First time investor

[Yushengji Zhou]

Hi, My name is Roger. I currently live in Los Angeles. I get to know bigger pockets and the real estate investing world last year.From that moment, I have been saving up. So far, I have saved about 50k and i want to buy my first single family house rental property in Texas. I understand there is no way i can start with this amount of money and invest in my area and expecting a positive cash flow.That's why i choose Texas. My goal is to let rent fully cover my monthly loan payment and generates couple hundred positive cash flow every month.

I am considering to buy a house around 200k with some mild renovation need to be done. In that case, i am capable of covering the 20% down payment and closing cost with the money i saved up. I would expect a mild renovation expense about 8k. I am just curious if the plan is workable and if there is anything I miss or need to rethink about.

I realize that I don't know much about property management company, if I am going to invest in Texas. I really need to use a property management company. I wonder how everything works between property owners and property management company?

[Jonathan Greene]

Why Texas and where in Texas are you interested in investing? It's very big. I would not buy something that needs mild renovation out-of-state as a brand new investor as you will not be able to manage it and will pay 4x the cost and it will take much longer and you are likely to get scammed if you have not built a proper funnel. Why not buy a turnkey property that is rent ready and has property management in place? Your cash flow will be average, low initial appreciation, but less risk.

[Robin Simon]

Quote from @Yushengji Zhou:

Hi, My name is Roger. I currently live in Los Angeles. I get to know bigger pockets and the real estate investing world last year.From that moment, I have been saving up. So far, I have saved about 50k and i want to buy my first single family house rental property in Texas. I understand there is no way i can start with this amount of money and invest in my area and expecting a positive cash flow.That's why i choose Texas. My goal is to let rent fully cover my monthly loan payment and generates couple hundred positive cash flow every month.

I am considering to buy a house around 200k with some mild renovation need to be done. In that case, i am capable of covering the 20% down payment and closing cost with the money i saved up. I would expect a mild renovation expense about 8k. I am just curious if the plan is workable and if there is anything I miss or need to rethink about.

I realize that I don't know much about property management company, if I am going to invest in Texas. I really need to use a property management company. I wonder how everything works between property owners and property management company?

Have you considered traveling to the markets in Texas you want to invest in? TBH - property managers are going to vary, and you are going to want to likely interview them in person. Also, have you considered other strategies like multi-units or STR/MTR? Unfortunately in the current environment, its very hard to have SFRs cash flow unless doing massive renovation BRRRRs (not light 8k stuff) especially when you have a PM to manage.  Cash Flow is going to be tight as it is and adding on a PM if its a vanilla long-term rental is going to make it just tougher

[Yushengji Zhou]

Quote from @Robin Simon:

Quote from @Yushengji Zhou:

Hi, My name is Roger. I currently live in Los Angeles. I get to know bigger pockets and the real estate investing world last year.From that moment, I have been saving up. So far, I have saved about 50k and i want to buy my first single family house rental property in Texas. I understand there is no way i can start with this amount of money and invest in my area and expecting a positive cash flow.That's why i choose Texas. My goal is to let rent fully cover my monthly loan payment and generates couple hundred positive cash flow every month.

I am considering to buy a house around 200k with some mild renovation need to be done. In that case, i am capable of covering the 20% down payment and closing cost with the money i saved up. I would expect a mild renovation expense about 8k. I am just curious if the plan is workable and if there is anything I miss or need to rethink about.

I realize that I don't know much about property management company, if I am going to invest in Texas. I really need to use a property management company. I wonder how everything works between property owners and property management company?

Have you considered traveling to the markets in Texas you want to invest in? TBH - property managers are going to vary, and you are going to want to likely interview them in person. Also, have you considered other strategies like multi-units or STR/MTR? Unfortunately in the current environment, its very hard to have SFRs cash flow unless doing massive renovation BRRRRs (not light 8k stuff) especially when you have a PM to manage.  Cash Flow is going to be tight as it is and adding on a PM if its a vanilla long-term rental is going to make it just tougher

Actually, i do plan to travel to the market before i buy a SFR. I don't know exactly what to look for when i interview a PM. Do I just go to their office in person and tell they that i Am going to buy a SFR soon and i'd like to see their terms?

I don't fully understand "vanilla Long-term rental". Since it is my first SFR. If the rent fully cover my monthly payment and PM cost, after that i can still generate $200-$300 cash flow, i am okey with that. I think overall that i am gaining equity purely on rent.

[Taz Zettergren]

@Yushengji Zhou welcome to the forums! Unfortunately what you're looking is no longer attainable in todays market unless you find an extremely rare deal. If you're wanting to see 2-300 in cash flow in TX you'll need to put 40-50% down. You're looking in the right place because TX is going to appreciate much quicker over time but the cash flow won't be as much since the taxes are higher. If you keep going east places like Little Rock or Memphis will cash flow with less down but these markets won't appreciate as quickly as TX. 

If you were to self manage that would increase your cash flow but that's another level of time and risk involved and if you're doing it out of state I certainly wouldn't advise it. 

