Which markets to start in

24 Replies | Detroit, Michigan

hello, I have been reading the forums, articles, and recommended books.

I'd like some opinions. 

I'm a single mother, with a year left of nursing school. I am looking to invest in real estate and reach financial freedom by 35 (I'm 25.)

I'm not sure the best way to go about this. 

Currently my income is about 24k due to being in school. After it will only by 46k to start more than likely. 

I would like to house hack using fha loans. However, the market I live in is quickly emerging into a housing crisis area. I live SLC, utah. I do not think i will be able to afford a four plex under 600k. I will continue to watch and research. 

I am wondering about markets where housing is very cheap but rent is ok such as 650+ with room for growth.

What cities/states other than detroit are cheap? 

Has anyone who is not a detroit resident purchased a home from the building detroit land bank? They seem to have gotten a monopoly on the properties under 15k and I'm not sure if I could buy from them under an LLC?

If I'm buying cash, which if I could purchase a home under 15k I would, I will do so with my llc.

I haven't made one yet but I will when I start my investing.

What other cities have property that low? 

If I bought a property cash for between 10k up to 15k, would it be hard to get a home reno loan of 15k (or around that mark)?

@Madison Holbrook

Pull up Google maps and start zooming in on the midwest. Oklahoma City, Kansas City, Minneapolis... If you don't see what you want there, head southeast to Nashville, Memphis, etc.

I don't think Detroit is the place for a beginner out of state investor. $15k houses are $15k for a reason.

You should keep reading, start tracking the market, and start making some industry contracts.

Go to some real estate investor clubs. Check meetup.com and Bigger Pockets events section. 

Don't rush it. There's always another opportunity next week. 

i think house hacking is the best way to start. Yes it can be tough getting started if your market isn't "affordable" but I'd discourage investing out of state for your first investment unless you are well connected with a team (you can trust) to help do everything you would otherwise be able to do/manage yourself if needed. 

Originally posted by @Geordy Rostad :

@Madison Holbrook

Pull up Google maps and start zooming in on the midwest. Oklahoma City, Kansas City, Minneapolis... If you don't see what you want there, head southeast to Nashville, Memphis, etc.

I don't think Detroit is the place for a beginner out of state investor. $15k houses are $15k for a reason.

You should keep reading, start tracking the market, and start making some industry contracts.

Go to some real estate investor clubs. Check meetup.com and Bigger Pockets events section. 

Don't rush it. There's always another opportunity next week. 

Definitely not rushed lol. All this is still a year away. 

Looking out  at the mid west for what exactly? Mfh or cheap 15k houses? 

Hi @Madison Holbrook , I admire your ambition to begin investing in real estate and retire by 35! Thats an awesome goal to set. I believe it would be difficult to move markets and invest, but it is definitely not impossible. I'm not sure if getting a $15K house is a great idea. I think that using an owner's occupancy loan to get into a nicer property could be a better option. With this loan, you could get into a good property that would generate the rents you desire for less than 5% down. 

Also, I am in the Nashville market (so I may be biased) but there is plenty of evidence to suggest that this is one of the best in the country. Best of luck to you as you begin investing!

I think that you should do some more research and find you team as they say. 

Starting off investing in a city far away is hard.  

I think you should look for things on the outskirts of the area you live.  

I currently live near Kalamazoo Michigan. A single family house in a great neighborhood could go for 1/2 million. But if I go a little farther away from town I could find a deal for around 100k for the same size house....Having said that the house might not be designed or decorated a well as the other. But it will have the same bedrooms and bathrooms etc often with more land attached.  

If you have any questions or need more advice pm me.

@Madison Holbrook are you looking to relocate to house hack or were you only considering house hacking in your market? 

15K is just enough for 20% down on a decent C class property in OKC. Because it sounds like you'll deplete your cash reserves, you'll just want to make sure to negotiate that the seller buy you a home warranty, that way anything that comes up in the first year is covered by a $70 service call! 

