New investor seeking advice on best strategy/markets to focus on

Jersey City, New Jersey
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New investor seeking advice on best strategy/markets to focus on

James Tarantino
Investor · Member since 2023 · 1 post · 8 votes

Hey everyone, I'm 24 y/o from NJ looking for some advice on the best way to get started. I'm currently working a full time job remotely and have been actively looking for my first deal but am struggling on which market & strategy I should be narrowing my focus on. I'm currently debating between trying to find a LTR here locally in NJ or finding a STR that i can manage remotely in a hotspot like Myrtle Beach. My budget is 400k or less which basically eliminates all MFH and leaves me with either single fam or townhomes/condos here in NJ.

Does it make sense to find a SFH in NJ considering how competitive the market is? My ultimate goal is to buy something and hold while using it to cash flow, just struggling on where to focus.

Any advice is greatly appreciated!

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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
3y

Here are some thoughts:

1. When you make posts like this, be prepared to have Realtors come out of the woodwork saying their market is the best to invest it. 

2. Many markets can work. It just takes different approaches.

3. I'm always a big fan of house hacking. It lowers your risk, gets you into being a landlord, and then you can figure out what works for you. But this way you get your foot in the door faster. Plus NJ is likely going to do well. As people get priced out of NY, they have to go somewhere. That's what I have been doing here in Los Angeles and it has helped snowball into buying more properties. 

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  • Javier Romero
    Member since 2023 · 3 posts · 1 vote
    3y

    As a fellow newcomer to real estate investing, I understand the feeling of wanting to make the right investment decisions. To do that, I suggest creating a concrete set of criteria based on your investment goals and risk tolerance. Look for markets and properties that match your criteria and gather as much data as possible about each potential market and investment.

    Once you have done that, start creating a deal funnel and pass properties through your funnel. Be ready to engage if all your criteria are met. 

    Remember that short-term rentals (STRs) are very different from long-term rentals (LTRs). Although they have a lot of demand and can be profitable, they also come with high property management fees. LTRs, on the other hand, may provide more stability and predictable cash flow.

    From what I've gathered the key to successful real estate investing is to remain disciplined, focused, and patient.

    1Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    Here are some thoughts:

    1. When you make posts like this, be prepared to have Realtors come out of the woodwork saying their market is the best to invest it. 

    2. Many markets can work. It just takes different approaches.

    3. I'm always a big fan of house hacking. It lowers your risk, gets you into being a landlord, and then you can figure out what works for you. But this way you get your foot in the door faster. Plus NJ is likely going to do well. As people get priced out of NY, they have to go somewhere. That's what I have been doing here in Los Angeles and it has helped snowball into buying more properties. 

    4Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Buy in your backyard. Do not purchase something you cannot drive to, especially as a new investor. Even if you’re giving up cash flow. Managing a property, especially a short term rental is a nightmare.

    3Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @James Tarantino:

    Read "Long-Distance Real Estate Investing" by David Greene. That book will tell you most of what you need to know.

    Look up Dave Meyers posts or videos. He crunches data and regularly posts about the best markets to invest in.

    The DIY Landlord Book4.7247 Reviews
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    1Reply
  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @James Tarantino I think house hacking where you live is the best way to get started. Low downpayment (0-5% of the purchase price) required and you get experience managing a house and tenants. This will make long-distance investing easier in the future. 

    Do you have 20% of a purchase price saved for a STR or investment property? If not, that makes your decision much easier. House hack in an area you want to live.

    Are you renting right now? If so, each month you deliberate on finding the "best" option is another month you are throwing money away on rent and losing out on loan paydown and appreciation. Get started and don't think about it too much. 


    Go connect with local investors and realtors who invest in your area. 

    The Assumable Guy544 Reviews
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  • Jacob LeBar
    Real Estate Agent · Austin, TX · Member since 2023 · 57 posts · 27 votes
    3y

    400k or less does not eliminate MFH. We've been selling multiplexes at my brokerage for around 220k. It really depends on what strategy you want to follow. You can buy and hold, rent out properties and create cash flow, or you can fix and flip create more capital in a short time. But it all depends on what investment strategy you're more comfortable with and where you want to invest. Here in Austin we see a lot of new investors starting with fix and flips and then buying rent and holds as their capital grows. Out of state investors are generally buying turn key rent and holds. 

