Aspiring investors with 200k+ income looking for guidance

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Aspiring investors with 200k+ income looking for guidance

Savannah Walbert
Member since 2024 · 14 posts · 23 votes

Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

Thank you and look forward to starting our investment career!

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y

@Savannah Walbert

i am just going to be blunt, this question comes up on BP over and over for folks in California and other high cost areas.  with prices and interest rates high right now, the market is very unforgiving for first time investors.

the answer to your question is - there are LOTS of decently priced markets that you could get into for a solid first investment.  but if you don't spend some time there setting up your team and getting to know the market, you won't be successful, and you could end up buying something that costs you money instead of makes you money.  it is just not possible to find a property on Zillow that looks nice, buy it, and expect things to go smoothly and for you to cash flow that $300 a month that Brandon Turner promised us back in 2016.

for a really thoughtful thread on this exact topic, see this:

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

i'd also encourage you to house hack in CA.  yes, getting financing might be difficult, and finding a property might be difficult, but successfully investing in a "lower cost" market out of state is also difficult.  it's all difficult.  if it weren't difficult, everyone would do it and everyone would be successful.

hope this gives you some things to think about

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Savannah Walbert

    i am just going to be blunt, this question comes up on BP over and over for folks in California and other high cost areas.  with prices and interest rates high right now, the market is very unforgiving for first time investors.

    the answer to your question is - there are LOTS of decently priced markets that you could get into for a solid first investment.  but if you don't spend some time there setting up your team and getting to know the market, you won't be successful, and you could end up buying something that costs you money instead of makes you money.  it is just not possible to find a property on Zillow that looks nice, buy it, and expect things to go smoothly and for you to cash flow that $300 a month that Brandon Turner promised us back in 2016.

    for a really thoughtful thread on this exact topic, see this:

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

    i'd also encourage you to house hack in CA.  yes, getting financing might be difficult, and finding a property might be difficult, but successfully investing in a "lower cost" market out of state is also difficult.  it's all difficult.  if it weren't difficult, everyone would do it and everyone would be successful.

    hope this gives you some things to think about

    7Reply
  • John B.
    Investor · Keller, TX · Member since 2019 · 76 posts · 62 votes
    2y

    Savannah, I invested in Ohio. I found a little team there I was comfortable with. 

    4Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    2y

    Hey Savannah,

     I think Columbus, Ohio is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees. 

    As for OOS investing you need a boots on the ground team that consists of a realtor, contractor, property manager, and a lender. Once you have this team in place, you should have the foundation to invest in any market confidently while not being there physically.

    Columbus on Zillows Hottest Markets: https://shorturl.at/rwyAI

    [email protected]614-662-1652
    Reafco - Samuel Diouf528 Reviews
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    5Reply
  • Logan LaperriereBusiness Member
    Real Estate Agent · Grand Rapids, MI · Member since 2023 · 333 posts · 124 votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


     Hi Savannah,

    Congratulations on starting your real estate investing journey! Out of state investing can be risky, it is always best to work with a trusted team. I recommend building your "Core 4" (Realtor, Property Manager, Lender, Contractor) in the area you are looking to invest. The Midwest has several areas that still cash flow with the current interest rates. I personally invest in Michigan, I own properties in Grand Rapids, Kalamazoo, and Metro Detroit. Michigan still has several markets that exceed the 1% rule. I work with several out of state investors, if you would ever like to talk about the market here in Michigan feel free to reach out. It's always nice to chat with fellow investors. 

    0Reply
  • Peter Dorinsky
    Real Estate Agent · Columbus, OH · Member since 2020 · 149 posts · 193 votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!

    Hey Savannah, I also recommend starting locally for your first deal if possible. Getting connected with an investor friendly agent who can source deals both on and off the market will help with finding a deal within your budget. 

    If you're interested in out of state markets, there are some great opportunities in the Midwest markets. A lot of markets in the Midwest are landlord friendly and offer a lower barrier-to-entry. Ohio in particular is seeing a lot of growth, especially in Columbus. Many big players in the tech industry and expanding their business in the Columbus market and propelling job growth. 

