Newbie asking for advice on first rental property investment

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Newbie asking for advice on first rental property investment

Mayda Searfoss
Sedona, AZ · Member since 2017 · 5 posts · 7 votes

HI!  I'm brand new to BP and just getting familiar with the forums :-) 

 I'm looking to buy my first rental(s) property investment and want some advice.  

I have been doing a lot of research mostly on the Midwest states as I have read they have the greatest rental returns.  After all my research I found Macon, GA to be a good choice for my price range.  The houses are not too old, the cash flow is good, the population has been growing in the last few years, etc.  I'm from Arizona and have never been to Georgia. 

 I'm looking to pay cash and would like to buy maybe 2 or 3 properties priced around 30k to 50k each.  I have seen on zillow that there are a few decent properties in Macon within this range that have good rental cash flow.

Due to the low home price I have found it difficult to find a real estate agent in the area that wants to spend time with me.  Does anyone have any advice on how to find a real estate agent in the GA area that works with investors and is not turned off by the low purchase price and small amount of properties?

Also, do you think Macon is a good place to get started buying my first rental property or would you have other recommendations for better places in Georgia where I can still buy at the prices I mentioned?

Thank you very much for any input you have.

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Jennifer BeadlesPro Member
Rental Property Investor · Phoenix, AZ · Member since 2016 · 424 posts · 261 votes
9y

@Mayda Searfoss When I decide on an area that I want to invest (based on the numbers and demographics) I always call a few local property managers and I tell them that I plan on buying several properties and let them tell me about their services. Then I ask them to connect me with their favorite investor friendly agent who can help me find properties to buy. 

This connection makes all the difference because the property manager wants an investor to buy so that they can manage the properties, and agents often get a good amount of business from property managers (at least the ones that only do PM) and they don't want to let them down by not following up with a referral.

Hope this helps!

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  • Andre B.
    Yorktown, VA · Member since 2017 · 21 posts · 2 votes
    9y

    I am also a new investor that is looking for my first property.  I live in the Hampton Roads area of Virginia.  The property values tend to be a little high in the A to B class areas, so I have started to look elsewhere.  I do not think that I will invest anywhere without visiting the area for at least a few days.  Visiting will give you a chance to meet with realtors who may take you more seriously at that time, especially if you do a package deal purchasing multiple properties.  Just my thoughts as a newbie.

    1Reply
  • Mayda Searfoss
    OP
    Sedona, AZ · Member since 2017 · 5 posts · 7 votes
    9y

    @Andre B. Thank you for your input!  Yes, I agree with you.  I do plan on visiting Georgia and staying there for several days.  I'm hoping to connect with a realtor ahead of me going.

    1Reply
  • Jennifer BeadlesPro Member
    Rental Property Investor · Phoenix, AZ · Member since 2016 · 424 posts · 261 votes
    9y

    @Mayda Searfoss When I decide on an area that I want to invest (based on the numbers and demographics) I always call a few local property managers and I tell them that I plan on buying several properties and let them tell me about their services. Then I ask them to connect me with their favorite investor friendly agent who can help me find properties to buy. 

    This connection makes all the difference because the property manager wants an investor to buy so that they can manage the properties, and agents often get a good amount of business from property managers (at least the ones that only do PM) and they don't want to let them down by not following up with a referral.

    Hope this helps!

    3Reply
  • Mayda Searfoss
    OP
    Sedona, AZ · Member since 2017 · 5 posts · 7 votes
    9y

    @Jennifer Beadles

    Thank you very much! That really helps.  I had planned on calling property managers to ask for their input after I had some potential addresses from a realtor but doing it the other way around like you mentioned makes a lot of sense.  Thanks again!

    1Reply
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    @Mayda Searfoss One of the investors I know buys in St Louis and in Indiana. He says he pays $40,000 to $50,000 cash per house. I asked him how he does it. He travels a lot! With the new "touchy feely" TSA, that doesn't sound appealing to me. Why not Casa Grande or Yuma or Flagstaff or Kingman? Closer by and easier to manage.