    0Reply
  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    3y
    Quote from @Eliott Elias:

    Buy in your backyard. Do not purchase something you cannot drive to, especially as a new investor. Even if you’re giving up cash flow. Managing a property, especially a short term rental is a nightmare.


     Totally agree with this. When starting out, especially with just your own money, you can't afford to make a bad purchase. Also agree with other posters that you really must define what your goals are.

    When starting I was investing for income generation, with appreciation being a fringe benefit. After my first rental appreciated a bit I saw how powerful that could be for wealth creation. Now I look for a mix of both. Happy to shoot the breeze if you ever want to message me. I don't have anything to sell you - I'm just another dude looking to network.

    1Reply
  • Bryan Vukelich
    Real Estate Broker · Kaneohe, HI · Member since 2020 · 193 posts · 163 votes
    3y


    @James Tarantino  - you're off to a good start asking these questions, and looks like you are getting some good advice from some other members.  I'll add a few things I think may be helpful.

    * First, I"m not familiar with NJ market but obviously there are advantages of owning in the market you live in.  

    *  I recommend you first investigate different markets around the U.S and then pick 3-5 markets that intrigue you most.  At that time, really refine your search to try and determine what market will likely give you the best opportunity to achieve your real estate goals.  When researching markets, research landlord tenant laws, what is the political/regulation environment?  Is the area business friendly?  Is crime increasing or decreasing?  More people moving to the area than moving out, etc. . . 

    * Congrats on having $400k budget.  In some markets you'll be able to invest in a MF. 

    * Also, I have clients who self manage an STR from out of state. I referred them to a cleaner and maintenance person and it is going well for them. I also know other investors who self manage STRS in their own state. Since you work full time, self managing a STR may not be viable, but it is definitely doable.

    * Lastly, I applaud you for wanting to get started in real estate investing.  However, please note, you can now get about 5% yield in a money market.  That 5% return - stress free - not having to deal with tenants, maintenance issues, property management companies.  Might be a good place to park your money until you find a quality real estate investment. 

    Wish you well 
      

    1Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    3y

    Hi James, One of the easiest ways of scaling in real estate today is to invest in turnkey properties out of state. If you have a busy 9-5 routine but have the money to get started and don't have enough time, turnkey companies provide some of the best resources to scale your portfolio. I have used that strategy so feel free to reach out if you want to discuss.

    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    Hi @James Tarantino LTR is what got me and my wife to financial freedom in NJ. When we first started we were preapproved for about $350 on single family, we ended up speaking to a few investor specific leaders which got our preapproval up to over 550k. So my first question is are you qualifying rental income with your pre approval? Right now a strategy that is working out very well in New Jersey is a live in flip turned house hack. You essential renovate slightly distressed single family/condo acquire roommates similar to house hacking but then you sell it for the capital gains to purchase your long term MFR or if the numbers make sense you keep it as a BRRR

    973-975-3895
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  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    3y
    Quote from @Bryan Vukelich:


    @James Tarantino  - you're off to a good start asking these questions, and looks like you are getting some good advice from some other members.  I'll add a few things I think may be helpful.

    * First, I"m not familiar with NJ market but obviously there are advantages of owning in the market you live in.  

    *  I recommend you first investigate different markets around the U.S and then pick 3-5 markets that intrigue you most.  At that time, really refine your search to try and determine what market will likely give you the best opportunity to achieve your real estate goals.  When researching markets, research landlord tenant laws, what is the political/regulation environment?  Is the area business friendly?  Is crime increasing or decreasing?  More people moving to the area than moving out, etc. . . 

    * Congrats on having $400k budget.  In some markets you'll be able to invest in a MF. 

    * Also, I have clients who self manage an STR from out of state. I referred them to a cleaner and maintenance person and it is going well for them. I also know other investors who self manage STRS in their own state. Since you work full time, self managing a STR may not be viable, but it is definitely doable.

