To move or not to move?

Question

I'm just finishing up college and am looking to go into buy and hold investing full time. I currently live in Lynchburg, Va, which seems to have a very small market for real estate. I have no problem moving to a new location but I don't know what a good location looks like currently. What are some key things to look for when deciding where to live? Does it really matter or do you pick a city and find the real estate opportunities that the city offers? Currently I’m within 3 hours of Virginia Beach, Fredericksburg, Va., Richmond, and Raleigh, Nc. Is 3 hours too far to be doing my own management?

Daniel Shadle · Answer

I'm up for moving anywhere, but I would prefer to stay close to the east coast. I'm single and will be finishing my MBA soon. My goal is to get a job for the sole purpose of funneling my paychecks into real estate.  I would love to get myself an owner occupied quadplex and build equity in it while saving for my second property. I like the idea of "house hacking" and think I will try it with FHA loans until I cant qualify for any more. I love the strategies outlined in "How I Turned $1,000 into Five Million in Real Estate in My Spare Time" and that’s probably the route I will take. So I have no problem moving, I just don't know where I should be looking. Since real estate markets can change from block to block it’s hard to know where a good location to settle down would be.

Lisa Arlt Escoto · Answer

I live outside Washington, DC and manage flips/rehabs remotely in Norfolk, VA.  It's a 4 hour drive and can be challenging unless you have GREAT people providing the boots-on-the-ground support you need.  I would imagine having to drive there - and back - 2x a week, every week, and see if you still want to invest there.  You probably won't have to go that often, but just in case, you don't want it to be something you resent or physically can't do.

Sibbir Noman · Answer

@Daniel Shadle

Hi Daniel - I live in Richmond and have properties here which are cashflow positive.  So I would recommend looking at the Richmond market.  From my experience, it's more difficult to have cashflow positive investment in large cities like NY, DC, LA, Chicago (I used to live in Chicago before Richmond).  If you do like big cities then you will probably need to consider suburbs.  3 hours shouldn't be too difficult to manage if you get the right tenent and have people do small work as needed.

Julia Rowling · Answer

@Daniel Shadle Great questions!  I'm going through a similar process in determining where to begin my career as a real estate investor in the US - moving back after nearly 20 years abroad and planning to set up shop in Greenville, SC.  I've done some research and it seems promising, but have yet to get even boots on the ground there...

Pete T. · Answer

Less than a hour, preferably in a 20-30 minute drive IMO.

Pete T. · Answer

3 hrs is too far.  If you are going to do that, you might as well look for the best out of area options.

Lumi Ispas · Answer

@Daniel Shadle & @Trevor Ewen,

I've learned that is easier to buy your properties within 30 minutes drive from your home or office if you plan to self manage them. We always take in consideration driving times with no traffic. Also, consider that you will drive two ways, so 30 min driving means actually one hour of driving.

For your first property, I will advise you to buy a 3-4 unit building and move in. This is the best way to learn the business and not worry about driving time. It is also the easiest way to finance a home, as you can buy your first property, owner occupied with only 3.5% down FHA loan. You will pay PMI, however if you buy the home at a good price and the numbers work, you can refinance the loan later after you make some improvements and hopefully get rid of that extra payment.

Another low down-payment option is for Vets, as they have a no money down loan available up to four unit buildings.

If you will have a management company, than the distance doesn't really matter, does it?

Good luck to you!

Jacob Elbe · Answer

@Daniel Shadle

Welcome to BP! This is a great resource for learning about real estate investing.

How far are you willing to move? Do you want to stay in Virginia or are you open to moving to a great but and hold market in order to give you the best opportunity for success? I live in Arlington because of work, but invest elsewhere because of the better prices and returns. I like  Indianapolis right now, but do some searching on the forums and you can find a number of strong markets as options.  If I were single and just getting out of school that's what I would do. Move to the best market u can find and get a job in the industry to learn the ropes.

You might consider a duplex or multifamily as your first deal in order to live in one unit and rent the others.  I think you will have a hard time jumping into but and hold full time without a job or significant savings though. This is because of a few reasons. First you will have a hard time qualifying for a  conventional loan without a source of income. Second, with only one property to start, your income will be minimal from that rental property and probably not enough to live on. Especially if you also need to build up reserves for unexpected maintenance, vacancies, and to private another property.  Third, even to start with wholesaling or flipping you will need some money to advertise or invest in that flip. So full time might be tough but that doesn't mean you can't get a job in the industry and build your buy and hold portfolio part time until you are in a position to do it full time.

To move or not to move?

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