Originally posted by @Alyssa Dyer :

@Madison Holbrook are you looking to relocate to house hack or were you only considering house hacking in your market? 

15K is just enough for 20% down on a decent C class property in OKC. Because it sounds like you'll deplete your cash reserves, you'll just want to make sure to negotiate that the seller buy you a home warranty, that way anything that comes up in the first year is covered by a $70 service call! 

 No, that's thing. I don't want to relocate to house hack initially. We will move a year or two after I graduate. Either to Washington or another state with very clean air. I'm trying to build enough personal wealth to have that freedom and ability to finance a new home construction. My daughter has severe and degenerative  breathing problems. I'd be specifying certain building materials and protocol in order to build a safer healthier home for her. 

Where we are has horrible, horrible air. The pay is not catching up to real estate costseither. But I'm going to build a years experience in my career field before applying out of state for easier job placement, financial stability, my daughter will be older and school age by that point. 

I would do a house hack for a year in utah on a duplex, triplex or fourplex. Even with 75% of the rentals income counted into my new salary i wouldn't qualify for what that home price range would be here. 

Thus wanting cash owned properties.

I love detroit for a buy and hold as well as a cash flow property once rehabbed. 

I have other savings. I have retirement, childs education, 6 month emergency (which is actually in a high yield account of 2.45%), and have under 15% credit utilization set to be paid off in 6 months.

This is a separate savings pool that I started this year in January for this purpose. 

Originally posted by @Alyssa Dyer :

Gotcha. So buying homes that are 15k is really what you're after? Not putting 15k down? 

 If I found somewhere in my state for a multi family in my price range that made sense, no hesitation I'd do that first. I'm watching both. 

I'm walking all the properties that have open houses. I watch what they sell at and then rent for. I'm doing due diligence.

I'd like to also look at the cash markets such as detroit. I've watched those as well but not a lot of detail on how the flipping is done. 

@Madison Holbrook

The parts of Washington that have the nicer air are also the cheaper parts so you're in luck! Unfortunately they are not necessarily the parts with all of the jobs.

When I mentioned looking in the midwest, I meant for cities and/or areas to invest in but now I realize you are in Utah and there should be plenty of places there to invest within a reasonable day's drive.

Have looked in Provo, Ogden, or even Rock Springs? I see some places that are pretty reasonable in those spots. I've been to all of them too and I liked them. there's a 4plex in Rock Springs for $298k right now. 

Originally posted by @Geordy Rostad :

@Madison Holbrook

The parts of Washington that have the nicer air are also the cheaper parts so you're in luck! Unfortunately they are not necessarily the parts with all of the jobs.

When I mentioned looking in the midwest, I meant for cities and/or areas to invest in but now I realize you are in Utah and there should be plenty of places there to invest within a reasonable day's drive.

Have looked in Provo, Ogden, or even Rock Springs? I see some places that are pretty reasonable in those spots. I've been to all of them too and I liked them. there's a 4plex in Rock Springs for $298k right now. 

 Provo is about 1.5 hours no traffic. 

If I did multi I'd be in an fha loan and would have to live there.

Its a veryyyyyyyy secular and religious place. Very judgemental, critical, and harsh environment. To the point people would cause trouble just knowing were not their religion. It's a serious thing when you get into "the valley." Being a single mother I wouldn't find a job and I wouldn't be able to property manage myself without potential problems.

I literally got left a copy of a bible and the reasons I need God. Can i post pics on here? I kept it hahah it's horrible. It was tailor fitted for me 😂

I do keep my eye on ogden! It's a long but doable drive.  That area has duplexes pop up. rent is lower by several hundred but the way the population is spreading, those cheap spots will get taken. Some spots have gang activity but I know them enough to be able to avoid the pitfall.

I'm watching areas of Idaho/WY for future mfh 2 or 3 years down the road. I wouldnt live in WY due to air so I'd need the 20% down for some financing other than fha since I won't be doing owner occupancy. 

