Property Manager · Prineville, OR · Member since 2016 · 261 posts · 166 votes
Hey bigger pockets members,
I have a little over 10k saved up and I'm looking To make a down payment on my first rental.
I'm looking in out of state areas such as Texas, Kansas City, Alabama and so on.
Where the cost of housing is a lot cheaper then Oregon.
I need some advice on where you guys think some good markets might be to invest in.
Thank you!
@Patrick Flanagan I am just a little south of you in Eugene, and have been investing in rental homes and other passive RE vehicles out of state since 2012. I agree with other comments above that $10k is not enough to invest in a buy and hold property yet, but you might want to take a look at an article I wrote about an alternative where I invest in portfolios of 10 SFR at a time, that are co-owned by the managers who are local to the properties in the midwest. The minimum investment is $10k :
It might be a way for you to get in the game with just the little amount of capital you have.
House prices in those areas are low for a reason, usually because they're almost if not over 100 years old.
Im not going to tell you not to invest out of state (I'm looking into it myself) but please understand that you're getting what you pay for. Old homes bring lots and lots of maintenance. so go into this investing strategy with your eyes open and make sure to do your homework.
Invest in T-Bills for the time being and grow it to a little more. Buy a house in Albany. I have sold a lot of apartment buildings down there and that area is primed for rent increases.
Carson Halley thanks for the reply Carson, you are right it is a great area. Especially since it's so close to OSU. But prices are just to high right now. Or that's what it seems like from the research I've done
Patrick Flanagan I would work on building up more capital first, unless you have another 10k set aside for reserves. You ideally want to have 10k in reserves AFTER buying your first property...so you might want to have $30k total. $20k towards down payment and closing costs, and the rest for your reserves.
I know it's probably not the answer you wanted to hear but you don't want to be caught with your pants down with an unexpected expense, eviction, or vacancy.
Carson Halley thanks for the reply Carson, you are right it is a great area. Especially since it's so close to OSU. But prices are just to high right now. Or that's what it seems like from the research I've done
We just came out of a huge recession, and I don't expect us to regress to those prices. Those were once in a lifetime pricing because it was a credit based recession, not a normal business cycle one. Find a property near the river or in old town that is under priced (say 30% below market value). That area will have good value gains in the long run because it is slowly improving. I truly believe if you invest with those type of margins, you will be successful no matter how overbought or oversold the market is! Good luck!
Greg Leach I've really been looking at Norada Real estate and possibly buying a turn key property from Marco
Hey Patrick -- @Kyle McCorkel does make a good point. As much as I love your enthusiasm and excitement to get started, it's also important to budget like a business would. That just simply means you have some funds in reserve for unexpected expenses or turnovers.
As a general rule of thumb, we recommend having three or even four months worth of gross rent per property in the beginning. You can scale that down considerably as your portfolio grows larger.
If you feel comfortable and confident, then move forward. But having a reserve is always prudent.
Besides, $20,000 or more is a better starting point then $10,000. If your criteria is to be in bread-and-butter neighborhoods then you are going to be looking at an $80,000 plus property which means a down payment of approximately $16,000 plus closing costs.
Have this discussion with your investment counselor here.
@Patrick Flanagan I am just a little south of you in Eugene, and have been investing in rental homes and other passive RE vehicles out of state since 2012. I agree with other comments above that $10k is not enough to invest in a buy and hold property yet, but you might want to take a look at an article I wrote about an alternative where I invest in portfolios of 10 SFR at a time, that are co-owned by the managers who are local to the properties in the midwest. The minimum investment is $10k :
It might be a way for you to get in the game with just the little amount of capital you have.
I live and invest in Alabama, and not all the houses are nearly 100 years old. Even if they are, a good rehab will take care of any problems. There are some very good turn key companies in Birmingham who buy older distressed properties and bring them back to life, and sell them to investors like yourself. I do not know how much of a downpayment you would need to invest with one of these companies. Just be careful and make sure that you are investing with a reputable company. I would recommend that you read over some of @Clayton Mobley's posts about the Birmingham market. His company, Spartan Invest, has a very nice product and they are honest people who are easy to work with.
I would take your $10,000 and buy into a syndicated deal or invest in performing notes through a broker here on BP just as a way to get return and build up what you have. Keep saving new capital and your dividends, and when you have $25,000 or more start acquiring your own leveraged assets, if you still want to do that. I personally do not like the idea of buying one single turnkey SFR. There is volatility in the business and having only one house exposes you to that volatility. I should also note that the volatility is almost exclusively in the negative direction - things can easily go much worse than budgeted, but they almost never go much better than budgeted.
Thank you all for the advice and this was a eye opener, well I guess it's time to keep working and saving up a little more.
I'm also very interested in some of the ways you guys have suggested I invest my money. I will look into all of those
Augusta, GA.
We've got a certain area of town, where homes are typically built from 1960-1980 and they can be as cheap as 35k if you get a really sweet deal.
Terrific job growth with home prices that are NOT just steadily declining. This is very unusual because when you see homes that cheap you typically don't see a steady market or any appreciation. Augusta, GA is different.
10k you could have a downpayment on a house :)
However, Patrick Flanagan if the 10k is everything you have to invest I wouldn't pull the trigger yet.
I'd use that 10k to send out some direct mail, wholesale some houses, get it up to about 30k and then start buying your own assets.
You might be able to use your 10k as down payment on a seller financed deal but those are hard to find. I would grow that some before jumping into a deal, even if you bought something you will need reserve for maintenance, vacancy etc.
@Patrick Flanagan I'm late to the game here, but I'll second a lot of the advice you've already received from @Kyle McCorkel and @Larry Fried: : don't pull the trigger just yet. I know it's tempting to buy into a sub-$50k C or D prop because it fits your budget, but I'd really recommend holding off until you have more capital and can invest in a lower-risk product. You always need to have cash reserves for unexpected issues like unforeseen CAPEX costs, so $10k just doesn't have enough wiggle room for a DP and reserves. You're heading in the right direction though, and I know it's frustrating not being able to jump in when you see other people scoring good deals. Just remember, there will always be deals - don't sacrifice quality and preparedness to satisfy enthusiasm!
You're pretty close to a down payment for a true turnkey investment in a B caliber area in Northeast Ohio. I you haven't looked at what's available here, I'd recommend you do.
@Patrick Flanagan I still thinks there's opportunities in your area, but it may require you thinking outside of the box. If your serious you can make a good amount of traction by putting in some legwork. Driving for dollars, knocking on doors, working with a mentor, etc to raise some additional capital. I will echo the comments here, do not buy in the $30K range in turnkey, you'll be sorry you did. Happy to assist if you need additional.
I bought my first property FHA 6 years ago with only 10K, no reserves. Very risky, however because I did that I now have the reserves lol. After a year or so and certain circumstances I converted the home to a SF rental and purchase another home conventional. I don't know about your areas but because of my personal experience I would disagree with some of the other posts and go for broke. Granted, my situation could also be different due to fall back options such as 401K, which to most people is very controversial. Good luck!