A scenario for Summer 2018- your advice is requested

[Dan Raphael]

BP Community,

I have enjoyed the education gained by reading the forums and now it’s my time to jump in. I would be interested in hearing your opinion on my situation.

I intend to sell a property in summer of 2018 when the current tenants’ lease is up. The house has never really been a great investment. I picked it up while stationed in the area with the Navy. I have offered to sell it to the tenants but they don’t qualify. I expect to realize about $75K from the sale after commissions, etc.

I will be retiring from the Navy next year and my intermediate-term goal is to invest in cash flow properties so that my post-retirement paycheck is supplemented to its pre-retirement levels. My longer-term goals are undefined at this point but presumably, once I get going, I will set the bar even higher.

My plan is to use a 1031 exchange to get into a property or properties that provide a better positive cash flow than the current property. I live in San Diego and fully accept that I will be an out of state investor due to the high cost of entry here.

I am soliciting your sage wisdom on the following questions:

How do I narrow down my search of the various markets? Which ones to pursue?

Do I approach turnkey providers or is there a way to learn about markets and assemble a team from a distance in these markets on my own?

Should I try to get into one B property or 2 C properties or some variation on this concept? What is the mix?

Once I acquire the property or properties in question, what is the next rung in the ladder? Should I specialize in the market I have gotten into or do I diversify into other markets?

I always appreciate the practical and creative advice I see in the forums and I look forward to seeing what the Community does with my situation.

Many thanks,

Dan

[Matt K.]

For me, this is how I approached it:
1) May your budget be your guide, sure plenty of great places to invest, but if you can't afford to it's a mute point.

2) Knowledge. Now this might be easier for you being Navy.... where have you been, what areas outside of your current location do you know?
Now, hopefully there's some overlap and if your lucky there's a place you know (well) or want to get to know well and it fits your budget. Some places (like KC) are easy to research online while others (insert most midwest cities here) are slightly to extremely difficult to dig info up with. Then you have the areas that are likely already picked over (Chicago, ATL, Dallas etc).

Now let's pretend you have your budget and area picked out... what's the next step? Figure out where in the city you're investing. What's your niche, what's your focus, why are people going to rent your property? Now that you got that picked out we need to find the property. This is easy, you have a budget, you know the area, you know what you need, but most important you know the value. You know the rents, you know the average prices, you know what renters would pay extra for and what they could care less about. 

So goes the hunt, you network with realtors, PMs, lenders.... figure out who fits well in your goals/attitudes and move forward. When they ask what you're looking for you know exactly what to tell them. You know if you talk to TK company you can spot check their numbers, do they mesh with what your thinking, is it a good value etc.

The deal doesn't have to be perfect, but it does have to make sense. The house won't be in perfect shape, maybe the price little more than you want etc, but wait and a deal will come. Let the budget guide you, but the best quality asset you can being OOS. Don't fall for the cheap warzone house with "great" returns, it won't happen in real life.