    * Lastly, I applaud you for wanting to get started in real estate investing.  However, please note, you can now get about 5% yield in a money market.  That 5% return - stress free - not having to deal with tenants, maintenance issues, property management companies.  Might be a good place to park your money until you find a quality real estate investment. 

    Wish you well 
      


     100% agree with parking your cash in a money market in the meantime. 

    0Reply
  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    3y

    Hey james, welcome to the BP community. I agree with what many have already said here. House hacking is a great way to get started. The market you live in, is usually the one you know best. House hacking will give you plenty of experience in: dealing with tenants, solving maintenance issues, day to day management, rehabbing, etc all in your backyard. 

    I know northern jersey is a tough market to get started with since multi fam price points are so high. Using 3.5% down to get a MF IMO is a a great way to start. I think if you go further south into jersey you can find those multi fam deals. But if you're househacking, you have to enjoy where you are living.

    Another point on house hack and quality of living is if you're buying a SF home and planning on renting out the rooms, consider that you are not getting tenants, but roommates. that means sharing the fridge, the thermostat, daily routines, etc. If youre comfortable with that, it can be lucrative, but personally I would try to find a 3.5% FHA multi fam house hack to start.

    [email protected]267-767-0111
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  • Tatum Littleton
    Real Estate Agent · Austin, TX · Member since 2022 · 121 posts · 67 votes
    3y

    Hey James, I'm excited you're getting into investing at an early age and asking the right questions! Continue to do that and grow your knowledge. It's always a good time to invest no matter your strategy, you just have to get going.

    I personally like LTR in an area you are familiar with and you know what kind of tenants to expect and can screen the right way. It would be easiest to learn to deal with emergencies you can easily take care of as you are starting your journey and from there grow and explore new markets. Since you live there you know where people would want to live and what they want around them such as grocery stores or other amenities. 

    With that being said, ask yourself what you are most comfortable with and what you can do while still doing your full time job well and learn through trial and error, it's all about growth in knowledge and experience! 

    0Reply
  • Josh Bowser
    Real Estate Agent · Atlanta, GA · Member since 2020 · 416 posts · 233 votes
    3y

    Hey James!

    If you are currently renting, have you considered house hacking in your local market? This is a great way to get started as it really buffers your risk when you take into account the savings from what you would otherwise be paying in rent! Depending on your savings and DTI, you may even be able to buy a multifamily in your area with less than 20% down of you go the owner occupant route.

    Additionally, $400k can go along way in tertiary markets in the south east.

    Feel free to reach out - I am happy to help!

    0Reply
  • Harold Looney
    Member since 2023 · 98 posts · 31 votes
    3y
    Quote from @Alan Asriants:

    Another point on house hack and quality of living is if you're buying a SF home and planning on renting out the rooms, consider that you are not getting tenants, but roommates. that means sharing the fridge, the thermostat, daily routines, etc. If youre comfortable with that, it can be lucrative, but personally I would try to find a 3.5% FHA multi fam house hack to start.

    I agree that renting out rooms is a great way to start in Jersey City. I currently rent rooms in Brooklyn and there is always high demand. Jersey City is just a short train or bus ride from Manhattan where many young professional work who basically just need a place to sleep.

    0Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    3y

    @Rick Albert what house hack strategies have you successfully employed in LA? Thanks!

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y
    Quote from @Brian G.:

    @Rick Albert what house hack strategies have you successfully employed in LA? Thanks!


    My first one was a fixer condo. Fixed it up and rented out the second bedroom. The second was an FHA 203(k) loan and built out the house and converted the garage into an ADU. At first my wife and I lived in the ADU and rented out the main house. Now we have swapped.

    1Reply
  • Joseph Guzzardi Jr
    Rental Property Investor · Member since 2019 · 411 posts · 148 votes
    3y

    @James Tarantino Hey James. Fellow NJ multi fam investor here. My advice would be to pick one avenue and dive in. Your goal should be to be an expert in a particular type of product (investment). From an efficiency perspective, ideally the same market as well. In terms of your budget, there are plenty of locations where you can invest in a multi fam with that budget, especially in South NJ. Whether you want to invest in those areas is another question.