Long-term rental just means a rental that will have at least a 1 yr lease with a resident. There are other investments like air-bnbs where owners rent by the night similar to a hotel and those are referred to as short term rentals. 

[Samuel Diouf]

If you're looking for properties under $200k that only need $8k in renovation and will cash-flow, you likely won't find that in texas. There are multiple cities in Ohio where you can achieve this though, such as Columbus, Cincinnati, or Cleveland. 

An $8k renovation expense would be a consider a very light rehab or just a turn around.

[Harrison Colunga]

Hey Roger, welcome to Biggerpockets! I Also live in California and primarily invest out of state! If you ever want to talk Real Estate Investing or have questions feel free to reach out I am always happy to help and talk Real Estate.

[Maureen McCann]

Hi Roger...Welcome to BP! Congrats on saving up enough capital to make your first investment. Bravo! I agree with Taz that TX is a good market for the capital appreciation play, however, you are not going to get the monthly cash flow you are seeking as the property taxes are 1.6%, the 7th highest in the nation. 

Property taxes in Texas are the seventh-highest in the U.S., as the average effective property tax rate in the Lone Star State is 1.60%. Compare that to the national average, which currently stands at 0.99%. The typical Texas homeowner pays $3,797 annually in property taxes.

Your capital can go a lot further in other states with a lower effective property tax rate. AL is one such state. The average property tax in AL is between 0.423 -0.675%. There are turnkey properties in good parts of AL for between $100K-$200K so your $ 50K will go far in such a market. 

Simply enter the assessed value of your property and choose your county to get an estimate of your property tax amount. The property tax rate in Alabama varies by county, with an average rate of 0.423%. This means that for every $1,000 of assessed value, the property owner would pay $4.23 in property tax.Nov 17, 2023

Interviewing a PM Co takes some skill and some basic, but very important questions. I can help you with the right type of questions to ask. Feel free to DM me and I will provide you with the list of questions. 

Cheers!

[Alfath Ahmed]

Quote from @Yushengji Zhou:

Hi, My name is Roger. I currently live in Los Angeles. I get to know bigger pockets and the real estate investing world last year.From that moment, I have been saving up. So far, I have saved about 50k and i want to buy my first single family house rental property in Texas. I understand there is no way i can start with this amount of money and invest in my area and expecting a positive cash flow.That's why i choose Texas. My goal is to let rent fully cover my monthly loan payment and generates couple hundred positive cash flow every month.

I am considering to buy a house around 200k with some mild renovation need to be done. In that case, i am capable of covering the 20% down payment and closing cost with the money i saved up. I would expect a mild renovation expense about 8k. I am just curious if the plan is workable and if there is anything I miss or need to rethink about.

I realize that I don't know much about property management company, if I am going to invest in Texas. I really need to use a property management company. I wonder how everything works between property owners and property management company?

Hey! I recommend looking into the Columbus market. A lot of out-of-state investors from the east and west coast are investing here due to the crazy growth over the last 3-5 years. Columbus has become a major tech hub in the midwest with large companies like Intel investing $20 billion, Amazon investing $3.5 billion, Google building 2 new data centers: one in downtown Columbus and the other in right outside of U.S. 33 in Lancaster.

I would work with an investor-friendly agent who focuses on cold-outreach methods like cold-calling, cold-texting, etc to bring you off-market deals. That is where you will be able to buy deals that are 70 to 80 cents on the dollar.

[David Bilandzija]

@Yushengji Zhou Hi Roger, do you own your primary residence or will this upcoming purchase be your first time buying? 

[Sam McCormack]

Quote from @Yushengji Zhou:

Hi, My name is Roger. I currently live in Los Angeles. I get to know bigger pockets and the real estate investing world last year.From that moment, I have been saving up. So far, I have saved about 50k and i want to buy my first single family house rental property in Texas. I understand there is no way i can start with this amount of money and invest in my area and expecting a positive cash flow.That's why i choose Texas. My goal is to let rent fully cover my monthly loan payment and generates couple hundred positive cash flow every month.

I am considering to buy a house around 200k with some mild renovation need to be done. In that case, i am capable of covering the 20% down payment and closing cost with the money i saved up. I would expect a mild renovation expense about 8k. I am just curious if the plan is workable and if there is anything I miss or need to rethink about.

I realize that I don't know much about property management company, if I am going to invest in Texas. I really need to use a property management company. I wonder how everything works between property owners and property management company?

Hey! Welcome! I couldn't help but notice the numbers you mentioned are what I recommend people start with (50-60k for out of state investors). Greater Cincinnati has SFH that make since around 140-200. And some need mild renovations like you mentioned. So let me know if you are interested in the area, I think it would work better for you!

[David Bilandzija]

Quote from @David Bilandzija:

@Yushengji Zhou Hi Roger, do you own your primary residence or will this upcoming purchase be your first time buying? 

Here's why I ask... if you're a first time buyer you'll face a difficult challenge satisfying lender guidelines.  I'm thinking of your traditional non-qm/business purpose loan types.