Updated about 2 months ago on . Most recent reply
Starting my Portfolio
Good afternoon,
My name is Dillon, and I live in Charleston South Carolina. I'm newer to real estate investing as a whole. My wife and I have now purchased our second home and are interesting in growing our portfolio so it provides enough cash flow to help me wife stop working to help raise our family. Ultimately our goals are to grow and scale larger enough so that we don't need to rely on our W-2 job income anymore. I'm also in the process of getting my real estate license to help generate additional income to help decrease the time required to scale.
Being in Charleston, it's a much tougher market to enter into with less capital starting out, so I would love to hear some advice from those who have invested out of state, or long distance investing because I believe that is how we are going to be able to generate cash flow quicker. Once I've identified some markets, should I be talking with property managers first before realtors in those areas? Should our first investment be close to home with lesser COCR to get action first? Or should I start of by saving and getting a 4 unit to help increase cash flow sooner?
Either way I'm excited to be a part of the community and look forward to continuing to learn and grow from there.
Thanks,
Dillon
Most Popular Reply
Hi Dillon,
One thing for your consideration is that by investing out of state, you will likely have to invest in property management, which adds another cost in the 'expense column' that you wouldn't have if you managed your properties locally. I can tell you that my wife and I managed 20 local properties while working full time corporate jobs. Once we got to 20 doors, one of us were able to quit our full time jobs and we kept buying... now up to 37 doors. I will say that we bought the majority of our properties between 2018 and 2021... and it was definitely easer to find cash flowing homes back then. We have bought 2 properties in the past 2 years though. So it is possible to find them... just not as easy as in the past. The sweet spot right now seems to be in properties that need more rehab in our area.
You will have to weigh which part is more expensive... the increased cost of buying locally, versus the increased cost of property management buying out of state.
From a "how did we handle that" perspective, I would recommend finding a good tenant facing property management platform to collect your rent, etc. We chose Rentec Direct... but there are many out there, and everyone tends to like the one they picked when you read reviews. We pay $2/door per month, and Rentec Direct does a lot of the heavy lifting for us... collecting rent, applying late fees, full accounting, full reporting, screening tenants, marketing vacancies, collecting applications, lets tenants report maintenance issues, etc, etc. The system lets tenants pay by ACH, or credit card, and even offers a cash option through an affiliate where tenants can go pay their rent in cash at a 7-11, etc... but the cash option comes with added fees to get setup, etc. Again, most of the major players do a lot of these things. But by leveraging a platform like that, it instantly becomes a lot easier to manage your properties while still maintaining a W2 job. So I would highly recommend checking one of those out if you go with the self-management option.
My favorite part is the marketing options within the platform. With the click of a button the system will broadcast our listing to Zillow, and about 20 other smaller websites. We will have marketing leads to call within 24 of turning on a listing where we can go through and find renters for our properties.
Hope it helps
Randy