Looking to buy my first property, need advice

16 Replies

Hi,

I am an immigrant living in the US on work visa, I am thinking of buying an investment property soon. I have two options, one is to buy a commercial property in India or other is to get some residential property in USA. My goal is to create passive income through these properties and hold them for atleast 10 years. I currently live in the bay area and I know that it is very difficult to get positive cash flow here, the only way to play here is to ride the appreciation game. I am not sure about going out of state because since this is the first time I am investing and I am not sure how I will be able to handle it.

Now, I would need inputs from people on what should be my deciding factors. What metrics should I use to get to a decision? I appreciate all the help and also let me know if you have any questions.

Thanks

Namaste @Vivan Bhalla!  India zyada accha hai!  When it comes to investing in real estate the primary benefits of the US market comparatively are 1. costs of debt 2. rent rates relative to property values (not in the Bay Area as much as in other parts of US) and 3. gov stability (which is perhaps a bit laughable right now I suppose).

There are some incredible and easy ways to invest out of state, but it all comes down to having a "team" you can rely on (like @David Greene talks about in The Book on Long Distance Real Estate Investing.   


I'm not sure how the H1B or other work-type visas restrict personal property ownership in the US, but the #1 most incredible play in real estate investing in the US has to be "house hacking."  Even in (or perhaps especially in) the Bay Area you have to pay to stay somewhere, so if you can find a small multifamily property that keeps your cost of living the same, while your tenants in the other 1-3 units pay down the debt on the property, you're growing your ownership of an asset in an appreciating market, at no additional housing cost!

Alternatively you can individually own houses anywhere in the country, or you can partner with others on deals anywhere in the country.  The options are vast Bhallaji.  The best path forward would be to determine what you would ideally achieve through real estate investing, and then dig into what opportunities best achieve that.


Aapke saat, aapke liye 

@Vivan Bhalla Hello, sir! You have quite a few options. If you're looking to invest within the US, but out of California, you can go the route of Turnkey investing. There are some really great markets for that in the MidWest and SouthEast, and they handle everything for you so you just get that passive cashflow you mentioned. It's a buy-and-hold method that works beautifully.

If you decide to go that route, though, do a TON of research ask a lot of questions up front! You'll need to know about their entire process, their property management, and all of their responsibilities and fees before making a commitment. Some people even fly/drive out to meet the people they're considering investing with and taking a tour of the area to get comfortable with it. You need to be able to get to know and trust your people on the ground, regardless of who you end up with. 

Best of luck to you! :)

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@Will Fraser

Hi Will,

Thanks for your advice. It was really helpful, and your hindi is very well. I just sent you a request and would like to discuss a few things with you.

Thanks again for your help.

@Vivan Bhalla - Welcome to BP!  Congratulations on looking into your first investment property.  

Here's a couple questions we (The @David Greene Team) always like to ask our clients when interested in investment properties regardless of their goal.

Are you pre-approved?  I ask because that is a big factor in identifying and becoming engulfed in research and properties.  No need to travel down a path if it is not the right fit for you.

Will you be living in this property if you bought in the U.S.?  I ask because there are House Hacking opportunities a plenty out there.

Where have you looked in the Bay Area?  While the sticker shock may drive some away, there are creative ways to cash flow, and make a property work for you.

Lenders can work magic and have a lot of programs to get you into a property with not a lot out of your pocket, so it may be worth it for the appreciation alone.  It is up to your appetite.

@Scott Pearson - Why do you suggest he move?  There are opportunities everywhere, it is simply a matter of making the right property work for you.

@Vivan Bhalla

I would choose residential property in the US simply because of the government ‘stability’. If I were in your position I would definitely consider turnkey investing in a higher cash flow market. This may lend itself well to you because you have a job which in many peoples cases, means they cannot devote lots of time to manage their real estate projects.

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Originally posted by @Vivan Bhalla:

Hi,

I am an immigrant living in the US on work visa, I am thinking of buying an investment property soon. I have two options, one is to buy a commercial property in India or other is to get some residential property in USA. My goal is to create passive income through these properties and hold them for atleast 10 years. I currently live in the bay area and I know that it is very difficult to get positive cash flow here, the only way to play here is to ride the appreciation game. I am not sure about going out of state because since this is the first time I am investing and I am not sure how I will be able to handle it.

Now, I would need inputs from people on what should be my deciding factors. What metrics should I use to get to a decision? I appreciate all the help and also let me know if you have any questions.

Thanks

 Vivian the good news is you have a very common problem. Most everyone living in the Bay area feels the same way you do and there is a whole industry out there servicing folks like you. It's called turnkey. There are tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cleveland, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Birmingham, Alabama
  • Kansas City, Missouri
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

If you're looking for a property where you can drive by, go out 1-2 hours of the bay area and you can find deals. Know some people investing in Modesto, Manteca, and Vacaville who are getting value add properties out there. A lot of the working-class people who work in the Bay Area are commuting from those areas. They want more space for a better price. 

Hi Vivan,

If you plan to stay here long term - say 7-10 years, I would advise against investing in India. Mainly because of the currency impact. Indian is high inflation economy, which means the rupee will depreciate against the dollar long term

10 years back 55 rupees could buy 1 USD & now it takes 70+ rupees to buy 1 USD. If you had invested in India 10 years back, your investment would have already depreciated just due to currency impact

As for where to invest around Bay Area you've gotten some good advise.