I am new to the whole real estate game.
I currently reside in Chattanooga, TN.
Chattanooga is consistently growing and I want a piece of the action, the only problem is that for my budget ( I don't have any investors) the only thing I can afford is in an "up and coming" neighborhood. Is the neighborhood worth the risk when trying to get my feet wet or should I wait and find a property in a better neighborhood for more money?
The thing that you have to understand about money is that if its not moving, not growing then its losing value, losing purchasing power, period. What ever you can do to get your money to grow, the sooner the better. You have have to have an exit strategy, how you will get out of the initial building, sell, lease option it, rent it, refinance it etc.
It's probably better to start in an "up and coming" neighborhood since you'll be required to learn more about rehabs, working with contractors, or, better yet, how to do the jobs yourself. That hands-on experience will arm you to know what reasonable timelines and costs are. Also, distressed properties can offer higher profits, but usually at the cost of more time, work, and investment in initial rehabbing and so on. It's also a bit riskier since you can be overwhelmed, but you can also be overwhelmed on more expensive properties in better neighborhoods, too.
If you're comfortable doing general construction already then that's great, otherwise I'd suggest asking local investors for referrals to local contractors you could call just in case. You might also expect that everything will cost double (again, just when you're starting out) so you have a buffer.
You didn't mention a strategy, such as BRRR, buy and hold, or whatever it may be, so I'll just repeat my standard advice here: If you're just starting out you might be best off working for a property management company to learn the basics, which I'll call the "learn and earn" option. That lets you build some more funds and puts you at a less risky position when you do set out on your own.
More of my standard advice: If you're going to jump in on a property in a less desirable neighborhood be sure you're comfortable being there at night. It's hard to work on and manage properties that you're uncomfortable visiting.
Those are only a few ways to start out. You could probably fine-tune your approach by reading as much as you can in the Learn tab.
Hope this helped!
Thanks for the advise everyone!
I do know about construction as I am a project manager for a construction company. I am just having a hard time pulling the trigger on potential properties as it is my money on the line.
Welcome to Bigger Pockets. Consider sending messages to other members for specific guidance.
Welcome to the neighborhood Tyler. You have a world of knowledge right here on BP don't be afraid to use it ! The site is filled with good people.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing