Best states to buy investment properties under $150k?

40 Replies

Planning to purchase my first investment property for around $100k. I live in NJ so the east coast would be preferable. Was thinking of PA. NYC and NJ are probably out of my budget. The goal is to buy and hold. Renting the property should cover all costs including management fees.

Which areas would you recommend? Whats the best way to accomplish my goal (start investing in real estate and benefit from the power of leverage)?

@Bob Roach

You're not far from me. Our area is notoriously terrible for affordable investment. In my experience, as you head north along the coast, property taxes goes up and inventory is pretty low. The places in the northeast where inventory is high tend to be really rough from a jobs and opportunity perspective.

In my discussions with people looking to invest out-of-state, I have heard many more great reports on the Southeast. We just purchased a duplex in Richmond, but I have been very happy with the growth and enthusiasm I see in most areas south of DC. Primarily happy with the number of wealthy, educated, former northeast people who plan to head that way in the next decade. 

Some of the coastal regions don't cashflow like your midwest working-class markets, but they still have great deals and I see a major white-collar migration taking place over the next few years. 

Originally posted by @Bob Roach :

Planning to purchase my first investment property for around $100k. I live in NJ so the east coast would be preferable. Was thinking of PA. NYC and NJ are probably out of my budget. The goal is to buy and hold. Renting the property should cover all costs including management fees.

Which areas would you recommend? Whats the best way to accomplish my goal (start investing in real estate and benefit from the power of leverage)?

You can definitely get an investment property to secure residual income in NJ for $150K. Particularly south thru central Jersey.

Kudos,

Mary 

Hutto and Manor Texas are suburbs of the Austin metro.  Good schools, growing area, high paying jobs around.  A few homes still remain under $150K, but they are quickly disappearing.  

In my opinion you must chose your domicile state but if you want an answer then New York region is the best because of the Federal government and high class locality.

Updated almost 6 years ago

In my opinion you must choose your domicile state, but if you want an answer then the New York region is the best because of the Federal government and high class locality.

@Bob Roach  

I would recommend Trenton NJ. I have a few friends investing there, you can buy there for between $20,000-$55,000, rents are between $875-$1,100, it's a b- c+ neighborhood, but still a pretty nice return worth checking out.

Good luck 

@Bob Roach yes, you can get 2-3 properties in a C area in PA for $150K which will give you a cap of 10-15%

Check out certain areas of Philly or the suburbs. I may being interested in splitting a 4-10 plex if you are interested.

@Trevor Ewen , I am curious can you share more about how your Richmond investment look. I love the LIC area and used to live there before I moved to San Francisco, am in a similar situation as you investing out of state, except from SF, so would love to trade ideas and discuss. I am currently looking in Austin area. Let me know if you want to connect :)

Your post title says "under $150K" then your post says "100K." Not sure what your budget really is so I did a super quick search for properties near the city you have listed in your profile. I've been to New Jersey zero times, but spent all of 1 minute on Redfin and found this house listed at $149,900;

331 Forrest St, Jersey City, 07304

And the description is quite interesting;

Bank approved short sale, Updated Kitchen, near trains and shopping, well priced. Ideal for investors 4Br 2 baths. Motivated seller.

If I can find something interesting in 1 minute, maybe you should invest a little more time and look in your own backyard for something really worth investing in instead of thinking you're going to find some great deal in another state you know nothing about.

New jersey is great for deals under 100k. Would recommend rehab properties in central nj and north nj. South jersey still has a slower market. Resale is your main concern. Always have a clear goal of arv.  Go and see the comps before your jump in. 

@Raymond B. I haven't lived here 20 years, but I can probably agree. As a new"er" CT resident, I can assume because of taxes and not being real business friendly. Taxes here suck and as a cleaning business owner, I can say the business climate is not too friendly either.

However, there are still great investments to be had and growing markets within CT, New Haven being one of them.

@Aaron Mazzrillo 331 Forrest St which you found is in a war zone. Very high crime area at least for the time being...

I am starting to realize North Jersey and Central Jersey may be a more investor friendly market then Northeast NJ. The market in the NY metro area seems pretty inflated right now.

@Jacqueline Carrington ,

Goodbye Connecticut, it is just to expensive here

Here is an example of why the State of Ct., is losing residents:

With the Litchfield hills and Connecticut in our rear-view mirror as we move our 101-year-old manufacturing company to South Carolina, we are nostalgic, excited, and disappointed.

We love Torrington and Connecticut but not all the things the General Assembly and the governor have done to induce us to leave family and friends behind. After more than a century of manufacturing in Connecticut, we are not looking for handouts.

We have paid our fair share, but enough is enough.

Connecticut

Hi Bob,

I started out in the same way- I live in NYC, but the prices here are pretty crazy.

My first investment property was in Hudson, NY- bought it for $60,000 in 2003, and I still own it. But the days of sub-$100k properties there are long gone, unless you're into doing a substantial rehab.

My current epicenter is Troy, NY, where I own and operate properties mostly in the two to ten unit range. I highly recommend it, as it functions as a bedroom community to Albany, has plenty of higher education facilities, and it's a cool spot to be. Affordable rentals and home prices, along with cafes and architecture from the 1800's- what's not to like?

If you're willing to plunk down about $80k-$90k, you can expect a two family in good shape, and rental rates ranging from $18k-$20k per year. You'll need good management; I'd recommend trying to secure that before making an investment. Of course you can pay quite a bit more for a property in excellent shape that requires nothing for awhile, and there are some homes available for less than $50k- but those generally require a good deal of rehabilitation. As this will be your first investment property, it's likely best to buy something in very good to excellent shape.

You can do similarly well in Albany or Waterford, both adjacent to Troy, but the former requires quite a bit more skill to navigate, and the latter has a rather demanding local government(and higher initial prices.)

Good luck with your first investment,

Michael

I can't comment on what states are best, but I own properties in Memphis from 50k to 219k in value.  The higher priced ones have been the most passive for me.  Lower price ones are more of a headache, but being local, I am able to manage these effectively.  I own a total of 15 and about to add # 16 and will continue to add.

I agree with Aaron ... your backyard is the best place to invest. If your backyard doesn't have what you are looking for right now, then change the location of your backyard, or change your strategy, or wait, or any combination thereof. If I can make good profit on cashflow positive buy-and-hold under $150k in SoCal, then surely you can find a way to do it in NJ.

Hi Bob,

I live in California and have my investments in St. Louis, MO. Started investing there in 2012 and now have 10 tenants across 8 properties. The net cap rate is between 18.57% (for the earlier properties) up to 41.78% (for the latest investments, as of this writing). The prices (including repairs) ranges from $25,631 for single family residence up to $47,217 for duplex. The rents range from $500/month to $750/month.

When I first made my cashflow strategy in 2012, I planned on investing $155k per year (roughly 5 properties at average price of $31,000/property) for five years to bring in an additional $3,000/month in rental income (roughly an average of $600/m for each of the 5 properties), mostly in single family residences. 

As of this writing I have a fourplex in escrow for $40k and a triplex for $38k. Some issues came up on the title and the closing has delayed a bit, but if we manage to close escrow successfully, the fourplex already has 3 tenants in it paying $450/month each and the triplex already has two tenants paying $650/month each. If everything goes well with these deals we'll be bringing in $2,650/month( $450 x 3 + $650 x 2) after the first month of closing on a $78k investment (which is a lot less than my initial estimate of $155k) and up to $3,700/month ($450 x 4 (fourplex) + $650 + $650 + $600 (triplex)) once occupancy is at 100%.

My wife and I manage the entire operation from a Google Sheet. We spent the most on repairing the first investment ($17,276), which we bought for $20,731 than any other property thereafter due to the lack of experience. Additionally on that same investment I sent $600 to an AC service provider that I found on craigslist and he never did the work, but we took that deal as a learning experience. 

After the first deal I looked for other service providers on craigslist, tested them with small jobs and kept the ones that I felt comfortable working with. I've been to St. Louis three times since 2012. The first time was on a weekend to verify that there were actually houses standing there selling for $20k. The second time was to check on the completed repairs of our first investment and sign the paperwork with our first tenant. And the third time was in 2013 to do an open house on two of our new investments that had just been brought up to rental status. That was all the school we needed to learn that market and the rest is history.

In my specific case, my strategy in the St. Louis, MO market is strictly cashflow from day one and it doesn't really matter to me if the properties don't appreciate a penny, as long as the cashflow is consistent. Your strategy may be completely different, but I'd recommend that you buy two properties, if at all possible, with your $150k (about $75k each). If you're new to this, more than likely you will learn a great deal from your first investment. Then you can apply all that learning to your second and subsequent investments.