New Investor - looking for advice

Real Estate Agent · Palm Coast, FL · Member since 2018 · 363 posts · 243 votes

2y

@Account Closed

As a fellow previous Marylander and still an owner of a property in MD, I feel comfortable speaking on the Baltimore area and the Area between Daytona Beach and Jacksonville.

I have had nightmares in my Maryland property and really only lame scary dreams in Florida. I have already posted about issue in Maryland before so no need to beat a dead horse. As for Florida I would say I am finding success in Flagler County Palm Coast and I have a few under management in St Augustine and Daytona Beach that the owners are doing well with. If you want to discuss more please feel free to reach out.

Biggest recommendation I can give is know the laws and know neighborhoods you are interested in investing in, they can make or break you.

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

2y

BRRRR is a capital intensive strategy. Is it a good idea? Sure. But the barrier to executing it is high since you realistically need a high amount of cash on hand.

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Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

How much is a high amount?

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

2y

Quote from @Account Closed:

How much is a high amount?

The cost of purchasing the house, rehabbing the house, and extra reservea and carrying costs during that time.

Take a nicer part of Baltimore, I'd probably want $350-400k liquid. Washington DC I'd want $1 million liquid.

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Jack Seiden

Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 654 votes

2y

Quote from @Account Closed:

First of all, allow me to say that BP is amazing! I am really surprised how many people are willing to share their wisdom and knowledge! Thank you all for that!

My husband and I are new investors. We have been thinking about this for a long time, but finally decided to pull the trigger. My BIG dream is to build a portfolio big enough so that we can replace our current income and retire comfortably (dream big they say, right ;)?) I am hoping for cash flow, equity, appreciation and tax benefits. Is it really possible with current prices and mortgage rates?

I have been doing research on BP and other places for a couple of months now and decided that buy and hold long-term rental BRRRR strategy will be best for us. I am open to other ideas, except house-hacking, which we would rather not do. Is BRRRR a good decision?

We live in South Florida, which is not the best area to implement this strategy, therefore I am considering out-of-state investing. I am torn between 3 locations: Jacksonville, FL (it's still FL and a drive/quick flight away), Baltimore, MD (we used to live in MD and it's familiar), Midwest: Columbus, Detroit, ??? (I have no clue, have never been there, but everyone is raving about it nowadays :)). Did I miss any other great areas to invest in?

Any advice will be highly appreciated :) Also would love to hear opinions on where newbies invest successfully nowadays and what strategies do they use?

I’m gonna be frank, you will not quit your job buying rental properties, Brrr’s are incredibly hard to make work, for instance I bought a property at about 50% of arv which is crazy hard to find, I could probably pull all my money out but I’d stil be cash flow negative. That’s not to say necessarily say you shouldn’t buy real estate, just that it’s asset just like a stock or bond and should be thought of that sane way not as ticket to early retirement.

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Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

2y

Quote from @Account Closed:

First of all, allow me to say that BP is amazing! I am really surprised how many people are willing to share their wisdom and knowledge! Thank you all for that!

My husband and I are new investors. We have been thinking about this for a long time, but finally decided to pull the trigger. My BIG dream is to build a portfolio big enough so that we can replace our current income and retire comfortably (dream big they say, right ;)?) I am hoping for cash flow, equity, appreciation and tax benefits. Is it really possible with current prices and mortgage rates?

I have been doing research on BP and other places for a couple of months now and decided that buy and hold long-term rental BRRRR strategy will be best for us. I am open to other ideas, except house-hacking, which we would rather not do. Is BRRRR a good decision?

We live in South Florida, which is not the best area to implement this strategy, therefore I am considering out-of-state investing. I am torn between 3 locations: Jacksonville, FL (it's still FL and a drive/quick flight away), Baltimore, MD (we used to live in MD and it's familiar), Midwest: Columbus, Detroit, ??? (I have no clue, have never been there, but everyone is raving about it nowadays :)). Did I miss any other great areas to invest in?

Any advice will be highly appreciated :) Also would love to hear opinions on where newbies invest successfully nowadays and what strategies do they use?

