Looking into getting into REI. Need Advice.

8 Replies

Hello BP,

I'm a newbie here and I'd like to get into REI and I'm just looking for some advice.

Let me spell out my situation...

I own a condo in San Diego that I purchased in 2009 for $200K.  It has appreciated greatly and is valued at $307K.  I owe about $180K.  I was thinking I could sell my condo and take the $120K or so + the $40K I have saved and purchase a multi family residential building in the midwest with good cash flow potential and then just rent in San Diego until the housing market drops again as I feel like we are in another housing bubble.  After the market crashes I should be in a good position to purchase a primary residence in San Diego, but now I should have a good stream of passive income coming in from my midwest rental property.

What would you do in my situation?  Am I crazy to try and time the market?  Am I crazy to purchase property thousands of miles away?

@Kevin Todd welcome to BP. I would not bank on appreciation when buying a deal since that is what hurt so many investors when the market crashed. With that being said, I would not bank on depreciation. Why not take your $160K and buy a MFR in you market, try to live rent free.

Thanks for the response Shawn.  Looking at the price-to-rent ratio for San Diego or pretty much any city in California and it doesn't look like it's the right time to buy here, not to mention I don't think I have enough capital for this market.  That's why I'm looking out of state.  I would love to buy here, but it just doesn't seem to make much sense right now.

BP looks like a great community and I'm learning so much already.  I think for now I will just do as much research as I can so I'm ready when the market is right.  Any advice for someone that's a newbie?

Originally posted by @Kevin Todd :

Thanks for the response Shawn.  Looking at the price-to-rent ratio for San Diego or pretty much any city in California and it doesn't look like it's the right time to buy here, not to mention I don't think I have enough capital for this market.  That's why I'm looking out of state.  I would love to buy here, but it just doesn't seem to make much sense right now.

BP looks like a great community and I'm learning so much already.  I think for now I will just do as much research as I can so I'm ready when the market is right.  Any advice for someone that's a newbie?

 Hi Kevin, nice to see you join the BP Community.  This is a great place to begin your real estate investment education.  Even though your neighborhood San Diego may be high priced, there might be places that you may able to find more reasonably-priced properties within driving distance.  At the beginning, you should aim to invest in your own backyard if possible.

Best of luck!

@Kevin Todd - welcome to BP. I agree with @Shawn M. in buying a MF property. Even though you might not live for free (due to high prices throughout San Diego), you can still live for an amount that's cheaper than renting while also accomplishing the mortgage paydown and depreciation for tax purposes. If your personal residence is in a good rental market in San Diego (not sure where you're located), consider refinancing and then renting that out. I certainly feel your pain in the increase in prices and am curious to see if market prices slow down. Best of luck.

@Kevin Todd welcome to the BP. I think your idea is a good one. You could probably buy a nice 4-plex in the mid-west that will give you good cash flow and if you're in a spot to sit an wait on this crazy San Diego market then go for it.

@Kevin Todd

BP is a treasure chest full of resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members which is my favorite part of the website.

Thanks to everyone for the big welcome!  Can't wait to get started on my first investment property.  I feel like I need to educate myself a bit more on all of the different options before pulling the trigger.  Glad to know there's an experienced community out there willing to answer questions.  Thanks again.

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