What happens when you're not in a 30K market but a 400-600K market?
I've decided to take the plunge into real estate investing. I'm reading all these great articles on BP (thank you for providing this amazing and extremely useful resource!!) and also have a stack of books on house flipping, how to buy foreclosures, creative financing, etc.. that I'm going through one by one. I've also watched HGTV to get a gist of what surprises to expect during renovations (I know, it's reality TV but it was helpful information nonetheless and a good starting point). I've been actively looking at open houses every weekend for the past 3 months or so. So I'm at the point now where I'm starting to see the big picture and feeling comfortable with what's involved in flipping a house and to a lesser extent, investing in rental properties.
Reading all these articles by seasoned RE investors is highly educational and motivating but I live in New England (Boston area) where you'd be lucky to find a single family home under $350K or a 2-family rental property for under $550K (and that's not even in the high end) in the suburbs. I'm in my 50s, never owned a home and my income doesn't qualify me for a mortgage (at all). However, I do have a little bit saved up but nowhere near enough to pay cash for a property in this part of the world.
I REALLY want to invest in real estate because all things considered, it's my best bet to make the little bit of money that I have, work for me. However, I feel paralyzed. Stuck between a rock and a hard place because I just don't see how your % rules can ever make it work for me in my geographical location. I need to find a solution that allows me to both buy a house that I can live in *and* create an income stream so that my housing expenses are covered.
It would be great to hear real life stories from investors who started out in the New England area (or similar high-priced markets) to see how they made it work financially. Specifically, here are the criteria:
1. This is your first property purchase, ie. you don't own any real estate
2. You don't qualify for a mortgage (ie. mortgage broker says you have to pay cash for the house or no deal)
3. You don't have a spouse, family or friends to co-purchase with
4. You are dealing with a market where SFR's start at approx $350K (a fixer upper in a lower middle-class neighborhood) and MFR's start at approx $550K - again, fixer upper that needs work. (If I want move-in ready, I'm looking at a min. of $550K for a single family in a neighborhood that's decent and safe.) You might get lucky and snag a foreclosure for $275K-$500K depending on the town and the size of the house but still need to factor in rehab costs.
5. Property taxes in this market vary between $4,400-$9,000/yr.
6. Rents for a 2BR, 1 BA apt average about $1500-1800/mo. 3BR can be as high as $2400-$2700 but that's in a more urban neighborhood where 2-families are selling in the 700K's and higher.
I like to believe that when there's a will, there's a way but everywhere I turn I'm hitting a brick wall. Are there any investors out there who can shed some light on this and offer creative solutions to making this work? Moving out of state is not an option by the way. Any help would be greatly appreciated! I'm sure I'm not the only one in this kind of conundrum so you would be helping others as well.
Thank you in advance!!