    If you decide to go the out of state route it'll be vital to connect with local professionals in the area and build your core 4: https://www.biggerpockets.com/blog/core-four-real-estate-tea... 
    3Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


    It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    3Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!

    Hey Savannah, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. 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 and you get amazing appreciation. 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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    0Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


     Cincinnati/Northern Ky is a great place to be as well. Columbus and Greater Cincinnati are both growing well and both are good options. I would consider househacking as well. Unless you already have ownership of a primary residence

    [email protected]859-443-4952
    Sam McCormack Realtor
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    0Reply
  • Min ZhangBusiness Member
    Real Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Hello Savannah, I would recommend you to start in the midwest, because the entry point is much lower and cash flows the best. As long as you develop your Core 4 like David Green’s mentioned in his long-distance investing strategy (realtor, contractor, property manager, and lender), you should be able to invest anywhere with confidence. I buy in Columbus, Ohio. Columbus has experienced so much growth for the past few years, partly due to the influx of tech giants like Intel ($20 billion), Meta, Amazon, and Google building warehouses and data centers in the area, which has contributed to an increase in property prices and more people moving into the city for job opportunities. I also invest in Cleveland and Dayton. Let me know how I can help!

    [email protected]614-412-2912
    Reafco.512 Reviews
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    2Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @Samuel Diouf:

    Hey Savannah,

     I think Columbus, Ohio is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees. 

    As for OOS investing you need a boots on the ground team that consists of a realtor, contractor, property manager, and a lender. Once you have this team in place, you should have the foundation to invest in any market confidently while not being there physically.

    Columbus on Zillows Hottest Markets: https://shorturl.at/rwyAI

    Thanks for the response! Ohio has been recommended to us many times and there definitely seems to be a very active investor community there. Would love to stay in touch to pick your brain a bit as I look more into their market! 
    1Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @Nicholas L.:

    @Savannah Walbert

    i am just going to be blunt, this question comes up on BP over and over for folks in California and other high cost areas.  with prices and interest rates high right now, the market is very unforgiving for first time investors.

    the answer to your question is - there are LOTS of decently priced markets that you could get into for a solid first investment.  but if you don't spend some time there setting up your team and getting to know the market, you won't be successful, and you could end up buying something that costs you money instead of makes you money.  it is just not possible to find a property on Zillow that looks nice, buy it, and expect things to go smoothly and for you to cash flow that $300 a month that Brandon Turner promised us back in 2016.

    for a really thoughtful thread on this exact topic, see this:

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

    i'd also encourage you to house hack in CA.  yes, getting financing might be difficult, and finding a property might be difficult, but successfully investing in a "lower cost" market out of state is also difficult.  it's all difficult.  if it weren't difficult, everyone would do it and everyone would be successful.

    hope this gives you some things to think about

    Hello! Very much appreciate the advice about the importance of setting up a local team wherever we are investing. This is something that we keep hearing so we are really realizing how important that will be! 

    0Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @Remington Lyman:
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


    It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

    Hi @Remington Lyman! We are quickly learning that developing a super strong local team wherever we are investing will dictate our success as much as anything else. For us, we are looking at RE as a more long term investment to build equity rather than just searching for a few thousand a month in cashflow, so markets with population and job growth are of course going to be the best fit for us.

    1Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    I could not save you from the Columbus folks time. Listen to people from Cali to go OOS, talk to folks like @Becca F

    I would recommend doing your diligence on where & who, and be mindful of folks with something to sell versus something for you to gain. 

    2Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @Peter Dorinsky:
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!

    Hey Savannah, I also recommend starting locally for your first deal if possible. Getting connected with an investor friendly agent who can source deals both on and off the market will help with finding a deal within your budget. 

    If you're interested in out of state markets, there are some great opportunities in the Midwest markets. A lot of markets in the Midwest are landlord friendly and offer a lower barrier-to-entry. Ohio in particular is seeing a lot of growth, especially in Columbus. Many big players in the tech industry and expanding their business in the Columbus market and propelling job growth. 