Washington I won't have a hard time finding a job. The areas im watching are cheaper in some spots. I loveeeee bellingham but it is pricier I'm looking for its suburbs. Its so gorgeous there. Thats the holy grail dream. Looking at all my options. Pay is approaching 40 for a brand new nurse without a bachelor in my specialty. I won't be brand new and I will just shortly have my bsn :) Utah is 25 starting and costs of living in the salt lake city region are very similar to Washington. 

Goals! 

Unless the investing is cash pay under the 15k, its gonna have to be mfh in utah and that's gonna be fha.

@Madison Holbrook

Bellingham is great but check great schools on any area you are considering. Sudden Valley is cheap but it's kind of remote for Bellingham. I was considering moving up there before so I got really familiar with it.

I have a non-religious friend down in Provo. She gets by but definitely says there is some "judgement". That said, isn't it a college town? Should be a strong rental market. It's a neat place to visit. I had a good time there when I visited a few months ago.

Yes it is a college down but more so for BYU, which is a religious restricted college.

Utah is a great place. Gorgeous! Outdoor enthusiasts dream. I love it here in salt lake county or more north. I try to stay out of utah county, anything south of lehi.

There is a huge amount of judgement, even more so given that I'm a single mom. It really makes a pariah out of me. I'm truly not dramatizing it. Suicide is extremely high here due to religious impact. 

Schools are definitely a huge thing, especially needing somewhere good with my daughters medical needs. Washington schools have nurses. Utahs do not at least not a majority of them. 

Question for all of you who think certain areas are so judgmental. Have you ever stopped and thought. Hmmmm maybe I’m the one that’s being judgmental about these people and they really aren’t being judgmental towards me at all? Maybe this is a story I’m telling myself to make me feel better of my own insecurities? 

Originally posted by @Matthew Fassett :

Question for all of you who think certain areas are so judgmental. Have you ever stopped and thought. Hmmmm maybe I’m the one that’s being judgmental about these people and they really aren’t being judgmental towards me at all? Maybe this is a story I’m telling myself to make me feel better of my own insecurities? 

 Yes, I can say that some times I've wondered if it's my own perception. 

However, when there are blatant comments and not just innuendos that's how I know the difference. 

Being told my child can't play because she isn't a part of a church ward mind you this was a mother my child is 2, how I'm clearly not a member or active member because I have a child out of wedlock, how I couldn't be hired to a unit because I wouldn't fit in as it was a predominantly married female lds and they were looking for someone who would fit in with current staff, this was after being asked if I had kids oh what does your husband do, oh so you're a single mom.... that's judgement, discrimination, and hate.

Wondering if the group of moms will care if I sit with them at a park? That's insecurity.

I live in an area where I'm encouraged, supported, and value. For tenacity, independence, and intelligent mind. 

There will be people anywhere you go who judge, have bias, or are just crappy people. 

You can always choose how to take things. I take them with a grain of salt, find the humor or good in it, or I ignore it. 

I choose to live in a forward, progressive, activist community. 

Even with comments and words people say to us our minds can perceive them differently. I for one second don’t believe someone came up to you and said ummm no your child isn’t part of our religion can’t play sorry. I believe she said something different  and you simply interpreted it as my child can’t play because of this or because of that. Our mind is a very powerful place. Sometimes it can be a powerfully dark place or a powerfully happy place. We need to decide which one we will support the most. 

Originally posted by @Matthew Fassett :

Even with comments and words people say to us our minds can perceive them differently. I for one second don’t believe someone came up to you and said ummm no your child isn’t part of our religion can’t play sorry. I believe she said something different  and you simply interpreted it as my child can’t play because of this or because of that. Our mind is a very powerful place. Sometimes it can be a powerfully dark place or a powerfully happy place. We need to decide which one we will support the most. 