    1Reply
  • Mayda Searfoss
    OP
    Sedona, AZ · Member since 2017 · 5 posts · 7 votes
    9y

    @Account Closed 

    I have looked a lot in Arizona but haven't found deals in my price range or the cash flow as in the other states. I run my own business and only have time to look for deals on the MLS or zillow but haven't had any luck. I really would much rather find deals in Arizona but I also want to maximize cash flow.

    Thanks a lot for your reply!!

    1Reply
  • Aaron Van Curen
    Real Estate Broker · Fort Wayne, IN · Member since 2016 · 88 posts · 41 votes
    9y
    Ken Min who is this investor you speak of? I am an investor in Indiana and would love to connect with him. I'm fairly new but maybe there is a way I can help him make his job more easy. Mayda Searfoss Since you are investing out of state, I would recommend connecting with investors in that area through BiggerPockets to potentially partner with, talk to an attorney about laws specific to that area, and like the other person said...form a good relationship with a PM because if you don't have a partner is the local area then the PM will be your boots on the ground. I would also definitely pick up ever book published through BP, they're amazing and have taught me so much.
    1Reply
  • Jeff Schneider
    Residential Real Estate Agent · Phoenix, AZ · Member since 2016 · 155 posts · 117 votes
    9y

    @Ken Min ''touchy feely" that was funny.

    @Mayda Searfoss That's a gutsy move for the first property. Why not finance something in AZ to get your feet wet? Your cash flow will be less but your percent return on your invested cash will be higher. It can definitely be done but it's best to have a support group of managers, tradesmen and so forth when buying out of state. 

    2Reply
  • Kin Lay
    San Leandro, CA · Member since 2017 · 55 posts · 5 votes
    9y

    @Jeff Schneider I used zillow to research Phoenix, AZ and the rent-to-price ratio does not even reach 1%. How can you say it's better there?

    1Reply
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    @Mayda Searfoss I haven't used the MLS in 20 years. I find all of mine "off market". Less hassle. less competition, more profit. PM me if you want some ideas or if you're happy to look far and wide that's cool too. "Luck" is not a business plan. ;-)

    1Reply
  • Kin Lay
    San Leandro, CA · Member since 2017 · 55 posts · 5 votes
    9y

    @Mayda Searfoss I don't recommend Macon GA. Too many unsold houses in that area.

    1Reply
  • Ralph C.
    Real Estate investor professional · Suwanee, GA · Member since 2016 · 233 posts · 81 votes
    9y
    Originally posted by @Mayda Searfoss:

    HI!  I'm brand new to BP and just getting familiar with the forums :-) 

     I'm looking to buy my first rental(s) property investment and want some advice.  

    I have been doing a lot of research mostly on the Midwest states as I have read they have the greatest rental returns.  After all my research I found Macon, GA to be a good choice for my price range.  The houses are not too old, the cash flow is good, the population has been growing in the last few years, etc.  I'm from Arizona and have never been to Georgia. 

     I'm looking to pay cash and would like to buy maybe 2 or 3 properties priced around 30k to 50k each.  I have seen on zillow that there are a few decent properties in Macon within this range that have good rental cash flow.

    Due to the low home price I have found it difficult to find a real estate agent in the area that wants to spend time with me.  Does anyone have any advice on how to find a real estate agent in the GA area that works with investors and is not turned off by the low purchase price and small amount of properties?

    Also, do you think Macon is a good place to get started buying my first rental property or would you have other recommendations for better places in Georgia where I can still buy at the prices I mentioned?

    Thank you very much for any input you have.

     I don't think Macon is that great. Its low for certain reasons. Its c class  and less.  There really aren't any major companies boosting the Macon economic market. It gets a bit more rural in that part of the state.

    Rents not too high. Is it worth the investment from a distance?

