Real Estate Rookie on the Loose!

28 Replies

About me:

I am attached to a military man, Chris, in San Diego (renting) for at least the next 4 years. Chris and I are both 34-year-old DINKs looking to start a family soon. After listening to BiggerPockets Money and reading Rich Dad Poor Dad, I am obsessed with breaking into real estate. I have been an avid investor in other areas since college, I am ready to learn something new! My day job is an engineer supporting the Navy. Over the past year and a half, I intentionally reduced my hours to ~30 hours per week in order to have more time to learn about other investing options. In a couple years I hope to be out of the typical work force and be a stay-at-home mom (don’t actually have the kids yet) with investments to manage.

REI Goal 1: Find a primary residence deal in San Diego using the VA loan with emphasis on a multi-family house hack or single-family live-in flip.

REI Goal 2: Out of state rental investments. My brother-in-law is actively investing in Huntsville, AL, which is the market I'm currently researching, but am open to any knowledge/location.

Thank you for welcoming me to this community. Let the knowledge flow and the fun-times roll!

Hey Nadia,

Welcome to BP! There is a great Bigger Pockets podcast very early in the series about a career military man who bought a new house close to base with a VA loan every time he moved. He then rented the unit to other service members and ended up with a great portfolio. Sounds like the deal could be even better if you could do with multifamily.

It might be episode 23. Good Luck!

@Nadia Brouillette

Welcome to Bigger Pockets!

This is a great place to learn and network. A lot of forum members are very knowledgeable in their respective fields related to real estate investing, whether that is real estate sales, wholesaling, flipping, rentals, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance.

If you haven’t been to it already, you might want to check out the BP blog: https://www.biggerpockets.com/renewsblog/

The site has quite a few tools that can be helpful for new members. I like the search features: https://www.biggerpockets.com/search

Alerts can be really helpful too: http://www.biggerpockets.com/alerts

Looking to divorce in 4 years?   Lol

Your purchase of a local property using VA loan (goal 1) sounds like good way to start. Be sure you do your analysis before making an offer. If you are not confident of your own analysis, you may consider to have others look it over. Ideally have multiple exit plans (easier said then done).

I am not a fan of zero appreciation markets like Alabama (We have owned 2 properties in Alabama).  There are some who are a fan but the number of people who start in low appreciation markets and pivot once they have more experience should not be ignored.  I therefore will propose something else for your consideration.  Consider a repeat of goal 1.  

I personally know no local RE investors who have only invested in zero appreciation OOS RE markets that have done what I would consider well.  I know many local RE investors who have invested in local RE that have done well.  The discrepancy is not due to me having met few people who have gone or are planning on going the zero appreciation OOS route.  It is because zero appreciation OOS RE has not produced the same returns.

Good luck 


Originally posted by @Dan Heuschele :

Looking to divorce in 4 years?   Lol

Your purchase of a local property using VA loan (goal 1) sounds like good way to start. Be sure you do your analysis before making an offer. If you are not confident of your own analysis, you may consider to have others look it over. Ideally have multiple exit plans (easier said then done).

I am not a fan of zero appreciation markets like Alabama (We have owned 2 properties in Alabama).  There are some who are a fan but the number of people who start in low appreciation markets and pivot once they have more experience should not be ignored.  I therefore will propose something else for your consideration.  Consider a repeat of goal 1.  

I personally know no local RE investors who have only invested in zero appreciation OOS RE markets that have done what I would consider well.  I know many local RE investors who have invested in local RE that have done well.  The discrepancy is not due to me having met few people who have gone or are planning on going the zero appreciation OOS route.  It is because zero appreciation OOS RE has not produced the same returns.

Good luck 

 I shouldn’t even comment, because I’d rather have fewer investors interested in Alabama. If everyone was as uninformed  as you I wouldn’t have as much competition. 

Originally posted by @Mike S. :
Originally posted by @Dan Heuschele:

Looking to divorce in 4 years?   Lol

Your purchase of a local property using VA loan (goal 1) sounds like good way to start. Be sure you do your analysis before making an offer. If you are not confident of your own analysis, you may consider to have others look it over. Ideally have multiple exit plans (easier said then done).

I am not a fan of zero appreciation markets like Alabama (We have owned 2 properties in Alabama).  There are some who are a fan but the number of people who start in low appreciation markets and pivot once they have more experience should not be ignored.  I therefore will propose something else for your consideration.  Consider a repeat of goal 1.  

I personally know no local RE investors who have only invested in zero appreciation OOS RE markets that have done what I would consider well.  I know many local RE investors who have invested in local RE that have done well.  The discrepancy is not due to me having met few people who have gone or are planning on going the zero appreciation OOS route.  It is because zero appreciation OOS RE has not produced the same returns.