 Choose to believe what you want. Telling a child at a park she can't play because she is not a part of the word, is in fact excluding her based off of that. 

Happy valley in your happy place, ain't that right ;)

Have you thought about Heber, summit park, or bountiful? Much better air quality in Heber and summit park.  Just a thought.  We own multiple MF properties in SLC and one in the park city area so know the markets and area well.  We also live in SLC (moves from Seattle 10 years ago) and you could look at homes with MIL apartments.  This way you could live in the MIL apartment and rent the main house out to cover your mortgage.  This is how we started in Seattle many years ago and it set us up to keep costs down and save money.  There are many houses in the Sugarhouse, Aves, liberty wells area that work really well for that.  Just a thought.  

Originally posted by @Monte Blunk :

Have you thought about Heber, summit park, or bountiful? Much better air quality in Heber and summit park.  Just a thought.  We own multiple MF properties in SLC and one in the park city area so know the markets and area well.  We also live in SLC (moves from Seattle 10 years ago) and you could look at homes with MIL apartments.  This way you could live in the MIL apartment and rent the main house out to cover your mortgage.  This is how we started in Seattle many years ago and it set us up to keep costs down and save money.  There are many houses in the Sugarhouse, Aves, liberty wells area that work really well for that.  Just a thought.  J

Thank you for the input! Yes, I'm keeping my eye on bountiful. MIL can be tricky from what I've heard. If they're not metered separately the bank has a hard time counting it as 2 units for the loan and rental income, unless permits were pulled to make it a multi unit with whatever city official. Do you have input on this?

 I'm contacting numerous for sales that I see. I was also going to be speaking to another lender than just that one but that's what i mean when the approval on my income would be hard to if I couldn't include that income a 350k house is gonna be out of my reach. That's the main issue for me. Even with the right amount for fha saved, if I can't get that rental counted towards income, the loans will be out of reach. 

I could be looking in Taylorsville or WVC but that would just be less than ideal for most of those homes. 

I really love Midvale, Cottonwood, Sandy, SoJo, Herriman, Draper, lehi (some of it is still affordable), Holladay, Millcreek, and parts of Salt Lake that you listed except maybe aves. Sugarhouse and liberty are easier for a single family due to more affordable daycare and better schools. That's a huge thing for me. I love that area. it's my favorite. So much to do that is family friendly, outdoors, not super crowded, clean, low traffic, right by my school. I love it. 

I'm just looking at my options. 

With a lower income I can't expand as much or fast as I'd like while carrying debt, would have to refi. Owning in cash is appealing to me, especially when it doesn't put me into another tax bracket at that point. 

I'd also be able to put it as my llc. Instead of liability being on me, having the potential of being sued. 

I own most of my things. i don't carry a lot of debt. 

Not saying I have a lot but what i have I buy nice and maintain such as my car. I own a plug in hybrid that will be paid off at the end of 2020. 

Being protected by having properties under and llc is my goal for all my properties at least after the first if I do end up buying a multifamily first. 

I'm trying to weigh out my options. Everyone either feels so strongly for one or the other, where as for me I see both sides. 

@Madison Holbrook

The main problem with the LLC is that it's diametrically opposed to getting the best owner occupied financing rates. If you were into 5u+, it wouldn't matter at all. With most commercial lenders they don't care at all if you go LLC or personal name but with 1-4u it's a whole different story. You'll have to shop around a lot for a bank that will finance residential property in an LLC. Buying personally and transferring later risks the due on sale clause.

I'm no lawyer but there's two things that people don't seem to mention when talking about asset protection and LLCs.

1) If someone wants to sue you, they can sue you, LLC or not. In many states you can look up exactly who owns/runs the LLC with a couple mouse clicks. Once they find that information, they will just name you in a lawsuit too.

2) If someone sues your LLC and wins, you STILL don't want to lose the property to them. Hence the importance of making sure your insurance is excellent and will prepare you for the worst case scenarios.