    0Reply
  • Brady Ferguson
    Rental Property Investor · Lubbock, TX · Member since 2021 · 58 posts · 21 votes
    3y

    James, I would recommend staying local as a new investor, especially is you are considering an STR. Personally, I think you cannot go wrong with a house hack to kick off your investing journey.

    1Reply
  • Margaret Christy
    Real Estate Agent · Union, NJ · Member since 2016 · 9 posts · 4 votes
    3y

    Welcome to the BiggerPockets community! I'm an investor-agent in Northern NJ (Union) with KeyVest Realty. We are a professional full-service property management company. We were started by investors for investors. We help Real Estate investors manage, acquire, lease, and sell investment properties throughout the state of New Jersey. There so many great responses on this thread. When you settle on the method thats right for you Id love to be of service. Looking forward to connecting with you.

    1Reply
  • Najma Osman
    Real Estate Agent · Columbus, OH · Member since 2023 · 161 posts · 217 votes
    3y

    Hi @James Tarantino, 

    If the numbers are not working where you live look at investing in other markets. A good place to start would be markets in the Midwest with lots of population growth and job opportunities. I would recommend checking out Columbus OH and Cleveland OH.

    1Reply
  • Anthony L Amos Jr
    Real Estate Agent · Columbus | Toledo · Member since 2019 · 608 posts · 768 votes
    3y
    Quote from @James Tarantino:

    Hey everyone, I'm 24 y/o from NJ looking for some advice on the best way to get started. I'm currently working a full time job remotely and have been actively looking for my first deal but am struggling on which market & strategy I should be narrowing my focus on. I'm currently debating between trying to find a LTR here locally in NJ or finding a STR that i can manage remotely in a hotspot like Myrtle Beach. My budget is 400k or less which basically eliminates all MFH and leaves me with either single fam or townhomes/condos here in NJ.

    Does it make sense to find a SFH in NJ considering how competitive the market is? My ultimate goal is to buy something and hold while using it to cash flow, just struggling on where to focus.

    Any advice is greatly appreciated!

    Invest in the wonderful town of Columbus, OH. Home to The Ohio State University with nearly 60,000 students, 5 fortune 500 companies, over +25% population change since 2000, 2016 smart city challenge award winner gaining 50 million dollars in funding from the government ( https://www.columbus.gov/smartcity/), Intel is spending 20 Billion dollars to build two semiconductor plants, and many many more great things presently and coming in the future. Needless to say Columbus will remain a strong real estate market for the foreseeable future.

    1Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    3y
    Quote from @James Tarantino:

    Hey everyone, I'm 24 y/o from NJ looking for some advice on the best way to get started. I'm currently working a full time job remotely and have been actively looking for my first deal but am struggling on which market & strategy I should be narrowing my focus on. I'm currently debating between trying to find a LTR here locally in NJ or finding a STR that i can manage remotely in a hotspot like Myrtle Beach. My budget is 400k or less which basically eliminates all MFH and leaves me with either single fam or townhomes/condos here in NJ.

    Does it make sense to find a SFH in NJ considering how competitive the market is? My ultimate goal is to buy something and hold while using it to cash flow, just struggling on where to focus.

    Any advice is greatly appreciated!

    Hey James, totally can relate as I moved here from Portland Oregon because of how expensive my own market was and decided to start investing in the midwest, specifically Columbus Ohio. Ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here. You made the right choice moving here, there's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals. Just this past few weeks, I helped a client go under contract on a duplex that is grossing $2400 in rents and the asking price was $190k. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out.

    [email protected]614-300-7535
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  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    @James Tarantino
    If you're not able to invest locally or are not able to get the returns, you are looking for you should invest out of state. I would recommend looking in the Midwest. Columbus OH is a great place to start looking in the Midwest. It's a nice balance of cash flow and appreciation. Also, it has lots of job opportunities and population growth

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  • Scott AllenBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 449 posts · 471 votes
    3y


    @James Tarantino

    Look into markets in the Midwest. With your budget, you can definitely look at multi-family in Columbus, OH. If you end up investing out of state, look into/research 3-5 markets, pick one, build your core four, keep going on from there. Best of luck starting out!

    [email protected]614-698-1227
    Reafco - Columbus, OH
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