All Forum Posts by: Mack Lengel

Hi All,
long-time lurker on Bigger pockets, but a first-time poster.
I am beginning my real estate investment journey and know that I want to invest in a property out of state (I currently live in Seattle, WA). I would like to find a property in the 200k or less range to start. I am thinking of a single-family or small duplex. I am hoping for a CoC of around 10-12%.
I am open to most markets in the US but starting to feel overwhelmed by the multitude of options. I am having trouble narrowing my search down to one market.
I am curious how you out-of-state investors narrow down your search criteria? Addtionally, what markets would you recommend to someone like myself?

Thanks in advance for your advice

Given your budget, mid west probably makes most sense.

There have been many good answers above. Here is my summary of major considerations in evaluating different markets:

Your budget: are you looking to buy under $200K, $200-300K, $300-500K or higher? It can help you create a short list
Population growth, employment growth, wage growth, composition of business types are the most important factors in the health of the market. There are many analysis, charts out there. Specifically. places where the millennials are attracted to are interesting as they are becoming the biggest renter and homebuyer group

(Note: Be careful with 'historical' data. The top growing markets in the last 2 years are unlikely the most sound choices. Good examples are Austin and Phoenix. Try to add the futuristic lenses into your analysis whenever you can. In the ideal case, there be a "new California" emerging somewhere in the next 10 years. But to be frank, CA's trajectory is impossible to replicate as working remote has become more prevalent, companies more “decentralized”, and more people think about not just professions, but also lifestyles these days).
Are you able to find trustworthy realtors/PMs or even service providers? Do not get into a market before you know whom to work with. Many investors interview many to find the best one. In my case, I started in the Houston area as my friend had very good recommendations for me. So use your network to get more ideas!
Run the numbers to understand the cash flow, and pay attention to the major cost such as the effective property tax rates. It typically range from 0.5%-2%+
Rental regulations as some States are more friendly to renters while some more friendly to investors
Distance to you. If you find a good area 2-5 hours drive from you, it’ll be easier to meet your team and check out the properties in person
Certain hazards or costs that you want to avoid. Drought, flooding, snowstorms, tornados, just to name a few

Some other considerations:

Form an opinion about where you'd like to live in the future, and factor that in. Even if you work with PMs, being close to your properties will still be a plus.
Also decide whether cash flow is most important for you, or good enough cash flow with less hassle, higher quality tenants, or even appreciation potential. That will determine the type of properties and the price range you want to focus on.

States that are popular these days: FL, GA, NC, TN, OH, TX, IN, AL

+1

@Vicki X is giving great advice here.

Finding a trustworthy PM is not emphasized enough. PM will make or break you in the long run. When I first started I put heavy weighting in finding a good PM and even more so than the market itself. You could be a in a growing market but lose in the long run if your PM is poor performing and/or not honest.

Also due diligence on hazards / natural disasters + risk mitigation + associated costs (i.e. flood insurance needed and impact to your bottom line) should not be overlooked.

I would marry Vicki X's advice with Melissa's advice above about goals.. start top down.

I have two rental properties in SC if you are interested. 4 bed 2 bath $108,999 and a 2 bed 1 bath $99,000

Where in SC?

2 Votes

I always send clients to TheLender. Their rates dropped below 7% last I heard. Might be worth checking them out

4 Votes

Lexington-Fayette, Kentucky

Has anyone used an interior designer to decorate their STR and what was the experience like?

Who would you recommend (Specifically in the Smokies)?

3 Votes

Quote from @Fernando Corona:

Quote from @Mack Lengel:

Congrats on your first post and glad to hear that the risk paid off for you and your wife!

What did the decision process look like to add the 4 additional bedrooms instead of cutting out 1 bedroom and adding a bathroom? I imagine that changes the living dynamics for the tenants.

thx @Mack Lengel, so far so good. we've gotten 3 more in the process and the two we just launched aren't profitable yet with the start up costs we've incurred. but still hopeful for sure as those just got fully booked and will bring in about $1500-$2k even at 8% interest loans.

