Finding The Right Niche

[Austin McAnena]

Hey BP,

I'm new to real estate investing and BP, but excited and ready to learn!  As I've started researching and reading the beginner's guide, podcasts, blog posts, learning from mentors, etc. I find myself torn on how and where to begin.  I have a full time job in nutrition and healthcare (which I love) as a marketing professional with previous sales experience in the field. I want to build financial freedom outside of my day job by generating passive income and looking for the right opportunities. I live in south Orange County, CA where I know real estate isn't cheap.

I have good capital saved up and access to possible investors. I received advice to start investing in a market close to home where I'm comfortable and can visit frequently. I've also been given advice to invest outside of CA based on pricing and better opportunity for higher ROI and cash flow. The challenge would be the travel back and forth with a full time job and learning new markets. I've evaluated different types of investments and tried to narrow it down.

My initial thought is to focus in Orange County and look to flip single family homes, or buy and hold condos/single family. The short term cash flow may be less but it seems to be a strong market based on location for the long haul. The other idea is to look for multifamily investing outside of CA in markets like Texas, specifically looking into mobile home parks based on lower cost and higher cash flow. I have mentors who are successful with both strategies and hoping to receive more direction.

Any advice or insight is much appreciated!

[David Thompson]

Austin,

Couple thoughts for you.  Since you are looking outside CA as one option, you could look at participating in syndications in the niche areas you are interested in.  I call this the earn and learn approach.  You can earn alongside experts, see how they do it, deciding if it's the niche you want to be more active with down the road.   Sounds like you have a busy career you enjoy and are thinking of creating passive income.  If you are accredited investor you have a lot of choices in syndication deals which I think are also ideal for out of state investing since you don't have to worry about managing the asset / property, the general partner does all the work but that does not mean you have to be passive in your thinking.  Good syndicators have active / hybrid investors as passive investors too because think about it, can you really be great at all the different niches?  If you are not accredited, there are deals where syndicators will take a limited number of non - accredited / sophisticated investors so you could get started now.

For instance, you may get that mobile home parks (MHP) is a great place to put some money, but you love to be active in MF because that is your passion.  You could tomorrow be investing with MHP operators that have years of experience, be invested in a pool of properties (diversification) and getting cash flow into your bank account monthly in about 90 days from signing up.  Great, invest passively in syndication deals w/MHPs and start attending local MF meetup groups in your area and get more active along that lines.  Several ways to get involved.  Don't think DIY or not.  It's not black or white...either I'm active or not.  I think most folks can appreciate some part of their portfolio in passive opportunities and can also get that they can learn and earn along the way before they start thinking about become more active in it.  Active can come with an immense amount of time, pain and lost money as you learn the ropes.  It does not have to be that way.