New investor choosing a market 2024

[Sean Haran]

Hello all! I'm an aspiring investor, and I'm living in Los Angeles so investing local is basically out of the question. Even a house hack is super tough in the city now. If I find one of course I'll jump on it but anything with an ADU or multiple units and in a decent area is generally significantly above the $1M mark here.

So now I’m stuck at the stage of choosing a market.

I have ~$60k saved up and set aside (separate from personal expense/emergency funds). I work a 1099 job selling solar, making anywhere from 10k-35k per month depending on the month. I know that $60k cash isn’t going to get me far investing out of state these days, I am planning on adding another 10-20k to that and going into something with 70-80k set aside for it. (Although if I can use less that’d be fantastic)  My fiancé (getting married this year) will also be able to qualify for Real estate professional status, which should hopefully help us with taxes.

I don’t really need cashflow in these first few years at least, I’m more than happy to keep working and using that income to build our portfolio. However, within 5 years or less I ideally would like to be able to at least cut back how many days per week I’m working, and start transitioning into doing real estate more, eventually full-time. 

My first option, which is what I'm leaning toward, is starting out with some BRRRR's in Detroit, as I could probably get in for 80k-ish and then hopefully get the majority of my money out. Recycle that money while continuing to save more to replenish it and keep BRRRR'ing until I have a nice chunk of equity. Then decide if I want to 1031 all of it into another market or whatever makes the most sense at that time. I really like the idea of pulling my capital back out and recycling it, which is why I like this option a ton.

Other option I'm thinking of is investing in a higher priced market with a potential for good appreciation. I have the ability to sell solar out in Florida and have done so in Tampa. You can still find houses around Tampa for like 200-250k, meaning my cash budget would cover a down payment. However, this wouldn't really leave me much room to do significant renovations to the point of being able to quickly pull out capital. I suppose I could find something out there for less that needs more work but I'm afraid anything much less than 200k in or near Tampa area is a total tear-down kind of job, which I don't want to do from across the country for my first investment. Tampa won't really cashflow much it seems after looking at a lot of deals out there, but I imagine appreciation will be significant and consistent there. Also, in the right areas in Tampa it seems that a STR could be great, and my fiancé does have enough free time to cover the extra time-commitment a STR would require, that part wouldn't bother us.

VERY open to hearing suggestions on other markets or other options to make things work in one of these markets. Trying to absorb as much info as possible while I’m in the last couple months of saving up for this first purchase! Thanks in advance!