I would like the opinion of BP on this. I am looking to purchase some rental property out of state. It will be either a 3 or 4 family unit. One of my best friends is going to manage the property for me. The reason I pick out of state is because it is more affordable versus where I live on Long Island. The property will return a positive cash flow of course, or else I wont be doing do it. Cash flow can range anywhere from $400/month to a $1,000/month depending on the deal. I do not have a portfolio at this time, so this property would be my first and also my first step into gaining bigger pockets.
Back here at home, I have a friend that is a commercial agent. He has been giving me some advice and tips since I started talking to him about it. In our last conversation he seemed to try and steer me away from the potential property and look more for a flip situation here at home. He's not against rental properties, but it seemed like he thought something like a flip or wholesale deal would provide "more of a splash." The initial outlay for the rental combined with the work involved in being a land lord and not having the property local may not be worth what I would get in retrun, even in the monthly cash flow is positive.
So I turn to my friends here. Does going buy and hold as a first step seem like a good/bad idea? Including out of state? Is my friend right in trying to look for a bigger splash to help build up some capital? He says a lot of the things I read on here, especially with respect to alleviating my fear of the expensive market I live in. He tells me that if I find a great deal, the money will follow.
Hey Michael! Well the big thing here to know is that flipping and rental properties are two completely different strategies. They have different levels of risk, benefit, tax situations, effort levels, etc. They are very different so I'd say first you want to be clear on what your actual goals are, your risk comfort, your ability to put in effort (and time), etc. Knowing the answers to those will tell you which route is better to go.
If that makes sense?
Would you say one is "better" than the other for a first time investment? Or does that not really matter and the criteria you listed above is really what's important when making that decision?
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