Ryan and welcome. You can ask any specific questions you have here in the forums. RE investing is exceptionally challenging for first-time investors right now and OOS is not a panacea.
To be very direct - your equity will be expensive to access, and $30K isn't enough to do anything.
Happy to dialogue further
- Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes2mo
Hey Ryan,
If you've already read a few books, I'd spend less time reading and more time analyzing actual deals. Pick a market, pull listings every day, and start underwriting them. You'll learn more from analyzing 100 deals than reading another 10 books.
I'd also be careful about tapping into that $500k of home equity before you have a clear investment strategy. A lot of new investors get excited about leverage before they've done their first deal.
As for out-of-state investing, it can work, but I'd make sure you have a solid local team in place first, especially an investor-friendly agent and property manager.
The biggest hazard I see with new investors isn't buying a bad deal. It's buying a deal they don't fully understand.
I'm a real estate broker based in NYC and Long Island. Happy to share ideas and answer questions. Feel free to reach out anytime, my DMs are always open.
- Real Estate Consultant · Usa · Member since 2024 · 27 posts · 9 votes2mo
You have several options. What market are you looking to invest? You could buy subject to if your looking for a rental. If you have no experience we typically can sign on as project manager to qualify for hard money loan. Whatever you do do not over pay for your first deal. Do not buy a retail process house. Message me if you need help
- Lender · United States · Member since 2020 · 177 posts · 26 votes2mo
My biggest piece of advice
Don't feel pressured to buy quickly. Real estate is a long-term wealth-building strategy, and patience is one of the best advantages you can have. The investors who succeed over decades are usually the ones who buy quality properties, keep adequate reserves, and let time work in their favor.
You're already ahead of many beginners because you're asking how to protect your family while building wealth. That mindset will help you make disciplined decisions. Focus on learning the numbers, surrounding yourself with experienced professionals, and buying only when the deal makes sense—not because you feel like you have to get started immediately. One well-chosen investment can teach you far more than rushing into several mediocre ones.
- 2moRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
The sentence that kept pulling me back was, "I want to help my family and not burden them or lose our money." That doesn't sound like someone trying to maximize returns. It sounds like someone trying to avoid making one expensive mistake.
If it were me, I wouldn't spend the next month looking for a property. I'd spend it trying to answer one question: what kind of investment could I comfortably own through a bad year? That answer usually narrows the market, financing, and property type faster than any spreadsheet ever does.
Out of curiosity, if you bought your first rental and it broke even for the first two years, would you still consider it a success?
Section 8 Launch52 Reviews - Investor · Gulf Coast · Member since 2026 · 37 posts · 13 votes2mo
Underwriting a deal means proving it's a good investment. The first thing to do is determine if the neighborhood or area is a good locations. Are the homes appreciating or is it in an emerging market, etc. What's keeping the folks there. Is employment near and strong. Is there ample shopping etc. Are people moving into the area or out of the area.
Then and only then, run some fake numbers until you get to know the routine. Then and only then settle on a specific property. To do that you have to have a purchase/asking price to get started and that may change based on how the rest of the numbers work out. The numbers may suggest you can't pay that for the property. if you do, it's not a Deal. Look at the asking prices in the market and determine what you may pay for a property. Are the properties selling quickly or staying on the market (the best indicator as to how vibrant a market is). With a purchase price you can start to figure out whether it's a good deal. Also, check the rents in the neighborhood for similar properties; similar in amenities (quality of construction (bedrooms, bathes, size (square footage) etc... and setting (location)), taxes and schools you're considering and determine what amount you can expect to rent the investment property for. Then determine your upfront costs. Since you're new to investing a realtor or two or title company closer may be helpful there; down payment, closing costs, points, escrow accounts required, etc. Also figure your carrying cost on the loan P&I plus taxes, insurance, HOA fees, etc. That will give you your monthly nut, what you'll be required to pay monthly to keep the wolves away. And don't forget to figure vacancies and a sinking fund (to replace major items). From there you should be able to figure cash-on-cash return, NOI, DSCR, cap rate, etc. It's a lot to get used to if you haven't done it before. It's a lot of work even if you have done it before. You'll also want to figure what flippers call ARV if you have any improvements to add or deferred maintenance (broken or neglected items) items you'll need to pay for. Will they increase the rent? It's not for the faint of heart. I'd stay close to home until you get the swing of things. Trying to make purchases out of state is not something you want to walk into casually. It's tuff to find a reliable team out of state unless it's by word of mouth and then only by arms length. Questions welcome. Note: If you can negotiate an owner finance do it. Regardless of what the real estate agents might say. It'll save you time and money.
- Investor · Gulf Coast · Member since 2026 · 37 posts · 13 votes2mo
You can probably negotiate an owner finance if there's something amiss with the property or it's been on the market longer than expected. Good luck.
- 2moJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 887 votes
Hey @Ryan Stolzoff! You're in a better position than you may think. You've already built significant equity, saved capital, and invested time into learning. The key now is turning that education into a repeatable process.
I'd start by learning to analyze deals consistently. Focus on projected rent, operating expenses, vacancy, maintenance, CapEx, and cash flow. Even if you're not ready to buy tomorrow, analyze properties every day. You'll quickly develop an eye for what makes a good investment.
