Buy and Hold Markets for Beginners
I've been doing research on markets for buy and hold for about a month now. I'm checking unemployment rates, population growth, purchase price, rent rates, percentage of renters, etc. and I'm still having trouble identifying a solid market for my price range.
My main problem is I don't have a whole lot, but I want to begin investing. I've been interested in investing for about a year, but circumstances have propelled me to start taking action.
I'm living in San Diego, and starting out here with a family and one income at entry level is relatively killer. I've been working two jobs and still barely paying our bills. We've cut down and cut back on every possible avenue and it's still not enough. My wife just got a part time job, and that will allow us to be positive monthly, but we will hardly see each other and never have the weekends off together.
So my current plan is to find a good cash flowing property to "help" offset our deficit, though my main goal is to save the positive income for future investments.
Right now I've got about $28,000 in the bank and $16,000 in comfortable playing around with.
Putting 20% down, I'm looking at buying two $30,000-$40,000 properties or one $60,000-$80,000. I'm looking for advice on which direction to go as well as what market falls into that category.
I've looked at a few cities that seem to meet the criteria for a good market in that price range, but I have no idea if that's how much the ordinary house costs or if I'd be buying the dumpiest house in town.
I appreciate any and all insight either about markets or suggestions and how to take the few funds I have and put them to good use.
I thought Dan and Doug were only in the business of property management. I didnt know you guys were offering a turnkey product.
Foremost, I admire your spirit of inquiry; a curious person like you will do well in any endeavor that they chose to undertake.
It's similar to the trait of dedication that @Kevin Yoo and @Jay Hinrichs share in giving you their experiences.
My experience resembles that of @Carlos Hernandez as a Bay Area investor looking out of state and realizing that cheaper markets are not truly "passive". Just view R.E as a multi-faceted game that can provide an education that is sometimes costly and sometimes profitable. I find the journey itself exciting and fulfilling!
Originally posted by @Cynthia Scaife:
Hi Trever,
I would say if you have access to the county courts records (tax records) and can look at the properties kind of close to you then you can determine what kind of homes are in your area, "A" "B" etc. then see if you would like to invest in the ones that are maybe in the "B" type.
One sure thing that works is a "B" type that is about 2% of purchase price I have heard is a sure way to make sure you make money. ( but is hard to find in that "B" area.)
0) Try contacting owners that do not live in the property to see if they want to sell these are great properties to work deals on.
1) Working with an agent you might have to interview a bunch that knows the area you want to buy in and they will have a wealth of information about the area and you can decide and make offers and the agent will have to do the negotiating you just tell them what you have to spend all in.
2) Ask around to see if you know someone who wll make a good tenant if you want to buy a buy and hold income property. You may have a very good part of your questions answered if you just ask around. This can go for the property you want to buy as well.
Well hope this helps
H - I Happy Investing!
Thanks Cynthia, I will keep that in mind for the future. Based upon the advice I've received here, I think I'm going to look at forms of investing. I would like to stay local, but the 2% rule doesn't apply in my market. I can buy a duplex right now for 460k. That means I need 9000 a month for 2%. One unit rents for 1800, the other 1600. 3400 is 1/3 of 2%, so I'm really looking at about .6% here. And that's one of the better options. Out of state has the income/cash flow I want, but not the hands approach I'd prefer.
Originally posted by @James B.:
Foremost, I admire your spirit of inquiry; a curious person like you will do well in any endeavor that they chose to undertake.
It's similar to the trait of dedication that @Kevin Yoo and @Jay Hinrichs share in giving you their experiences.
My experience resembles that of @Carlos Hernandez as a Bay Area investor looking out of state and realizing that cheaper markets are not truly "passive". Just view R.E as a multi-faceted game that can provide an education that is sometimes costly and sometimes profitable. I find the journey itself exciting and fulfilling!
I'd rather ask a dumb question than make a dumb "investment". I almost typed "dumb mistake" but I erased it because I know I'm going to make mistakes. It's part of learning. But I don't want to make a bad "deal" because I didn't take the time to ask the right questions. And I greatly appreciate the advice both Kevin and Jay have been giving.
Thanks for the encouragement!
"I'd rather ask a dumb question than make a dumb "investment" "
Now that's what I call a tweetable topic!