Newbie Investor Choosing a Market

[Nicole Blankenship]

Hello BP community-

I've been an avid listener to this podcast ever since my interest in real estate peaked last year. I just read David Greene's long distance real estate investing book and am now trying to choose a market that is out of state from me. 

I am currently in Arlington, VA (DMV area) where housing prices are pretty expensive. I'd like to purchase a rental property (SFH 3/4BR) out of state that is either turnkey or needs minor rehab done with it. My full time job is flexible so I am able to fly out to this location to get a look at the property & make connections in the area. I have about $40K cash (and other investments if needed to withdraw) saved up for this purchase, now I just need to zero in on a location. I have narrowed down my options to the markets below:

Dayton, Columbus, or Cleveland, OH
Fayetteville, NC
St. Louis, MO
Detroit, MI
Columbia, SC
Indianapolis, IN
Louisville, KY

I know these are a lot of options.. I am looking to connect with any investors, agents, lenders, etc. in these areas OR any that you are currently in and recommend to other investors starting out. Thank you in advance and I look forward to connecting with you :)

[Nicholas L.]

@Nicole Blankenship

welcome.  i lived in Northern Virginia for 16 years and still own property there, so i totally understand the desire to find a lower cost market to invest in.  I want to strongly caution you, though, to really do thorough due diligence.  a lot of investors in DC, CA, etc. find a property in the midwest that looks great... and then just turns into a money pit, and deferred capex consumes years and years of cash flow.  and with the jump in interest rates cash flow is even more challenging at the moment.

as an example... see this really thoughtful thread.  i'd argue this investor did everything right... and the cash flow just wasn't as much as hoped for, because the midwest is not a panacea.

https://www.biggerpockets.com/forums/48/topics/1159104-overl...

and unfortunately... if you're looking for something turnkey, $40K just isn't going to get you very much.  you might get 1 property in a decent neighborhood... and then be at about break even on cash flow each month.  i just don't see how that's a good use of your entire RE budget, and/or liquidating other investments to not get a return.

i am encouraged that you said that you plan to fly to the chosen market in person, but one or two trips just isn't going to get you very much.  have you considered house hacking?  it's tougher in the DC metro because of the lack of small multifamily so you'd be looking at roommates.  another option is to pick a DC exurb like Hagerstown or Culpeper or Winchester or even the nicer areas of Baltimore (get some local experts to guide you if you go that direction) and start going there every weekend and really put some time in.

hope this helps, feel free to ask any follow ups or PM me