I'm in between columbus and miami. I'll be in miami in a week I've been looking at a lot of our new builds single family, multi family, and land entitlement deals. I'll message you to chat further more about your situation. Baltimore, Detroit have very low cost per housing units and anything less than 200k I warn people to stay away from. Jacksonville is ok market growing fast like all of florida but you still have less multifamily. similar average cost per housing unit to columbus but columbus speaks for itself. state capital, ohio state, developer friendly, fast growing market. those are the two stronger markets. depending on your liquidity I wouldn't look far away from home either. homestead, other areas there are massive deals being done. I just got sent a package for 500 units in homestead that an institution jumped right on. people love florida. I'll message you to speak further about both and maybe we can meet up.

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Joseph BeilkeBusiness Member

Real Estate Agent · Palm Coast, FL · Member since 2018 · 363 posts · 243 votes

2y

All the information from the other contributors is good. If you want more detail advice, it might help to share a little more of your details. I believe you can replace your day job with real estate investing, but it takes a lot of capital up front, few mistake along the way and a whole lot of hands on work. With you being in Florida I would recommend you invest as close as possible to home as possible. This will provide you the ability to stay on top of everything and make sure you see each step through. Maybe in even self manage if to save that cost if your very close by, I'm talking 30 minute drive.

This is not going to happen over night, I bought my first house in 2006 and 18 years later I still have not completely replaced my 9-5 income. I'm close, but know I need to go above and beyond to cover insurances and other stuff longterm stuff.

I will admit I probably could be there by now, but after 2009 I got really scared and has over analyze every deal and got paralysis. It was a learning curve that took too long, but I got it figured out now.

240-676-4927

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Account Closed

Real Estate Agent · Chattanooga Tn. · Member since 2024 · 46 posts · 15 votes

2y

Have you considered the Chattanooga Tn market to invest? Chattanooga is a great hybrid market both cash flow and appreciation.

3 Reply

Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

Why can’t I use financing with some cash down? Why should it be a cash deal? Sorry, I am new, so might ask silly questions 🤣

1 Reply

Joseph BeilkeBusiness Member

Real Estate Agent · Palm Coast, FL · Member since 2018 · 363 posts · 243 votes

2y

@Account Closed

Financing isn't as simple as it sounds. First of most lenders will need 20-25% down for an investment property. So based on the price and with 25% down you need closing cost too. That could be another 3-7% depending on the lender points, rate buys and title fees. For a $500K duplex that's coming to the table with about $150K. Now depending on your rate and how much rents could pull in said neighborhood you might be cash negative, even or positive. Even if your positive are you making enough to off set the expense, future improvements or repairs, insurance and tax increases, management fees, vacancies, and other carrying cost. All these factors have to analysis to make sure it's a smart investment.

I will say this, rates will come down some eventually and when they do, everyone sitting on the sidelines waiting to buy will probably jump in and push up prices. I don't think waiting for a rate drop is smart. Buy now if you can, an refinance later.

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Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

Thanks a lot for the advice! Really helpful! We do have some cash and husband is still on W2 and is not planning to drop it until I can prove we can survive on REI which might be in 10 years or never, but that's ok. At least I made a step to free my time and jump into it, which is a step forward 😎 Having equity by the time we retire is also good enough, even if we don't get a cash flow, right?

1 Reply

Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

@Account Closed real estate investing is a long-term game.

The only way to use it to replace your day job... is making RE investing your day job!

That's what flippers & wholesalers do.

Landlording builds wealth more than cashflow. I've got several rentals and always joke I'm cash-poor, asset-rich.

You can BRRR via buying with a mortgage, but either the property must be habitable and just need updating or you'll need to use a DSR Rehab loan. Either way, you'll find it tough to be cashflow positive with Class A or B properties. Class C & D cashflows well on paper, but requires exceptional management of low-income tenants and even then you're playing a statistical performance game (Sectio n8 is NOT the cure-all!).

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Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

2y

Columbus, Ohio, is a great option if you're leaning towards appreciation. Multiple, billion dollar companies are investing heavy in our area, such as Intel, Google, and Amazon. Which will bring plenty of other investors and general business to the area. I moved here from Florida after seeing the projected growth.

[email protected]614-662-1652

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Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@Account Closed

welcome. a few reactions. and questions.

