Starting Out.... towards my first SFR investment

[Neel Iyer]

Hi BP community - I have started doing some research into my first SFR investment which will likely be out of state - A ~$100,000 home with a roughly 1% rent/cost. I am looking at St Louis, MO, Cleveland OH, suburban Houston TX and San Antonio TX areas. I plan to get it financed through a traditional bank loan with a 20 or 25% down payment. Also, I am thinking about going with a property management company to manage the property instead of self-managing.

I look forward to get to know this community and learn from the wealth of knowledge shared here. Thanks!

[Travis Timmons]

I'll second what @Aaron Bihl said - I'm local to Houston and you don't want a $100k house here. You'd be buying problems - especially at a distance. I also think that a property manager that wants to manage a $100k house in Houston is not one that you would want. Anyone with talent has better options - the very limited income upside vs. the problems and time it can potentially eat up is just a bad deal for a property manager on a single SFH unit. If you're interested in Texas, look in a secondary or smaller market - places like Waco, Bryan/College Station, New Braunfels, San Marcos, Killeen, etc. if your budget is $100k. Even something in Midland/Odessa that could be a furnished rental for oilfield workers.

I also lived in St. Louis for 5 years. You need to know that market well before buying a low priced home. It's a city that certainly has opportunity - there is absolutely money to be made, but you need to really know the city/area before pulling the trigger on a property. It's a shrinking population that saw rents decrease in the last year or two when the rest of the country was on fire. While a part of me still calls it home and loves it, there are parts of town that are downright depressing. 

I'd suggest getting a 10% down second/vacation home loan (since it is at a distance) and upping your budget a little bit rather than 20-25% down for a $100k home. 

If you do get closer and want to talk Houston or St. Louis, please send me a DM. I'd love to offer any knowledge or help that I could. Good luck! You're asking the right questions and on the right track.