Looking for first rental/flip- questions

18 Replies

Hi Everyone,

Looking to invest in real estate (rental or flip) but I'm facing a couple of challenges-

1) I live in DC and own my home. I have about 200k equity in my current home.

2) I have no debt except for my mortgage. No credit card balances, no student loans, nothing- Both of my cars are paid off, I have about 25k saved up

3) The challenge- DC and surrounding areas are expensive. I looked at some homes in Baltimore priced under 100k but they were located in bad neighborhoods. I looked into other areas which I was familiar with and most home prices started at 250k. The higher the price, the more money I have to put down which I don't have right now unless I dig into my equity.

4) I was thinking of sticking to my 100-150k budget and invest out of state- but again, I don't know where to start. I thought Delaware, WV, PA and even as far as Detroit.

I see a lot of potential across the country but I don't know anything about these markets. I can work with an agent but that would also require me to fly out and familiarize myself with the area and see the properties listed- I'm thinking that I should stick to what I know and/or buy in a part of town/state with easy access. (Philly is 2 hours way)

Anyone investing in baltimore or the surrounding area? Any advice for investing out of state? I'm really lost and confused and have no idea where to start. Thanks

I would look into some turnkey companies for out of state investments. Another suggestion would be to get into an investment group from out of state. Sure you could find one on here.

Out of the area investing, especially if you are chasing cheap and do not know the market is a recipe for disaster.

Originally posted by @Mike Shahi :

Hi Everyone,

Looking to invest in real estate (rental or flip) but I'm facing a couple of challenges-

1) I live in DC and own my home. I have about 200k equity in my current home.

2) I have no debt except for my mortgage. No credit card balances, no student loans, nothing- Both of my cars are paid off, I have about 25k saved up

3) The challenge- DC and surrounding areas are expensive. I looked at some homes in Baltimore priced under 100k but they were located in bad neighborhoods. I looked into other areas which I was familiar with and most home prices started at 250k. The higher the price, the more money I have to put down which I don't have right now unless I dig into my equity.

4) I was thinking of sticking to my 100-150k budget and invest out of state- but again, I don't know where to start. I thought Delaware, WV, PA and even as far as Detroit.

I see a lot of potential across the country but I don't know anything about these markets. I can work with an agent but that would also require me to fly out and familiarize myself with the area and see the properties listed- I'm thinking that I should stick to what I know and/or buy in a part of town/state with easy access. (Philly is 2 hours way)

Anyone investing in baltimore or the surrounding area? Any advice for investing out of state? I'm really lost and confused and have no idea where to start. Thanks

 Many investing looking OOS like to go with Turnkey providers. It is much easier than going it alone and risking getting into something you cannot manage. 

I would suggest either Turnkey investing or building a team in an area you are interested in (per the book by David Greene). 

Check out Norada Real Estate Investments. I am working with them right now to purchase my first SFR in Little Rock. I reached out to them after discovering and listening to Marco's podcast. It's been extremely informative for me and also helped me find many other great sources of education on all the ways one can make money through REI. Good luck!

@Mike Shahi I’m a newbie but I know the Baltimore area. You’re right that cheap properties in Baltimore city will be in rough neighborhoods. But there are some zip codes in the surrounding counties where you can find cheaper homes for rentals. The Essex/middle river area, Dundalk, lansdowne. The deals are hard to find and it’s competitive but you could look outside In these areas before going long distance. Is 100k your total budget to purchase and any repairs/upgrades? Or are you looking for a rent ready property?

Thanks for all the replies- @Chrissa Carlson I can go as high as 200k- I actually have a team ready for repairs if any are needed. My parents flipped homes in Bethesda a good part of early 2000's so I have the resources if any repairs are needed. I'm not a "newbie" per say- my family and I have always focused on the Bethesda, Chevy Chase area so that's where my expertise is. It's just that I'm no longer in the position to purchase 700k homes to tear down/rehab- life happened- not to mention the market in these areas is VERY competitive. 

I don't mind if the house needs a bit of work- my team and I can make it look like a million bucks- but the price/location/reno costs all I have to make sense. I'm just clueless when it comes to Baltimore. 

My goal honestly is to build a portfolio of rental properties, get them paid off by the time I retire and have a stream of passive income. Another reason why my budget is low- I can pay it off quicker. 

I prefer to be able to "touch" the investments, especially at first.  But if you are going to venture out of state/ long distance make sure you really really do your research on the market.  Leveraging the roof over your head to try to be a real estate investor isn't always the best idea.  Your first RE investment is always the most important, study , study ,, and then study some more.  

Good luck! 

Hi there @Mike Shahi , it looks like a lot of people have said what I was going to say, you should look into a few turnkey companies in the areas you are looking at. I am a bit biased on the turnkey subject, but I like to try and give the best advice possible. 

Do research on the areas the properties are in. Yes, get info from the turnkey company, but you also need to do some research on your own. Ideally, the research you do will just back up what the company is saying. BUT companies will advertise a property as being maybe an A- when any local would tell you that area is a C.

