I think I may have found a niche that could work for my situation but I'm looking for some advice first. Living in New Jersey, I realize I can't invest locally yet because I lack the cash and because the ROI numbers don't look so good around here, but seeing all these listings in low-rent areas that show positive cash-flow is quite exciting. Recently I've been considering purchasing $20k-50k homes that are in good condition and tenant-occupied, so my question is, does anybody have any tips for a first-time out-of-state investor? Some things to look out for? Past experiences?
I'm interested in states like Florida and Wisconsin, just to name a couple. Not necessarily in the worst neighborhoods, but places where average real estate prices are relatively low and the quality of life is still decent.
I've read the books, I've listened to the podcasts, I've ran conservative numbers, but I believe there is nothing as valuable as actual experience. So I figured I'd ask the helpful community of BP for some insight before I embark on this journey.
Thank you all in advance!
@Nelson M. believe it or not, this question has been asked many times by people on Bigger Pockets!
You may be interested in listening to one of Brandon's recent podcasts on the topic.
What quality of housing will you be buying for $20-50K?
What type of tenants will these houses attract?
How will you manage them?
How will this affect your life?
I suggest that you consider these questions. At $20-50k, you're likely buying old property and it's likely not in good neighborhoods. If you're buying out of state, I'd suggest buying newer, quality housing...
I've invested across multiple states for over 12 years.
Best of luck.
Thank you all for the links and insight!
I understand the risks involved with the quality of tenants in these areas. However, I am researching every property through neighborhoodscout and other sources of information to get a feel of what the neighborhood feels like. If the vacancy rate is higher than 15/20%, it means it's one of those boarded up blocks, and thus I tend to look the other way. As far as managing, I am factoring in the cost of PM when doing my numbers, I just hope I'm able to find reliable PMs. Worst case scenario, I'm sticking to a max radius of 3-5 hours away from my area. That way I can be able to make the drive for whatever reason, as I am not adverse to the idea of investing a little sweat equity into my properties.
"How will this affect your life?"
- I feel this will be a good starting point for me as well as a learning experience, not to mention the additional income. I do plan to invest in nicer properties in the near future when I have the financial resources, but one must start somewhere, right?
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