HELP: Finding my niche?

Question

Hello BP Community:

After months of reading and reviewing the BP forums, I'm still struggling to define my niche. I enjoy learning about different ways people are leveraging real estate to reach their goals. However, my learning continues to pull me in different directions.

Things I've been considering: wholesaling, pre-foreclosures, auction, holding vs fix and flip. I feel like I'm all over the place. I live in Sacramento, CA but considering investing in Detroit area. I'm from Detroit and much more familiar with the neighborhoods. After reading the forums it's become clear that Detroit is a renter market. Maybe that answers my question about niche. Maybe the greater Sacramento area is the best option for me to start. I feel like I'm all over the place.

Is out of state investment a bad decision for newbies?

I would love to learn how, why and what helped you define your niche?

Thanks in advance BP community!

Robert Syfert · Answer

Hi @Anton Taylor,

First off, we all were where you are at in the beginning so I appreciate what you are feeling. My one advice would be to avoid the paralysis by analysis state. You always want to do your due diligence, but at some point you have informational overload.

@Jake Weir made some great points and because we are a turnkey investment and property management company in Michigan I want to share my thoughts on turnkey and that market.

As you know Metro Detroit is a different breed the inner Detroit and it is important to separate the two. Based on where you are at I would stay with Metro Detroit as it offers a lower risk out of the box and still has a great purchase price to rent ratio. Here are some recent stats on the area.

• The median home price in Metro Detroit area quadrupled between 2009 and 2016, going from $40,000 to $165,000.
• With the increase in the median home price, financing has becoming more attainable for investments in Metro Detroit area.
• Eleven Fortune 500 companies with Michigan headquarters are located within Metro Detroit.
• Ford is investing over a billion dollars into a new manufacturing plant in the Metro Detroit area.
• The median rental price is $1,050 in the metro Detroit area
• Metro Detroit rents increased nearly 6% year over year in 2016.
• Vacancy in the Detroit metro area has fallen to below 4.00%. One of the lowest rates in sixteen years.

I also would add that as important as everything already discussed, it is just as important that you find someone you can trust to be your boots-on-the-ground. Keep in mind in most cases you are not just buying a property, you are also inherent a tenant(s) and PM company.

If I can help answer any questions just let me know. I can help explain everything from which counties regulations are more investor friendly, to renting to section 8's, etc.

Shawn Ward · Answer

@Anton Taylor :

1. I found mine because I've always been a trader and I like trading, so fix and flips fit my passion, thus it became my focus.

2. My recommendation is to reach out to people here on BP and LinkedIn who do exactly what you are considering doing, and meet up with them in Sac Town and get a real-world view of each. From those shadowings, you should find out which fits your passion/interest the most.

Onwards!

sjw

Ali Boone · Answer

Hi Anton! No, it isn't necessarily a bad decision for a newbie to invest out of state, but that is 100% dependent on what you are trying to do out of state and how much experience you have. I started as a newbie with out of state stuff but I had professional teams doing the harder stuff for me. No rehabbing, no nothing. If I were to try to rehab out of state as a newbie, that would be a completely different animal.

As far as finding your niche, it can be hard, yes. Maybe this will help some-

https://www.biggerpockets.com/renewsblog/2013/10/2...

The best thing you can do is understand what is required for each route and then with that, see what interests you and best fits your position.

Hope that helps!

Craig Curelop · Answer

@Anton Taylor - It is great that you are getting excited and want to do EVERYTHING! It is even better than you are realizing that this isn't great and focusing on ONE THING is necessary.

It sounds like you want to get started in more of the active investment styles (i.e. wholesaling or flipping). I would suggest reading up and listening to podcasts on both of these subjects to see what truly interests you. Do you want to find deals for other investors? Or do you want to find deals, manage a rehab, and then sell?

My advice would be to invest locally as you just start out. That way you can be present and learn. Start building a network of people who invest in real estate in your area.

Go to www.biggerpockets.com/meet, message them, ask them to grab coffee with you. You'll meet wholesalers, fix & flippers, landlords, contractors, accountants, attorneys, the works! You will learn a tremendous amount from them.

Let's see some action! I challenge you to message 10 people in your area asking them to grab coffee. Respond back once you have a response and a time set up.

I look forward to seeing what you end up doing :)

William SaintAmour · Answer

Look at the towns about half an hour outside of Sacramento, and you may find a great community to dig into. I like Michigan, but as a new investor, learn the ropes close by.  Your first property is stressful enough without airplane rides, taxis, and snow removal.

Tobias Falzone · Answer

I would advise sticking close to home.  You will have more opportunity to spot value than you will several hours away.  Sacramento has great opportunities, start going to REIA meetings and find out what others are doing successfully and emulate that.

Jake Weir · Answer

@Anton Taylor, there is a lot here.  A few questions for you to think about:

Have you dug into the numbers of properties in both locations?  Do you like what you see?

How well capitalized are you/others who might be willing to partner with you?

If I had to start over tomorrow in Sacramento's limited supply market (assuming I had good to great credit and $20k or so), I'd look for something in a decent neighborhood on the path of revitalization with 3-4 bedrooms and house hack.  I'd get a low-down payment loan (5%), live in one bedroom and rent out the other bedrooms.  My criteria would be that the bedroom rents would need to cover the mortgage plus other housing-related expenses, allowing me to save up for the next down payment.  The next down payment may or may not be allowed to be 5% depending on property type, whether it is owner occupied or not.  I'd plan for 20% just in case.

This is essentially how I started, but it was a duplex.  Multi family properties have run up so much in the area, I typically don't find them attractive, hence the house hacking if I had to start over.

So in summary: run numbers and get comfortable if an area is feasable, get pre-qualified for a loan, get an agent, find property, be prepared to be patient and submit lots of offers before you land one.

Anton Taylor · Answer

Thank you for all the responses. I'm so amazed by this community!  @Craig Curelop my messages are off. Let the action begin!!!

Garrett Diegel · Answer

@Anton Taylor - Regardless of where you invest and what you invest in. You need to find your WHY. Why are you doing what you are doing? Are you looking for freedom, cash flow, to build a giant company or invest on the side? There are a lot of other questions to ask yourself but they will all help lead you to your niche. Always follow your why.

Alex Craig · Answer

If you can stick close to home, I advise that as you could save some money by self management. If you have to go out of state, then that is fine too.  Hundreds of people on BP do it with success. It is all about due diligence and finding an all inclusive team to take care of everything for you.

HELP: Finding my niche?

Most Popular Reply