First Rental Purchased (Atlanta, GA), Here's My Experience
So to introduce myself, I'm 31 years old, with a stable full-time avg. paying job in NYS. I have investments mostly tied to stock market and wanted to diversify as who know's how long this uptick will last and there seem's to have always been wealth to be made in owning real estate. I knew nothing starting out but I started reading a lot about real estate investing online and mostly got into podcasts such as Bigger Pockets but a few others as well. NYC and nearby is un-affordable for profitable rentals in my price range unless I get about 2 hours away in which the rental market is less dependable. For that matter I learned out-of-state investing is now very doable and more likely to be profitable at my price ranges.
I initially was looking on Roofstock.com and a couple similar sites for out of state a long-term rental investments but it was about 11/2017 and I found their inventory to be too limited at the time and sometimes slightly over priced. I also found it difficult to really gauge comps for houses as the selection was from all over the country. I narrowed down to a few cities, (Austin, Charlotte, Atlanta, Indianapolis) for various reasons (population growth, job growth, etc...). I waited for inventory to appear on these sites but eventually started to speak directly to a few property managers I had kept coming across and was told I can buy with them directly from out-of-state (although they did support Roofstock.com and did not intend to dissuade me from using the site). I eventually settled on Atlanta for the reasons previously mentioned and also because I found property managers/agents at Excalibur Homes to be extremely responsive and helpful.
I did a lot of searching for homes, I made my own excel sheet with formulas to plug in numbers on properties. To be honest the cash on cash and cap rates were lower than I had heard on podcasts and in forums etc. so I was constantly discouraged. Also the better inventory seemed to be snatched up within a day or 2 from being posted on the MLS therefore I learned to constantly check notifications from my buying agent and search sites I set up notifications from. I got stuck a little in analysis paralysis, I was aware I was looking for a good house in a good school district in a good neighborhood with good rental potential and better rates when running the formulas. I tried not to budge too much on any those which I don't think is a bad thing as I was putting bids down but was not getting the top bid. I did on one property get the contract but the inspection (that one hurt) came back horrendous. The agent agreed to do a walkthrough before I ordered inspection on future contracts (lesson learned). Eventually a few houses showed up part of a portfolio that were cheaper than my target price range but not in as a great of a school district. The numbers seemed to work however, I narrowed to a single house in that portfolio which was in good enough shape and already rented even which turned out to be a plus and I was able to quickly bid and get the property lower than expected.
I was in contract 03/2018. The process from there on gets busy. I have excellent credit and a few lenders lined up with pre-approval, I settled on one that was very responsive, very knowledgeable, established, and seemed to have slightly lower closing costs than some of the major popular routes (such as Rocket Mortgage). We were able to close in 3 weeks, I didn't have to, but I flew down to Atlanta for the closing as a sort of vacation and to bask in my first property purchase (I've lived in an apartment my whole life and currently still do).
There's so much I can go into with the whole process. From searching, analyzing, bidding, in-contract, closing, there's a lot that goes on and what most people don't tell you is that it can feel scary at every moment, more so because you don't know, what you don't know.
My advice would be:
-First narrow your search a bit but stay flexible enough that you won't miss a deal. It might not feel like a deal, but if you are able to know prices of certain neighborhoods and check price AND rental comps (don't rely on broker only or one single source for that info) than you can determine if your comfortable with those numbers and put a bid in.
-Keep researching and listening to podcasts, it helps with the don't know what you don't know parts. I'm not very outgoing but talk to people. I found out a friend of mine was doing something similar. (I became discouraged to learn he was doing it a lot faster and with so far good results but have since realized his scale is different, as is his risk-tolerance and goals). I did learn a lot and find re-assurance from hearing about his experience though.
-Talk to the agents and lenders, don't expect THEM to make you rich, don't hound them, don't rely too much, do your own research but talk to them, realize you're worth their time if you're going to ultimately trying to give them your business but try not to waste their time as well.
-Try to take your emotions out of it all. In the beginning although I was running numbers I was staying away from houses I would not want to live in even though they met all standards. Ultimately the house I purchased is not for my taste but is very rent-able, that matters more.
-Make sure you have a good agent, lender, property manager lined up. Eventually you'll also need an attorney (I went with the one provided by lender which was a VERY good choice), and a home-owners insurance provider (I used multiple agents until I was happy with coverage and price (DON'T under insure).
-Don't get discouraged. There are some things many people seem to insist upon in your position but keep doing your research, keep staying active in action. Even if your next task is to learn about mortgage types or to learn how home insurance works or to decide on LLC vs Sole Proprietor ownership (<--- Hot Topic). These are things that seem intimidating and halt the whole process but little by little hitting these topics on your way to finding and bidding and closing on the home helps immensely.
-Keep looking for what you don't know, this is probably good advice for any new skill/activity/business endeavor.
There's a lot more I'd love to say about all this so I'll leave it for questions/topics, whether it be the mortgage product (30 year fixed), ownership type (individual), analysis process, decision making, "why this and not that", I'd love to discuss it all. It will help review the process for myself and maybe help others understand how and why to do things a certain way. Thank you for reading and good luck!