How to invest $100k for my first investment property

Question

Hi! I've saved up $100k and am looking to invest the money in real estate. I currently live in Los Angeles and am not so excited to invest nearby because of the high prices and unfavorable laws towards land lords. Additionally, if I were to invest in Southern California, I most likely would not be able to afford anything in a safer community. Thus, I am debating whether to invest out of state or keep saving up.

I have some family in Boise, Idaho and have heard great things about the growing community. I was thinking to invest in a multifamily property, like a duplex or triplex in the $500-600k price range. For those familiar with this market, is this a normal price to expect? I've done some quick searches on Zillow and this seems to be relatively realistic. What are some things I need to know going forward? Thank you all!

Jake Andronico · Answer

@Benji HalpernI know this post is a bit old, but curious what you decided to do. You look young - $100K saved is super impressive man!! Congrats. Hopefully you found what you were looking for.

Chris Davidson · Answer

Hey Benji, With that much saved up you have options and that is important. You are pretty much spot on with the prices, and if you are looking at the greater Boise area you can get in the 400's on duplexes still. One thing if you are looking at investing out of state is not only the purchase but management. Bad management can turn a home run deal into a nightmare. I would look to see if a house hack would be possible in your area before looking out of state. If you have any questions about the Boise market or out of state investing feel free to shoot me a message.Best of luck!

Ryan Wallace · Answer

Hi Benji, The Boise MSA is a great option to consider investing, but it does have some challenges like any area in the country. There are definitely some great options at the 500-600k range, depending on area and condition. Demand for multifamily still remains fairly high even though the broader market has experienced a slight price correction over the past 6-8 months. One of the biggest challenges we see across the entire state and the country is properties not penciling out at 80% LTV (20% percent down, 80% financed). With interest rates on multifamily investment property being around 7%, many of these properties are not generating enough income to cover the debt service at 20% down. I have had good success with off-market deals, renovations, and house hacks, but most of the MLS listings that you see on consumer portals (zillow, realtor, etc) are properties that are overpriced for the income that they generate. If you have any other questions or want to chat further, please reach out!

Peter Mckernan · Answer

House hacking or live in flip is a great option. I bought a condo (on the MLS) 20% under market last year doing a live in flip in OC. Bought it for $480,000 (bought last September) one just went into escrow for $600,000. Doing a cash out on it once that closes, and then going to take that money to the next deal. But you can go out of state as well! Either way always good to take a look at all options local and out of state.

Keira Hamilton · Answer

@Benji Halpern I would definitely recommend getting connected with a realtor in Idaho who can help you better understand the market. A good realtor will be able to explain sales trends and suggest the best areas for a rental.Since it sounds like this property is going to be non-owner occupied, you're probably looking at 20-25% down. Keep in mind you'll need some capital for closing and lenders also like to see some reserves left over.A DSCR loan would be a great option for you, so finding a property with strong cashflow or potential cashflow will be key.

Don Spafford · Answer

@Benji Halpern There are several options to consider. The Boise metro is a good area. I believe they are going through a correction though, it was one of the most overpriced areas recently. If you like Idaho for the favorable laws and relatively good tenant base, you may want to consider SE Idaho. This area is still a little less pricey and not facing as drastic of a price correction. You can possibly buy a fourplex for that range. Maybe even use one or two units as a STR for better cash flows. We are close to Yellowstone but also a great growth area with lots of expansion with jobs and a big need for housing. This area is wonderful for renters. I've held and managed properties here for almost 6 years. I have never had an eviction, no trashed properties, and the tenants always pay on time and are respectful. Some of that of course has to do with the screening process before they move in to avoid potential problems.I'll add that with $100k, depending on your circumstances, there are options for as low a a 10% down payment, so you could potentially buy two properties in that price range.Alternatively, if you are busy and don't want to worry much about a long distance rental, you may want to consider investing in a syndication. That way it is completely passive and you may possibly get just as good if not better cash flows. I'd be happy to share some information on what that could look like for you based on some ones that I am personally invested in.