Good luck 

 I shouldn’t even comment, because I’d rather have fewer investors interested in Alabama. If everyone was as uninformed  as you I wouldn’t have as much competition. 

 I do not know how uninformed you think I am but I have had 3 units (2 properties) in Alabama.  How many have you had in San Diego?  I know Case Shiller lists San Diego as the 3rd most profitable buy n hold city in the US this century.  Are there any Alabama cities in the top 50?  

Also note, I believe locals can succeed in these types of markets.  So I hope you are killing it there.  You are not the same as the OP who would be OOS. She would need a PM.  She would need to build and maintain a team.  Apples to oranges.  Any success you have (and I hope you have done great) would not necessarily translate to any OOS RE investor.

@Peter McDonough

>lol "no appreciation"

When I say zero appreciation, I do not literally mean zero.  What I mean is long term appreciation below inflation.  1.9% (your Zillow reference) for the last year qualifies.  NeighborhoodScout has the 10 year appreciation at less than 1% per year (0.58%), that qualifies.  NeighboorhoodScout has Huntsville RE appreciation below 70% of the nation over the last decade and way below San Diego (San Diego is listed as almost 10 times better).

BTW I liked both of our Alabama properties. A duplex on the beach sand in Gulf Shores and a SFH on a very beautiful lake. The Gulf Shores property would likely cost >$10M in So Cal today. The issue was the return was not what I could achieve local. If I had kept the Gulf Shore property until now, I would have done better than we did as we sold it shortly after getting hit by a 2nd hurricane when the market was a little depressed due to getting hit by a 2nd hurricane. I know Alabama has nice places, I am not stating otherwise. It has nicer places than many people who have not been there may believe. Those places, unfortunately, have historical long term appreciation at a rate less than inflation.

I wish you both a lot of success investing in Alabama.

Welcome to BP, @Nadia Brouillette . You've certainly come to the right place. Goal 1 is a good one, just know that a MFR in a HCOL area like San Diego may not make sense as a pure investment property once you decide to move out.

To that end, one thing I wish my wife and I had done was move to the 'burbs before the kids came along. In your case, perhaps this means your "kid-raising house" not the 'burbs. Going through the process of finding a home, the mortgage process, moving all with kids in tow is incredibly stressful and not to be underestimated. Now, could I convince 6-years-ago us to leave NYC...hmmm, I don't know.

I've heard good things about Huntsville and the fact that you have "boots on the ground" there is a huge advantage. What other locations are you considering and why?

You only get those low numbers when you pick and choose your starting and ending points.  Choose a longer timeframe, ie 2013 -2019 on that same link and you'll see appreciation hitting 5-6% /year.  And this is across the entire city.  We've had 20-30% increases on lower end housing just in the last six months.  Huntsville is red hot right now.

Originally posted by @Dan Heuschele :
Originally posted by @Mike S.:
Originally posted by @Dan Heuschele:

Looking to divorce in 4 years?   Lol

Your purchase of a local property using VA loan (goal 1) sounds like good way to start. Be sure you do your analysis before making an offer. If you are not confident of your own analysis, you may consider to have others look it over. Ideally have multiple exit plans (easier said then done).

I am not a fan of zero appreciation markets like Alabama (We have owned 2 properties in Alabama).  There are some who are a fan but the number of people who start in low appreciation markets and pivot once they have more experience should not be ignored.  I therefore will propose something else for your consideration.  Consider a repeat of goal 1.  

I personally know no local RE investors who have only invested in zero appreciation OOS RE markets that have done what I would consider well.  I know many local RE investors who have invested in local RE that have done well.  The discrepancy is not due to me having met few people who have gone or are planning on going the zero appreciation OOS route.  It is because zero appreciation OOS RE has not produced the same returns.

Good luck 

 I shouldn’t even comment, because I’d rather have fewer investors interested in Alabama. If everyone was as uninformed  as you I wouldn’t have as much competition. 

 I do not know how uninformed you think I am but I have had 3 units (2 properties) in Alabama.  How many have you had in San Diego?  I know Case Shiller lists San Diego as the 3rd most profitable buy n hold city in the US this century.  Are there any Alabama cities in the top 50?  

Also note, I believe locals can succeed in these types of markets.  So I hope you are killing it there.  You are not the same as the OP who would be OOS. She would need a PM.  She would need to build and maintain a team.  Apples to oranges.  Any success you have (and I hope you have done great) would not necessarily translate to any OOS RE investor.

@Peter McDonough

>lol "no appreciation"

When I say zero appreciation, I do not literally mean zero.  What I mean is long term appreciation below inflation.  1.9% (your Zillow reference) for the last year qualifies.  NeighborhoodScout has the 10 year appreciation at less than 1% per year (0.58%), that qualifies.  NeighboorhoodScout has Huntsville RE appreciation below 70% of the nation over the last decade and way below San Diego (San Diego is listed as almost 10 times better).

