First time investor - In state 4plex vs. Out of state 12 plex

2 Replies

Hi All,

I'm a newbie investor and joined BP around a month ago. After numerous hours of learning through podcasts, articles, forum discussions and webinars later I found some good deals. I'm debating which one to go for as a newbie investor. I've just enough cash for one of the two choices. An instate 4 plex in CA, and out of state 2 6plexes in MO. They both seem to be great deals but given my experience I'm concerned about taking the bigger plunge. Here are few facts and my thoughts on the deals, and I can furnish more if required. Can you help me by providing your thoughts on one vs. other ?

In state 4 plex: ~400k, 2.5 hours drive from home, ~25% CoCROI, well within MAO (GYR*7 +- 10%), 50 years old, all units renovated, good neighborhood, all units vacant right now.

Out of state 2 6plexes: ~1.4M, in MO so very far off from where I live, ~30% CoCROI, doesn't really work with MAO but can probably be negotiated, the property is about 100 years old but is in good condition, college neighborhood, all units occupied.

I'd love any thoughts and comments. Thanks !

@Rohan Attravanam The general consensus is to invest close to home. $400k for a 4plex is good. If this is your first investment definitely go for the 4plex.
1.4m 12plex in MO sounds good as well though Usually people buy cheaper properties in the mid-west. If u do not end up buying the 12 plex, can u send me more info on it?

Rohan ,

I don't  think it matters a lot if the property is located near you if you are planing to have property management in place. I would go with better cash on cash return. Another thing to consider is tenants friendly laws and regulations in CA. It can be complicated process to evict a tenant in CA.I'm not sure if it is easier in MO , but definitely consider it before buying the property.

It TX for example (where I bought all my properties) evictions are very fast and simple (3 weeks till the writ of possession and than another ~week till constable arrives).

You may also consider investing in larger multi family as passive or doing your own syndication..

I've a meetup concentrating in out of state multi family. In case you are interested you are welcome to come and learn ..

https://www.meetup.com/Los-Gatos-Real-Estate-Networking-Meetup/

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