​Scared and in paralysis by analysis

[Joshua Johnson]

Ok here is my situation and I was hoping you could help me find my focus. 

I have talked to my bank and I am approved for 200k for an investment property. I have also been approved for a HELOC on my current home for 40k. I live in Orem, Utah (in the valley just south of Salt Lake City) and not sure if I should bother looking around here for properties due to current prices.

What I want from REI is to have a steady passive income of about 5k a month in about 8 years. I don't need any cash from the investments until that point. I have decided that buy and hold would be my best avenue to achieve my goal.

My question I would like help with (and I am also posing the same questions to a realtor friend of mine that I might work with who is also an investor) is where should I start for my first real estate deal? I want to get my feet wet and start small and learn as I grow into bigger properties and deals. I think for this first time I would really like to stay with just using the 40k from the HELOC especially listening to so many podcasts that talk about starting with even less. I can afford the 415 payment a month if things go really bad with the HELOC. With this limitation in mind I have a few options. 1. Find deals that are off of the MLS and look for something that would meet my criteria in HUD, REO, or short sales. 2. Look at areas that are 3 hours or more away from my home. 3. Go out of state (which I am worried about but I have considered places I would be willing to move to after the 8 years could be an added benefit) 4. Wait for a down turn in the market in my local area and position myself to be able to move quick. (I am assuming on the down turn due to the trends and the tendency to drop after houses get so expensive and there are multiple offers for each one due to lack of supply.)

I know this post in just the next step in my paralysis but I really appreciate the people on here and am still just not sure what step I should take next. Really thank you so much for taking the time, any help with these options, or any others that I might not see.

[Joe Villeneuve]

Having a property close to you doesn't make a deal a good one...it just means it's close to you.  If the deal is a bad one, as in negative cash flow, then you have the ability to drive by it occasionally and point it out to others saying, "I own that house, and I'm losing money on it".

This also means, that simply knowing the area well (because it's your area), isn't going to make it a good deal.  In fact, if you really know it well, and you listen closely, that voice you hear is that area/property telling you it's a bad deal and you shouldn't be investing here. 

That doesn't mean your area is bad to invest in, it just means that the close location to you has nothing to do with making it a good/bad deal.

Learn to analyze properties based on the market, and not the property, and your market analysis will tell you where to invest, and more importantly, where NOT to invest.

Notice I used 2 different terms describing this event:  Property and Deal. You want to invest in deals, not buy properties.  It's a numbers game, and the numbers that matter have "$$$" in front of them, not street names behind them.  If you are in the right market, the properties you didn't get, will be followed by another one just like it...with a different address.