BTW I liked both of our Alabama properties. A duplex on the beach sand in Gulf Shores and a SFH on a very beautiful lake. The Gulf Shores property would likely cost >$10M in So Cal today. The issue was the return was not what I could achieve local. If I had kept the Gulf Shore property until now, I would have done better than we did as we sold it shortly after getting hit by a 2nd hurricane when the market was a little depressed due to getting hit by a 2nd hurricane. I know Alabama has nice places, I am not stating otherwise. It has nicer places than many people who have not been there may believe. Those places, unfortunately, have historical long term appreciation at a rate less than inflation.

I wish you both a lot of success investing in Alabama.

 Zillow's a poor indicator, but Huntsville lagged the nation and was pretty stagnant in appreciation until right around middle to later 2017.  Houses in the sub $150,000 range have seen $30,000-$80,000 price increases.  I've seen houses that I used to be in the market for at $80,000 needing $40-$60,000 in rehab sell at $160,000 in the same unfixed condition.   You couldn't sell houses in some areas for $20,000-$30,000 and some of those are at $100,000.  I've got about $350,000 in personal appreciation myself and I'm a very small player.

@Dan Heuschele

Thanks Dan for you insight. SD is scary for me bc from my research prices are at the top right now. I’m planning for long term and thinking about the $ I’d save in rent and the $ I could make in value add projects or rent for MFUs, but again...still scary in such an expensive market.

Originally posted by @Mike S. :
Originally posted by @Dan Heuschele:
Originally posted by @Mike S.:
Originally posted by @Dan Heuschele:

Looking to divorce in 4 years?   Lol

Your purchase of a local property using VA loan (goal 1) sounds like good way to start. Be sure you do your analysis before making an offer. If you are not confident of your own analysis, you may consider to have others look it over. Ideally have multiple exit plans (easier said then done).

I am not a fan of zero appreciation markets like Alabama (We have owned 2 properties in Alabama).  There are some who are a fan but the number of people who start in low appreciation markets and pivot once they have more experience should not be ignored.  I therefore will propose something else for your consideration.  Consider a repeat of goal 1.  

I personally know no local RE investors who have only invested in zero appreciation OOS RE markets that have done what I would consider well.  I know many local RE investors who have invested in local RE that have done well.  The discrepancy is not due to me having met few people who have gone or are planning on going the zero appreciation OOS route.  It is because zero appreciation OOS RE has not produced the same returns.

Good luck 

 I shouldn’t even comment, because I’d rather have fewer investors interested in Alabama. If everyone was as uninformed  as you I wouldn’t have as much competition. 

 I do not know how uninformed you think I am but I have had 3 units (2 properties) in Alabama.  How many have you had in San Diego?  I know Case Shiller lists San Diego as the 3rd most profitable buy n hold city in the US this century.  Are there any Alabama cities in the top 50?  

Also note, I believe locals can succeed in these types of markets.  So I hope you are killing it there.  You are not the same as the OP who would be OOS. She would need a PM.  She would need to build and maintain a team.  Apples to oranges.  Any success you have (and I hope you have done great) would not necessarily translate to any OOS RE investor.

@Peter McDonough

>lol "no appreciation"

When I say zero appreciation, I do not literally mean zero.  What I mean is long term appreciation below inflation.  1.9% (your Zillow reference) for the last year qualifies.  NeighborhoodScout has the 10 year appreciation at less than 1% per year (0.58%), that qualifies.  NeighboorhoodScout has Huntsville RE appreciation below 70% of the nation over the last decade and way below San Diego (San Diego is listed as almost 10 times better).

BTW I liked both of our Alabama properties. A duplex on the beach sand in Gulf Shores and a SFH on a very beautiful lake. The Gulf Shores property would likely cost >$10M in So Cal today. The issue was the return was not what I could achieve local. If I had kept the Gulf Shore property until now, I would have done better than we did as we sold it shortly after getting hit by a 2nd hurricane when the market was a little depressed due to getting hit by a 2nd hurricane. I know Alabama has nice places, I am not stating otherwise. It has nicer places than many people who have not been there may believe. Those places, unfortunately, have historical long term appreciation at a rate less than inflation.

I wish you both a lot of success investing in Alabama.

 Zillow's a poor indicator, but Huntsville lagged the nation and was pretty stagnant in appreciation until right around middle to later 2017.  Houses in the sub $150,000 range have seen $30,000-$80,000 price increases.  I've seen houses that I used to be in the market for at $80,000 needing $40-$60,000 in rehab sell at $160,000 in the same unfixed condition.   You couldn't sell houses in some areas for $20,000-$30,000 and some of those are at $100,000.  I've got about $350,000 in personal appreciation myself and I'm a very small player.

