Where should I invest
Investor · San Diego · Member since 2022 · 2 posts · 7 votes
Where should I invest
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Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes@Harrison Haynes I used to have investments in the Midwest and now all my investments are local here in San Diego and all of them started out as "initially" cash flow negative..many would think I'm crazy but those are usually people who don't have any investments here in San Diego.
The best place to start for most is starting local, where ever that is, even if it is in the midwest. Going long distance only adds more complexity and one can be successful in any market but you have to understand the local market and economics and having people you trust on the ground. There is no inherent value in Real Estate, its value is derived from the surrounding economy. (That's why the same exact home can be $100k in one part of the country and $1M in a different part)
There are some on here that invest out of state and do very well with 1000s of units but they are not the norm.
Few items to consider as you decide what to do:
1. House Hacking - would you be better of house hacking vs continue renting? We all have to pay mortgage whether it is our own or someone else's.
2. When calculating your numbers in markets you don't know very well, your returns on paper can and likely will be different from realityl;
3. Markets that are lower cost and higher cap rates are generally perceived to have higher risk and lower appreciation in the long term and thus have to pay a higher cash flow.
4. Generally the higher the Cap Rate of a market the lower the appreciation...If Cap Rates are high enough in a market then the real estate is likely losing value each year.
5. Being cash flow negative initially in coastal markets like San Diego, Los Angeles, etc is not the end of the world if there is a plan in place to get it to break even and then to positive within a known period of time...
6. food for thought: investing in a 401k is a negative cashflow investment (for those that say they'd never invest in anything with negative cashflow and have a 401k account ;) )
7. Investing locally with owner occupied loan options can be less of initial $ investment than buying an investment out of state since you can buy owner occupied with 3.5% down payment and investments are generally 20%-25% down. (i.e. local investment - 3.5% down payment of $800k = $28,000 and OOS - 25% of $200k = $50,000)
8. If you are adamant about investing out of state, I'd connect with other successful locals here in San Diego who have shown success over a number of years investing in a particular out of state market and learn that market from them...it will be alot more helpful than reading a book on long distance investing.
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29 Replies
- Huntington Station, NY · Member since 2018 · 11 posts · 3 votes4y
Quote from @Joshua Janus:
@Harrison Haynes Columbus, Ohio is a great market to invest in. The population has been growing here year over year over the last decade, it is home to The Ohio State University which has over 50,000 students that live here along with those that visit, and it also holds a diverse range of young professionals and traveling nurses to fill the demand of the multiple business corporations and hospitals stationed here. Tech companies are continuously moving here and establishing a footprint in Columbus as well. Intel is a great example, who is building the largest chip manufacturing plant in the US right here, and it will be a $20 billion dollar investment that brings a few new thousand jobs.
Here are a few more recent investments https://www.10tv.com/article/money/business/hydrogen-power-company-hyperion-bringing-700-jobs-to-columbus/530-25907aab-5517-4661-a9f3-d2ed2d5be6b0
https://news.wosu.org/news/2022-02-08/rumpke-to-build-50-million-recycling-facility-in-columbus
Hi Joshua,
I am intrigued about Columbus. However when I look at what is on the market and the rent prices I see the purchase prices not supporting a cash flowing business. What am I missing? I like that the area is developing and all the other positive attributes listed here. Seems like it has the right pieces. Thank you for you time.
- Member since 2018 · 1 post · 1 vote4yLooking to invest in the Raleigh area but market is really crazy now. Bought one property for living ourselves and looking to buy for investment. I see you mention you invest in other close by places. What other near by cities/towns rent relative easy?
Quote from @Tim McGarvey:
@Harrison Haynes I'm located in CA as well (Napa) and have been investing out of state in North Carolina for several years. We initially selected the Raleigh-Durham market due to population growth, high paying job growth, landlord/development friendliness. We've also found there are opportunities for all types of investors whether seeking cash flow or higher appreciation areas. We've been doing a lot of textbook BRRRR deals lately within an hour of Raleigh
- Real Estate Broker · Member since 2022 · 20 posts · 8 votes4y
@Harrison Haynes the Raleigh-Durham-Chapel hill area in NC is a great place to invest and considerably less expensive than California! Fayetteville is another great area for rentals due to Fort Bragg being close by!
- Real Estate Broker · Member since 2022 · 20 posts · 8 votes4y
@Inalvys Canahan Fayetteville is about an hour south of Raleigh and is great for rentals due to the military base Fort Bragg in the city! Always people looking to rent. I actually have some properties in Fayetteville. Let's talk more!
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