Out-of-State & $100k

[Adam Eckhoff]

Good Morning Everyone,

My name is Adam Eckhoff, commercial real estate appraiser in New Jersey. I'm considering investing in cash-flowing properties out of state. For example, lets choose Ohio. I see multiple properties listed between $75,000 and $150,000 and also meet the 1.0% rule. "Assuming" the property cash-flows, would it be EASY as putting 20% to 25% down for the property, and finding a management team to take care of everything else? Or am I delusional? Would i be better off putting the $100k in an index fund...? Would buy and hold rentals not be worth it? Maybe BRRRR is the right method? I don't know... How would you guys invest a lump-sum of money into real estate, looking for your first property?

Thanks,

Adam.

[Travis Timmons]

Get on a plane and visit markets. You need to engage all 5 senses. You also need to be realistic about your budget. If you want to start with a $150k property in a major metro, consider the tenant pool there. Good property managers likely won't take on a client with 1 house renting for $1000-1500 unless it is in a low maintenance part of town. Or they'll try to nickel and dime you to death. 

If possible, I'd encourage you to house hack in your market before rushing off to buy a $120-150k property in the rust belt. You get a better asset and training wheels for being a landlord. 10 years from now, would you rather own a duplex in your corner of New Jersey or 1-2 houses in Ohio. I'd suggest owning the higher value, higher appreciation (and rent appreciation) property. It won't provide the same year 1 cash flow returns, but you'll like back in 10 years and feel like a genius. 

Lastly, don't stack risk factors. Out of state investing is common, but it is an added layer of risk. For example - out of state + BRRRR + first time investor is a dangerous cocktail. I would advise you to keep the first deal as simple as possible. Hit a base hit and learn; take a bigger swing on the next one. These forums have a way of making stressful RE investments and projects sound casual and easy. It's harder and more stressful than you likely expect. Feel free to send me a DM if you think that I could be a resource. I have nothing to sell and would be happy to help.