A good first step is just looking at the property and the neighborhood on Google Earth and seeing how the property looks, is the house unkempt, how appealing is the neighborhood, etc. If you don’t think the property class is correct, then the company may be inflating the property class so they charge more. If the prop is listed as an B- but a quick Google Earth shows tire-less cars on lawns and peeling paint, it’s time to walk away.

Of course, market research is extremely important, but nothing beats looking people in the eye. I usually recommend that folks take the time to visit their top one or two companies before pulling the trigger, just to gut-check their decision. Any decent turnkey company should be ready to give a tour or even have scheduled ongoing tours. They should be able and ready to show you some props, take you around town, answer questions, shake your hand. If the turnkey company ‘can’t’ accommodate a tour, again, move on.

As @Cassidy Burns said "Your first RE investment is always the most important, study, study, and then study some more."

I hope this comes in handy for you!

Best wishes!! :)

@Mike Shahi

We’re investing in Cecil and Harford counties. They’re farther north than Baltimore, but not as far as Philly. MD has great landlord friendly laws with the exception of Baltimore. Pricing is definitely more affordable than our local housing. Let me know if you want to hear what we’re doing. 

Mike,

Seems like you came looking for a drink of water and was handed a fire hose.  Many great insights were provided... which is the really great thing about Bigger Pockets.

Regarding investing in the Baltimore area... there are great values in many areas, some were pointed out by Chrissa.  The positives about Baltimore are lower acquisition costs, areas that do support appreciation, and very competitive rents.  The biggest downside is that it is Baltimore.  And with that said,  I have been working with a number of investors who are where you want to be... owning a portfolio with no debt.  What a great place to be... and very doable achievement with a well thought out and executed plan.

Regarding remote turnkey rentals... watch the hype. In my experience, every turnkey opportunity ultimately over promised and under performed. 

Regarding remote inesting I have been working with one investor who could no longer buy rentals in his area due to ridiculously escalating costs who started investing 800 miles from his area and now owns 16 units... all providing positive cash flow.

Bottom line... any of the above can work.  It just requires clarity of purpose and ruthless execution.


Pete

If you are located in the DMV then I see no reason to look any further then the Baltimore Metro area for flips, turnkeys, or BRRRR deals. One thing I'll caution you on is to not judge an area as "good" or "bad" based on a visual inspection alone. Check the recent sales in the area and, especially in Baltimore, I think you'll be surprised at how quickly homes will sell in some neighborhoods that you may have written off.

@Mike Shahi  

I'd recommend you think about how active and how much time you have for this endeavor. If you have the time then BRRRR in your local market. If you'd rather be passive than look at benefiting from different markets through a Syndication or Turnkeys. Just make sure you heavily vet your team and visit their operations no matter what strategy you use.

Originally posted by @Mike Shahi :

Hi Everyone,

Looking to invest in real estate (rental or flip) but I'm facing a couple of challenges-

1) I live in DC and own my home. I have about 200k equity in my current home.

2) I have no debt except for my mortgage. No credit card balances, no student loans, nothing- Both of my cars are paid off, I have about 25k saved up

3) The challenge- DC and surrounding areas are expensive. I looked at some homes in Baltimore priced under 100k but they were located in bad neighborhoods. I looked into other areas which I was familiar with and most home prices started at 250k. The higher the price, the more money I have to put down which I don't have right now unless I dig into my equity.

4) I was thinking of sticking to my 100-150k budget and invest out of state- but again, I don't know where to start. I thought Delaware, WV, PA and even as far as Detroit.

I see a lot of potential across the country but I don't know anything about these markets. I can work with an agent but that would also require me to fly out and familiarize myself with the area and see the properties listed- I'm thinking that I should stick to what I know and/or buy in a part of town/state with easy access. (Philly is 2 hours way)

Anyone investing in baltimore or the surrounding area? Any advice for investing out of state? I'm really lost and confused and have no idea where to start. Thanks

Hello

The whole DMV area is very very expensive. I would attack the following way

1. Do you want to be a passive investor or an active investor? Active investor means you are in control and handling tenants issues and rent collection.

2. Figure this $200k is going to cost you what yearly, for example, let's just say the rate is 5%(i picked this rate arbitrarily) I would speak to some local banks and credit unions to find out the cost. From there see you know what are your monthly costs and then the cap rate you need.

3. As this is your first rental focusing on less expensive areas can be problematic as there are a lot of commitments and extra hands on involvement needed.

 

@Mike Shahi I agree with @Chrissa Carlson , Pete, and Joe, There are money ares with Baltimore city and in Baltimore county, that fit your budget, would be in neighborhoods that you would be comfortable in and are within driving easy distance.

When you invest out of your area you increase both your risk and your cost. 

Im looking to buy & rehab a property. Investor stated he will fund my deal. He told me come on here so i can put togather a marketing plan so he will fund my deal. Any good Templates? Please point me in the right direction