    If you decide to go the out of state route it'll be vital to connect with local professionals in the area and build your core 4: https://www.biggerpockets.com/blog/core-four-real-estate-tea... 

     Ohio seems to be one that keeps coming up as a recommendation! We are more focused on equity growth over the next 10+ years and less focused on immediate cashflow, so a city like Columbus with rapid growth would probably be a great fit for us

    0Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @V.G Jason:

    I could not save you from the Columbus folks time. Listen to people from Cali to go OOS, talk to folks like @Becca F

    I would recommend doing your diligence on where & who, and be mindful of folks with something to sell versus something for you to gain. 


    Solid advice, much appreciated! We are both in sales so hopefully we have a decent BS-meter when being sold to :D 

    Speaking to other investors near us in a similar situation is a great recommendation. Thank you! 

    0Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    0Reply
  • Savannah Walbert
    OP
    Member since 2024 · 14 posts · 23 votes
    2y
    Quote from @Logan Laperriere:
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


     Hi Savannah,

    Congratulations on starting your real estate investing journey! Out of state investing can be risky, it is always best to work with a trusted team. I recommend building your "Core 4" (Realtor, Property Manager, Lender, Contractor) in the area you are looking to invest. The Midwest has several areas that still cash flow with the current interest rates. I personally invest in Michigan, I own properties in Grand Rapids, Kalamazoo, and Metro Detroit. Michigan still has several markets that exceed the 1% rule. I work with several out of state investors, if you would ever like to talk about the market here in Michigan feel free to reach out. It's always nice to chat with fellow investors. 

    Hi! Thank you for the response. Another investor from SoCal recommended Michigan to us as well and it’s definitely somewhere we’re looking into so I would love to stay in touch.

    1Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    2y

    @Savannah Walbert - be wary of out of state for your 1st investment.  The numbers on paper will NOT match reality.  If you live in OH and can keep a tight rein on rents and expenses then yes.  But as an out of state owner you will be relying on a property manager's decision on tenant selection, needed repairs, contractor selection etc.  Your expenses WILL BE higher than any seller tells you.  CA is expensive but can you find a town that's 2 hours away that's cheaper?  2 hours is a pain in the neck but you CAN check up on it when needed.  If it's an out of state property... you will probably never visit it, ever.  The realtors, property managers and contractors know that and you'll be treated accordingly.  I'm not necessarily saying it will be malicious or intentional but there will be a certain lack of effort on getting the best tenants or the best prices or fastest repairs because they are not being checked up on.  So I'd say invest as far from your town as you need to to get pricing that makes sense or invest in a well vetted syndication deal/investor or an experienced, well regarded investor that you can partner with.  On my multi family and commercial deals I bring in 1-2 money partners.  They get equity and a return.  Truly passive and secured by real estate.  If you're looking to invest out of state, I think that's a better option.  If you become active on BP long enough you'll figure out the best plan for you.  Good luck!

    1Reply
  • Allan C.
    Rental Property Investor · Member since 2018 · 828 posts · 810 votes
    2y

    @Savannah Walbert you know the saying… when everyone tells you to zig - you zag. I invest in multiple markets, including one in the Midwest. Yes the cash flow is nice, but it comes at a price.

    Markets are efficient, which mean higher return markets come with more risk or effort, or both. There is so much liquidity in the world, so why doesn’t all the smart money flow into these Midwest markets people boast about? There’s obviously a reason, and maybe it aligns with your goals and maybe it doesn’t.

    The markets that have given me the best returns are the ones that have the lowest year-1 cash flows. The debt pay down is much larger than the early year cash flow benefits of low cost markets, and the year 5+ cash flows equal or exceed the cash flow of low cost markets.

    If you aren’t ready to buy into the CA market, maybe patience or creativity is a better option than buying into a market that you can immediately enter today. There isn’t a correct answer, but I want to provide counterpoints to the over-representation of Midwest enthusiasts.

    1Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    2y
    Quote from @Savannah Walbert:
    Quote from @Peter Dorinsky:
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!