    Might be a little more worth it If you purchased a large package deal or somewhat where the roi is justifiable.

    If you are really considering that area then definitely take a flight and drive around Macon and look closely at those areas where you have properties in mind before you purchase, get property management etc.  At the end if you like what you see and feel good then it's a different story.

    1Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Mayda Searfoss I think it is great that you are getting into the real estate game.  I think that buying 2-3 properties for between 30k and 50k is doable in some markets.  But before you buy anything though I would encourage you to ask yourself what it is that you want real estate to do for you.  Defining your goal (what you really want), and the purpose of your goal, will help guide your decisions in your real estate purchases.  

    For example, if you want to create some cash flow and benefit from depreciation then purchasing some rental properties in a better rental market than Arizona makes sense.  However, these properties won't be completely passive.  You will likely need to manage the property manager and oversee their work.  At the lower price point properties, there tends to be more turn over, and vacancy can be your biggest expense.  So if you don't have a great property manager that is on the ball, the numbers may not be as high as they pencil out.  I think that is what @Account Closed mentioned the TSA being "touchy feely," I think that is an understatement.  I think it is more like Gropey Gropey and then some.  The least they could do is buy you dinner first.

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Jeff Schneider
    Residential Real Estate Agent · Phoenix, AZ · Member since 2016 · 155 posts · 117 votes
    9y

    @Kin Lay I recommended Arizona, not specifically Phoenix, it's a big state so she'll have a few choices.  

    1Reply
  • Rodney Sums
    Laveen, AZ · Member since 2016 · 584 posts · 528 votes
    9y

    @Mayda Searfoss here's my 2 cents as a new investor as well.  I just rented out my first primary residence, and right now I'm going to house hack a condo here in Phoenix.  The numbers won't be as juicy as experienced investors get but I'm learning and it will cash flow.  I was doing my little nosy  visit during construction and thankfully so because I discovered the day before the contractor was to start setting tile, the supplier gave them the WRONG TILE, and it was ugly tile too. And mind you this was going to be tile throughout, minus the bedrooms.  What a nightmare it would have been for them to set it, me see it, then have to hash out jacking it up to put the right stuff down, the delays, more hold costs, who was gonna pay for it etc.  Being local prevented that disaster, and was a lesson learned.  So my two cents is you might want to try investing local first, so you know what to plan for when investing afar since you can't visit the property every day. 

    @Account Closed Can I PM you too?  I've been wanting to get in on Yuma seeing how the Phoenix market has been on fire

    1Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    9y
    Originally posted by @Mayda Searfoss:

    HI!  I'm brand new to BP and just getting familiar with the forums :-) 

     I'm looking to buy my first rental(s) property investment and want some advice.  

    I have been doing a lot of research mostly on the Midwest states as I have read they have the greatest rental returns.  After all my research I found Macon, GA to be a good choice for my price range.  The houses are not too old, the cash flow is good, the population has been growing in the last few years, etc.  I'm from Arizona and have never been to Georgia. 

     I'm looking to pay cash and would like to buy maybe 2 or 3 properties priced around 30k to 50k each.  I have seen on zillow that there are a few decent properties in Macon within this range that have good rental cash flow.

    Due to the low home price I have found it difficult to find a real estate agent in the area that wants to spend time with me.  Does anyone have any advice on how to find a real estate agent in the GA area that works with investors and is not turned off by the low purchase price and small amount of properties?

    Also, do you think Macon is a good place to get started buying my first rental property or would you have other recommendations for better places in Georgia where I can still buy at the prices I mentioned?

    Thank you very much for any input you have.

    Welcome to BP! Idk Macon, GA and I am sure there are areas that have had good returns all over. I am not sure where you read these certain type of areas have the greatest returns and that might not be accurate. If a house or hood is getting 30k to 50k in 2017 I can assure you that is not an area that has the greatest returns historically. 

    Keep looking for an agent there will be one to help. Perhaps find the PM first then the property as managing will likely be your biggest challenge being so far away. The PM would be able to recommend the agent too.

