All Forum Posts by: Vaibhav Pandey

Hi, Nathan. I am looking at this as well. $1,000 sounds reasonable to get started with this. But I am also looking for more info from 'real' people!

It can work, but it's hard. I know Saint Louis well (used to live there and grew up just down the road). You can make money investing there, but it's a city with a declining population and a so so economy. It's very block to block, street to street. I would advise buying at or slightly above the median home price for the city. 

You need to spend time there, though. @Travis Biziorek is a great example. He invests in Detroit, but the guy moved there and built up his portfolio of houses, team, and expertise as a local. 

If you want my advice on areas for long term rentals, look at areas just outside the city/county line. Target people that commute to a job in the city but want county schools. Think Maplewood, Affton, Richmond Heights, Webster Groves...places like that. The price point is going to be higher than parts of South City (dutchtown, princeton heights, bevo) that are going to be tempting with the low price tag, but they are better and more stable long term locations.

I 100% agree with this advice. We invest both locally and out of state and we've been very intentional about getting to know the areas we're buying in out of state. There is simply no substitute for going there yourself and driving through (and walking) through the area. You should be able to pull up a property on the MLS, zoom in on the map, and feel familiar enough to know if it's in a good area, marginal area, or bad area because you have first hand experience seeing it. Also know that people's definition of the neighborhood classes of real estate is a bit subjective. Someone may think a property is "C Class" but you might think it's D-class or vice versa. It's not an exact science. What matters is how you see it. It takes time and you must be intentional when building your team. IMO the best way to do that is to seek referrals from people you trust. Going to local REIAs will help introduce you to people who will become valuable sources of local information. Many have an option to join virtually, but if you're going to travel to an area to scout it, plan your trip around some local meetups and attend while you're there. Especially in large metro areas, neighborhoods can change dramatically on a block by block basis so you really need to understand the lay of the land.

@Vaibhav Pandey

My wife and I looked at St Louis, MO as well when we started and ended up deciding to start in our own hometown in Myrtle Beach first. two main reason: 

1. We read everywhere: You need to have a good team in the area you are investing (Real Estate agent, property manager, project manager/ contractor (if you do any rehabs). For us, to build a team like that on our first investment was too big of a step. 

2. We saw a lot of cash flowing properties in St Louis, but it seemed that the neighbourhoods were very much hit and miss - and we decided then and there, if we have not visited the place at least once, we will not invest there. 

Let me know if you have any questions! 

@Vaibhav Pandey

I agree with Nicholas on this. I don't know anything about St. Louis. Wealth in real estate is built on appreciation over a long period of time (e.g many investors in Bay Area and LA) but on BP and social media, cash flow is constantly pushed in inexpensive locations which likely won't appreciate enough to make up for all the costs. A very honest property manager told me that investors who profit from cheap properties buy in volume (not your typical beginning investor) because the good properties offset the losers. Doing an OOS renovation is even more challenging - you can't physically check on the property unless you fly out there frequently. You place a lot of trust in a team that's 2000 miles away. 

I talked to several CA investors who bought in Indiana: one lost $20,000 because the contractor didn't finish the renovation and disappeared, another one is seeking legal action against an evicted tenant and negligent property manager. The tenant stole the appliances and water heater and caused over $20,000 worth of damage, and more stories. If you decide to buy OOS, have lots of cash reserves and a high risk tolerance. I would leans towards Class A or B (going for appreciation and higher quality tenant but your price points will be higher) not Class C which I think is better suited for locals who are physically there to check on properties and see what tenants are doing to the properties (good or bad things) and what's happening in the neighborhood.  

I have 3 properties in the Indianapolis metro area. Here's a brief summary of why OOS investing is difficult:

https://www.biggerpockets.com/forums/48/topics/1165499-whats-something-nobody-tells-you-about-real-estate-investing-but-should?highlight_post=6644969&page=1#p6644969

@Vaibhav Pandey

i strongly recommend that you not invest out of state unless you are willing to go there in person multiple times / as many times as it takes to build your team and look at properties.

way too much investors on BP buy a random house in a supposedly low cost market and then get crushed with deferred maintenance and high cost turnovers.  there goes that 'cash flow' that was promised.

and with interest rates where they are, even those supposedly attractive low PP houses just won't cash flow very much.

can you house hack in CA instead?

Hi all,

I am on a H1b visa W2 income. Spouse H4 visa no EAD stay- home-mum. We have been working together in acquiring investment properties. Can she qualify as a real estate professional under IRS rule to reduce tax burden on my W2 income? 

I know I should ask a tax professional. Wondering if anyone has been in similar situation and their experience

Thanks in advance 

Don't allow underwriting properties as a BRRRR be the lone criterion you rely upon. Focus on buying quality real estate. You can purchase a distressed SF home in many markets in the US, renovate the home, obtain an income approach appraisal and get your money back. In most cases, you will likely never see the equity convert to a realized gain and 2-3 years of cash flow will be eaten up by one major capital improvement event because the entry level SF homes struggle to absorb the cost of the repair. To put this another way, would you rather leave your $40,000 of capital in a property for 2 years and then walk away with a $50,000 realization event when you sell the home or in those 2 years complete 3 BRRRR transactions, become frustrated by the reality of owning the low income housing and then sell 3 homes after 5x as much work with no gain? I am not suggesting you can't acquire a BRRRR home (although it's more difficult right now with the higher interest rates), or you will necessarily fair better with the purchase that requires you to leave your $40,000 of capital in the property. I am merely using this as an illustration of how the BRRRR method might lead to owning more homes but not necessarily lead to better return on your money or time. Don't allow the recoup of your money to be the lone decision on whether the property is a good investment.

Vaibhav,

If your looking for some good data and tips for the CA or OR states I would reach out to @AJ Wong@AJ Wong