    Hey Savannah, I also recommend starting locally for your first deal if possible. Getting connected with an investor friendly agent who can source deals both on and off the market will help with finding a deal within your budget. 

    If you're interested in out of state markets, there are some great opportunities in the Midwest markets. A lot of markets in the Midwest are landlord friendly and offer a lower barrier-to-entry. Ohio in particular is seeing a lot of growth, especially in Columbus. Many big players in the tech industry and expanding their business in the Columbus market and propelling job growth. 

    If you decide to go the out of state route it'll be vital to connect with local professionals in the area and build your core 4: https://www.biggerpockets.com/blog/core-four-real-estate-tea... 

     Ohio seems to be one that keeps coming up as a recommendation! We are more focused on equity growth over the next 10+ years and less focused on immediate cashflow, so a city like Columbus with rapid growth would probably be a great fit for us


     make sure to look at new builds you get about 8.65% appreciation over the past 3 years and can get to 1% rule by buying wholesale new builds not existing new builds. avoid the contractor nightmare in columbus. let me know if I can be of any assistance. I have a 100 page packet about new construction with more info than you'd ever want on our market it's a good starting place and I have about 500 hours into the packet. we update it every month. 

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  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    2y
    Quote from @Savannah Walbert:

    Hello! My fiancé and I will be beginning our real estate investment journey in 2024 and are looking for any suggestions or pointers as we make some of our initial decisions.

    We live in Los Angeles, so it’s probably not surprising that we are leaning toward out-of-state investing. Combined we are making about 250-300k annually pre-tax. However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

    We have 100k+ saved in the bank, but don’t want to plow all of it into our first deal. Ideally we will find a (relatively) low priced market to be able to get into without putting up huge amounts of capital.

    If it were possible to invest within driving distance we would love that, since we are a little nervous about dealing with any renovations or even just unexpected maintenance from out-of-state. However, I think the prices in California will cause us to invest out of state and we will just have to learn how to set up the right systems and processes to deal with issues as they come up.

    Any pointers on decently priced markets that we could get into in 2024 for a solid first investment property would be much appreciated. We are open to single and multi family, although we’d prefer multi of course. We also aren’t set on doing long, medium, or short term, and would be open to advice about which way will probably be best for our given situation.

    Thank you and look forward to starting our investment career!


     What markets are you evaluating right now and what metrics are you going off of? The midwest has a lot of opportunity.

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  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    2y
    Quote from @Nicholas L.:

    @Savannah Walbert

    i am just going to be blunt, this question comes up on BP over and over for folks in California and other high cost areas.  with prices and interest rates high right now, the market is very unforgiving for first time investors.

    the answer to your question is - there are LOTS of decently priced markets that you could get into for a solid first investment.  but if you don't spend some time there setting up your team and getting to know the market, you won't be successful, and you could end up buying something that costs you money instead of makes you money.  it is just not possible to find a property on Zillow that looks nice, buy it, and expect things to go smoothly and for you to cash flow that $300 a month that Brandon Turner promised us back in 2016.

    for a really thoughtful thread on this exact topic, see this:

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

    i'd also encourage you to house hack in CA.  yes, getting financing might be difficult, and finding a property might be difficult, but successfully investing in a "lower cost" market out of state is also difficult.  it's all difficult.  if it weren't difficult, everyone would do it and everyone would be successful.

    hope this gives you some things to think about


     Bring up a good point. If you're going to decide to invest in another state, make sure to set up your operational plan first. And I would say to stray away from C-Class areas on your first out of state rental.

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  • Dan Sundberg
    Real Estate Agent · Sacramento, CA · Member since 2019 · 77 posts · 61 votes
    2y

    Congrats on getting into the game!  Sounds like you're on really solid footing to start. @Allan C. made a lot of good points...the ADU house hack opportunity in California is pretty huge.

    my wife and I are in Sac, and have very similar situation to yours. We're almost done with our 2nd ADU project. It's definitely work, but there's positive cash flow and great appreciation. Plus having our rentals within a 30 minute drive is enormously beneficial.

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