Seems like you are doing good/great.  Long term appreciation calculations factor in the good years (according to you the last couple of years, Zillow does not agree but FortuneBuilders does agree with you on the recent short term appreciation (especially for 3 BR)) with the not so good years.  Two years does not qualify as long term in my opinion.

Another way to look at it, San Diego has good to great long term appreciation but the last two years have been mundane (there is a range of appreciation numbers, depending on the source, but none of them are great) yet still has outstanding appreciation for 10, 20, 30, 40, 50 years.

Maybe Huntsville's recent appreciation will continue but historically this has not been the case (no one knows for sure).  You can research a market to form a forecast on the forward appreciation, but it may or may not come true.

good luck

Originally posted by @Nadia Brouillette :

@Dan Heuschele

Thanks Dan for you insight. SD is scary for me bc from my research prices are at the top right now. I’m planning for long term and thinking about the $ I’d save in rent and the $ I could make in value add projects or rent for MFUs, but again...still scary in such an expensive market.

San Diego is pricey.  I can understand it can be scary.  All of our recent purchases have been purchases with value add opportunities.  I will say they work out well except for one thing: The refinance appraisals are very conservative (i.e. way lower than RE that is actually be purchased).  It makes it real difficult to extract all of the investment.  What has allowed us to extract all of our investment on most of our properties has been an assist by market appreciation.  So beware of low refinance appraisals in any analysis you perform.

Going with your Goal 1, you can get in with >=95% LTV. This means your cost of entry is relatively low (at least when compared to the price), but it will place an extra challenge on your cash flow (i.e. your cash flow will be negative). Using owner occupied VA LTV, you can purchase >5X the value as an owner occupied as you can as a non-owner occupied (i.e. OOS). Also the VA loan has great rates.

No one knows if we are at the top of the market (including me).  I have purchased twice in San Diego near market highs.  I purchased for $167K, fell to ~$140K, today worth ~$630K.  I purchased $741K, fell to ~$620K, Today worth ~$1M.  I have also purchased with better timing but I am using two poorly timed purchases as the example here.  These poorly timed investments look very good today.  They would have looked better if I could have timed the market to purchase at the low.  Timing the market is extremely difficult to do.  My point is that if you are not forced to sell, the valleys do not determine the return. 

My own belief (which could be wrong) is that San Diego near term will have modest appreciation (near the inflation factor), but the long term appreciation will continue to be outstanding (significantly better than inflation).

If you do decide to go out of state, I think it is smart to go where you have friends or family.  It makes building/maintaining the team a bit easier.  Also it is nice if it is someplace you like to visit.

Good luck

@Nadia Brouillette, welcome to BiggerPockets. I am stationed in San Diego county, and would love to chat with you guys about this. I've written a lot of content about the VA loan, VA renovation loan, and VA house hack strategies on both the BiggerPockets blog, and my own, because I perceive it to be an incredible strategy!

I also invest in the midwest, while living on the west coast (military man as well) and have done alright for myself.

I would be happy to talk with you guys, and help answer questions. We could grab food in SD county sometime, or whatever works!

Originally posted by @Nadia Brouillette :

About me:

I am attached to a military man, Chris, in San Diego (renting) for at least the next 4 years. Chris and I are both 34-year-old DINKs looking to start a family soon. After listening to BiggerPockets Money and reading Rich Dad Poor Dad, I am obsessed with breaking into real estate. I have been an avid investor in other areas since college, I am ready to learn something new! My day job is an engineer supporting the Navy. Over the past year and a half, I intentionally reduced my hours to ~30 hours per week in order to have more time to learn about other investing options. In a couple years I hope to be out of the typical work force and be a stay-at-home mom (don’t actually have the kids yet) with investments to manage.

REI Goal 1: Find a primary residence deal in San Diego using the VA loan with emphasis on a multi-family house hack or single-family live-in flip.

REI Goal 2: Out of state rental investments. My brother-in-law is actively investing in Huntsville, AL, which is the market I'm currently researching, but am open to any knowledge/location.

Thank you for welcoming me to this community. Let the knowledge flow and the fun-times roll!

 Welcome aboard Nadia.

@Nadia Brouillette the problem with some of the appreciation numbers thrown in here is they are all based on the past. Before the new jobs announcements, before the last 2 years insane growth. It will never be California level appreciation here but a couple things to not: Huntsville has had the second highest rental growth (second only to Phoenix). It was the number one market for hotel investment in 2019 (second was San Fransisco). Supply is low and demand is high, and it will be for several years as Huntsville is projected to overpass Birmingham for most populous city in AL. Non of that was factored in to the “past numbers.” I’ve been investing here for 3+ years and in just that timeframe it has become a red hot market. Love the house hack idea btw, I have done that by renting out rooms, pretty cool not having to pay to live somewhere!

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