    Good luck with your search!

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y

    @Mayda Searfoss first of all, I am curious why you are looking at buying a property in GA (south) if you were targeting the midwest? 

    Secondly, I would challenge your model of buying $30-50K homes. You could buy one $100K house closer to your home. You would have a third to half the number of tenants. It also means a third to half the number of HVAC units, water heaters, refrigerators, etc. A refrigerator costs the same whether in a $30K house or in a $100K house. Although the numbers look better on the surface for these low cost homes, you end up with much higher expenses and more tenant problems. It is also harder to get realtors or banks interested in these low dollar properties. I would save up money and shop closer to home. Sedona is beautiful, so why not invest where you live.

    2Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    I'd be careful buying in a different state, especially doing cash only deals where the properties will likely need $10-$20K more in improvements.   You're going to be at the graces of a contractor, who knows darn will you have $$$$ so he will charge you whatever he feels necessary.    I'd recommend buying one that's driving distance, and get your feet wet first.     That way you can check on progress, and be involved, and it's really fun to see before/afters!   If it's out of state, every call and everything will cost extra, and you'll have no option but to pay. 

    1Reply
  • Mayda Searfoss
    OP
    Sedona, AZ · Member since 2017 · 5 posts · 7 votes
    9y

    @Linda S. thank you, I will PM you.

    Have a great day everyone!

    3Reply
  • Sebastien Hitier
    Rental Property Investor · Hong Kong, Hong Kong Island · Member since 2014 · 188 posts · 114 votes
    9y

    Hi Mayda, 

    At such price points, performance depends on property manager and the kind of contractor handles your rehab and repairs.  

    What kind of rent do you expect to receive from a 30k-50k property? 

    In this kind of investor only market, you will have to allow for annual replacement reserve for fridge, HVAC, roof etc, as you can't count on some homeowner buying from you at an inflated price before these expenses come. 

    I read an article on bp where someone was suggesting there is at least a 3k reserve per year needed for any house, no matter its price (ensued a big debate as to whether this was 2k or 4k).

    I'd be interested in what experienced investors in these kind of properties do set aside as reserves and what kind of formula they use (per bath/sqf?).

    1Reply
  • Greg Hoing
    Phoenix, AZ · Member since 2016 · 3 posts · 3 votes
    9y

    Hi I am brand new to BP and AZREIA. I just bought my first rental property in Phoenix, well it's technically in  the historic district of Glendale. With this being my first one I wanted to buy something that was in a good location in case I have to sell it if things go south. I bought a duplex  with both sides already rented.  What I have been finding is that the rents are to low to make a good return. Most of these multifamily units were bought back  in the down turn when the purchase price was around 30k a unit so $500 a month was great. Now that the unit prices are around 70k you will have to raise the rents. From what I am seeing rental rates are going up but there are a lot of new  apartment construction  going on to compete with.  What I would like to know is what people are wanting as far as amenities these days.  Will they pay more for a pool, in unit washer drier, nice grounds, close to buses, trains, off street parking or close to work, shopping. Look forward to connecting with others for insight. Gregory

    2Reply
  • Chad McMahan
    Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes
    9y

    Hi Mayda. 

    Being that you are from Sedona, I'm surprised you don't want to buy a vacation rental here. This has recently become one of the hottest vacation rental markets in the country. I specialize in vacation rental properties here in Sedona. Let me know if you have questions or would like a proforma or two.

    1Reply
  • Kin Lay
    San Leandro, CA · Member since 2017 · 55 posts · 5 votes
    9y

    @Mayda Searfoss Hi Mayda, have you taken any action yet? I am looking at GA as well, but neighborhood around Atlanta, GA only. I want to stay close to urban city. Plus, I have budget of $5000. I am a new grad and not work long enough to borrow any credit at the moment. I am looking at tax lien sale. Let me know your thought and current process.

    0Reply
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