The decision to add more rooms vs add a bathroom is the difference from cash flow to selling for forced appreciation.if we were going to sell, it'd make sense to add another bathroom possibly because those homes would sell for more. but we wanted to keep the home for cash flow. so its the math of if we can charge $700/month per room or $900/month for a room with a private bath, it makes more sense to just add more rooms. since we can have 4 people share 1 bath and be okay with that.

That being said, our two most recent buys are 9beds/3baths, where we bought with enough sqft to have a 1bed/1bath option to maximize those rents. but the other 8 still share 2 baths. you'll get some bad apples here and there but mostly people are just looking for cheapest rent where we don't require more than a $100 deposit.

Sounds like a great niche! Glad it’s been working so well for you

3 Votes

Hey, @Ryan Briggs congrats on your first post!

If you are looking in the upstate of SC then @Jonathan Anderson would be a great connection. He had a couple of multi-family deals last time I checked.

2 Votes

Denver, Colorado

Congrats on your first post and glad to hear that the risk paid off for you and your wife!

What did the decision process look like to add the 4 additional bedrooms instead of cutting out 1 bedroom and adding a bathroom? I imagine that changes the living dynamics for the tenants.

3 Votes

Quote from @Kevin L Owens:

As I continue to explore and prepare to be a REI I am finding people around me being very doubtful and advising against. The feedback is always about the headaches, constant tenant problems, constant repairs, evictions, etc. What are your thoughts and experiences? I am very appreciative of the Bigger Pockets community and the people I have been connecting with and the books and materials I have been reading because I am not feeling the support from those around me.

Thanks everyone!

Don't take advice from people with smaller dreams for your life than you have.

They might mean well and might even care about you on a personal level but don't think they could do it for themselves so they don't want to see you do it for yourself.

End of story.

2 Votes

Cleveland, Ohio

Hi Ty! Welcome to BP and congrats on your first post!

I will message you a couple of contacts that should be able to help

I am happy to give you my opinion on it as well share some resources I use for analyzing properties

Mack

2 Votes

Knoxville, Tennessee

Hey @Angelo Cortez, good question!

Let's break it down further. What is it that made Waynesville jump out to you? Do you think it is an underserved market, lower prices, or just generally like the area?

You seem to make a decent income if you pay over 100k in taxes. If you want to take advantage of bonus depreciation to offset your taxes I would think having a more expensive house, ie Gatlinburg, would be more beneficial. Unless you plan on buying multiple properties in NC.

It is a beautiful area and is surrounded by a lot of great attractions but does not have a large appeal in and of itself, at least compared to Gatlinburg.

I have friends that have STRs throughout Western NC and they love them. It can be easier to dip your top into the water with the lower cost of entry but it requires you to be on top of your game in terms of the quality of the home you offer and how you manage your business. This is because there is not as huge of a pool of renters traveling through so your home needs to almost be the destination instead of just relying on other attractions.

I have no doubt you'll find success with either option it is just about finding the right fit for you. Feel free to message me, I have a good network of connections in both markets!

4 Votes

Knoxville, Tennessee

I will message it to you

1 Vote

Knoxville, Tennessee

All Forum Posts by: Mack Lengel

Mack Lengel has started 3 posts and replied 126 times.

Post: Investing out of state.... so many options!

Post: Beeline for DSCR loan

Post: Interior Designers for STRs?

Post: First investment property now producing $3k in passive income (NOT AirBnB or STR)

Post: Looking to invest in NC or SC

Post: First investment property now producing $3k in passive income (NOT AirBnB or STR)

Post: Feeling frustrated ... your thoughts

Post: General Contractor/Project manager in the Pigeon Forge area

Post: Secondary STR Markets outside of Gatlinburg?

Post: Looking for remodel contractor in the Smokies (Sevierville, Gatlinburg, Pigeon Forge)