-are you going to meetups? go to all the meetups. find them and go to them. alternate with your husband or go together. go to the local ones. go to ones an hour or two away. go to the pitch-y ones and don't buy anything.

-can you house hack? not everyone can, or wants to. but it's a great way to get started. a variation is a live in flip. have you considered either of these?

-BRRRR is great. it's also really, really, tough. As @Russell Brazil mentioned: it takes cash! and: it's not a cash flow strategy right now. it's an equity strategy. if you do it right you'll get all your cash back... and no cash flow. rates are too high.

-i'd start local. there is no substitute for being hands-on. go an hour or two out if your immediate market is too expensive. sounds like you might be able to be hands on in Jacksonville. great. explore there.

hope this helps

7 Reply

Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

2y

@Account Closed

Welcome to BP!

To build a big rental portfolio using BRRRR works well but needs smart picks of homes and a firm plan. It's key that rent money tops the costs of loans, upkeeps, and others, and aiming for homes sold at low costs. The state of the market, like going up interest rates, can sway how easy it is to get loans and could keep house prices steady. Local market scenes, like how much people want to rent, the worth of homes, and the local economy, also play a big part in doing well.

Target areas with pros and cons include Jacksonville, FL, Baltimore, MD, and Midwest (Columbus, Detroit, etc.). You should consider partnering with local experts, networking and mentoring, diversifying and scaling, and leveraging technology.

Good luck!

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John Mason

Member since 2024 · 1k+ posts · 351 votes

2y

Househacking when having a family may be a no no for many people because of privacy issues.

Best to maybe look at buying a second home or investment property with 10 to 15 percent down eac year

1 Reply

Ken Breeze

Investor · Phoenix, AZ · Member since 2015 · 485 posts · 384 votes

2y

@Arina Alexiuc why not look into a multifamily master lease, seller financing or subject to?

Immediately start learning how to raise capital. You’ll ALWAYS need more capital.

There are more than enough blogs and videos here on BP or YouTube to learn from, for free.

The bigger your vision and courage the faster you’ll reach your goals.

You can try buying ten SFRs or buy a 50-plex - the work is almost the same - but the rewards are much bigger. It’s like a Time Machine.

Learn way before you “invest”. It will take time.

1 Reply

Ken Breeze

Investor · Phoenix, AZ · Member since 2015 · 485 posts · 384 votes

2y

@Arina Alexiuc the volume of equity determines how much cashflow you can use for your life style.

I'm assuming the goal is to have your REI Cashflow pay for and keep up with, or even improve your lifestyle, way before you retire.

On a spreadsheet, calculate how many cash flowing units you need to reach your dream income to cover ALL your life expenses.

You will realize that your own capital will never suffice and that you’ll need to learn how to raise capital - as much as you can - for many projects - over years.

It’s a marathon 🏃 🏃‍♂️ 💨

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Ken Breeze

Investor · Phoenix, AZ · Member since 2015 · 485 posts · 384 votes

2y

@Joseph Beilke my private lenders and investors group can chip in on deals that pencil out.

0 Reply

Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

@Ken Breeze Are you saying I should become a private lender instead? Or find private lenders and buy big multifamily units? What exactly are you saying:)?

2 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

2y

There is variance in markets but I believe most markets are like my market with 2 primary plays 1) patience. Re appreciates. Rents rise. Most mortgages are fixed. 2) value adds. Higher cost markets produce more equity gain for the value add.

assume both 1 & 2 are best path forward (not 1 or 2). What does this indicate? Unlike common mindset, the value add should be in high cost area. I recently added a micro half bathroom to a little unit. Guess the value added? ~$40k of value. If I am in a 3 cap area, a dollar of noi equates to $33 ov value add. What does half a bathroom equate to in increased rent in high rent market. Use $100/month, $1200/year at 3 cap get $39,600 of added value. In a lower price market, say 6 cap for ease of example that same half bath may only net $50/month, $600/year at 6 cap is $10k of added value. Same value add only produced 25% of the value added. Do you think it costs anywhere close to 4 times as much to add a half bath in high re area than a low cost RE area?