Out-of-state investing is absolutely an option, especially coming from a high-cost market like San Diego. The biggest challenge isn't the distance, it's building the right team. A knowledgeable agent, property manager, lender, and inspector can make all the difference.
The biggest hazards I see are buying based on emotion, underestimating expenses, and rushing into a deal because you're eager to get started. Buying one solid property is far better than buying the wrong one just to say you're an investor.
I'm a real estate agent based in Memphis and work with out-of-state investors building rental portfolios. Many California investors choose Memphis because of the affordability, strong rental demand, and cash-flow potential. More importantly, they're able to build a reliable local team that helps them invest with confidence from afar.
You're asking the right questions, and that tells me you're approaching this thoughtfully. Keep learning, keep analyzing deals, and don't be afraid to lean on experienced investors along the way. If you'd ever like to discuss out-of-state investing or learn more about the Memphis market, I'd be happy to connect and help however I can. - Member since 2023 · 4 posts · 10 votes2mo
Thank you for the info. I am interested in running the numbers and analyzing. However what are the specific steps to do this? Where do I get the info? How do I compare? What is a good ratio? What are operating expenses? I understand vacancy. What would I expect for maintenance? I don't know what CAPEX is ? How do I analyze it? I understand cash flow.
could I get an example of this on a property?
Thank you for your help! - 2moTwana RasoulBusiness MemberReal Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
Hey Ryan, as an agent myself and local investor as well, these are conversations I have regularly with San Diego homeowners sitting on significant equity and the honest answer is: it depends.
A quick reality check on that equity first: a cash-out refi or HELOC typically gets you to 75-80% LTV, so not all of it is deployable capital. That still shapes your options significantly though.
Two recent examples from clients I've worked with:
- One had equity in their home but wasn't in a position to buy. We decided the best move was using their HELOC to convert their garage into an ADU, instant rental income, no new purchase, no new mortgage.
- Another was sitting on a townhome and had VA loan eligibility. We sold the townhome and repositioned them into a 4-unit property. Completely changed their financial trajectory.
Same starting question ("I have equity, what do I do?") two completely different answers.
On out-of-state investing — I'll be straight with you because I invested in the Midwest myself: it's not the right move for most people. More variables, less control, and you're trusting a market and a team you don't know. The math can look good on paper until it doesn't.
The books are a great start. But the next step isn't buying, it's a conversation to map your specific goals, your actual numbers, and what options actually make sense for your situation.
If you want to chat feel free to shoot me a private message.
Compass5122 Reviews - Lender · United States · Member since 2020 · 177 posts · 26 votes2mo
You're already ahead of many people by owning a home with significant equity and taking the time to learn before jumping in. Start by analyzing lots of deals, even if you don't buy right away. Out-of-state investing can work if you build a strong local team (agent, lender, contractor, and property manager). The biggest mistake is buying a bad deal, not waiting for a good one. Be patient, keep learning, and don't be afraid to ask questions—your first deal doesn't have to be perfect, just well researched.
- 2moGarrett CrosbyPro MemberReal Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 162 votes
Hey Ryan, fellow SoCal guy here - I'm based in LA and have helped a lot of investors in your exact position. Big equity in a high-cost market, solid savings, and not sure where to start. You're actually further along than you think.
First thing - don't let San Diego prices discourage you. A lot of my clients from the LA/SD area have built great portfolios out of state. The key is picking the right market and building a real team on the ground before you buy anything.
On analyzing deals: the BiggerPockets rental calculator is honestly one of the best free tools out there to start. You plug in purchase price, expected rent, taxes, insurance, vacancy (I'd use 8-10%), maintenance (budget around 5-10% of gross rent), CapEx (another 5-10% for bigger repairs like roof, HVAC, etc.), and property management if you're going OOS (usually 8-10%). Once you run 50 deals, it starts to click naturally.
A few honest thoughts:
- Your $30k is real but limited once you factor in down payment, closing costs, and reserves. Think about whether a HELOC makes sense as a backup.
- Don't rush. The investors I've seen get hurt are the ones who felt like they HAD to buy something. One solid deal beats three mediocre ones every time.
- OOS can absolutely work, but your property manager will make or break you. Interview several before you even pick a market.
Happy to answer any specific questions. You're asking all the right things.
- 2moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Ryan Stolzoff:
I am new to investing in real estate. I own my own home and have over $500k in equity. I also have 30k to use to start. How do I analyze deals? Who can help me? I don’t think I can afford to buy where I live in San Diego. What about out of state rentals? I have read three books about the topic and I am looking to get started. Or at a minimum learn what else I need to do to be prepared to take the first step. What are the biggest hazards? I want to help my family and not burden them or lose our money. Any advice would be helpful. Thank you!
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully building a knowledgeable & trustworthy local team.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9450 Reviews - Rental Property Investor · Member since 2026 · 56 posts · 29 votes2mo
@Ryan Stolzoff I've purchased out of state a few times, biggest thing to keep in mind is the added cost of management and repairs. When you invest locally you can handle much more yourself, but you'll be surprised how much a seemingly small service will cost - $200 to install a doorknob, $300 pest control because your tenant saw a roach, $150 for lawn mowing, list goes on and on.. but as long as you run your numbers right and are prepared for the expenses then you'll be alright. How close to San Diego are you looking?
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