Ponder it. If you do not understand how noi and cap rate determine value learn it even if in theory it only applies to commercial RE.

Is BRRRR dead? I would say it is on life support because after refi the negative cash flow necessitates extra reserves. But what if you purchase with alternate financing (sub to, assumable (look at VA but requires OO), owner financing, etc) and only did buy, rehab, rent, and repeat (one less R)? I still need reserves for the value add. What if instead of refi there was a construction loan or post rehab 2nd or heloc was used. Can you imagine a scenario where this does not bleed cash?

More to ponder. lots to ponder.

Good luck.

1 Reply

Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

2y

Quote from @Account Closed:

My BIG dream is to build a portfolio big enough so that we can replace our current income and retire comfortably (dream big they say, right ;)?) I am hoping for cash flow, equity, appreciation and tax benefits. Is it really possible with current prices and mortgage rates?

People have achieved your dream in the 80s when rates were in the double digits. It's not that complicated, but it's not fast or easy. It takes a lot of time and effort. Think 10 years.

Is it likely that you can replace your W2 in a few years? Frankly, the stats are not in your favor. You'll need at least 50 doors in a good market and that takes time. But even a couple rental properties have the potential to change the financial trajectory of your life. And once you have bought a handful of properties, find a way to double it.

The idea of replacing your W2 with REI has been hyped up over the last (unicorn) years. REI has always been more about equity and cash flow is basically the dividend you derive from that equity. So I would start there, invest for equity and net worth, cash flow will come later.

2 Reply

Jamie Singleton

Investor · Member since 2023 · 7 posts · 2 votes

2y

Quote from @Account Closed:

First of all, allow me to say that BP is amazing! I am really surprised how many people are willing to share their wisdom and knowledge! Thank you all for that!

My husband and I are new investors. We have been thinking about this for a long time, but finally decided to pull the trigger. My BIG dream is to build a portfolio big enough so that we can replace our current income and retire comfortably (dream big they say, right ;)?) I am hoping for cash flow, equity, appreciation and tax benefits. Is it really possible with current prices and mortgage rates?

I have been doing research on BP and other places for a couple of months now and decided that buy and hold long-term rental BRRRR strategy will be best for us. I am open to other ideas, except house-hacking, which we would rather not do. Is BRRRR a good decision?

We live in South Florida, which is not the best area to implement this strategy, therefore I am considering out-of-state investing. I am torn between 3 locations: Jacksonville, FL (it's still FL and a drive/quick flight away), Baltimore, MD (we used to live in MD and it's familiar), Midwest: Columbus, Detroit, ??? (I have no clue, have never been there, but everyone is raving about it nowadays :)). Did I miss any other great areas to invest in?

Any advice will be highly appreciated :) Also would love to hear opinions on where newbies invest successfully nowadays and what strategies do they use?

Welcome to the BP family! I started like you 12 months ago. I live in Columbus, OH but surprisingly started buying properties in West Virginia (familiar with the market). Currently have 8 single family homes, renovating 4 of them, and looking to grow more soon.

As for rates, dont let them steer you away. Buy now with the rates higher and then just refinance when they drop. Rates drop and selling prices will go up. I am using this strategy to pick up some great deals.

As for Columbus, its a great place for appreciation growth with all the incoming jobs and businesses. Lots of construction going on new roads as well as incoming large manufacturing jobs. Plus, you have Ohio State campus with 60K+ students. Great Midwest gem but I have found I can pull better than the 1% rule in WV vs OH. I will eventually buy in the Columbus market but for now, I found a sweet spot. Similar places you might consider are university and college towns. Find yourself a great property manager and remote ownership works smoothly. I do it now.

I use Zillow, Realtor.com, Crimespot.com and few others to do analysis on comps and neighborhoods I am thinking about investing in. Ultimately, you want to make sure the math works and cash flow is positive. Good luck!

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Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

@Marcus Auerbach Appreciate your advice! I almost got discouraged because of other comments, but you gave me hope again :)

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Account Closed

OP

Member since 2024 · 12 posts · 14 votes

2y

@Jamie Singleton Very encouraging story! Do you mind sharing where exactly in WV do you invest?

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New Investor - looking for advice

New Investor - looking for advice

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