Investing in Raleigh for a newbie

[Kimberly Scott]

Hi all,

I am trying to get into real estate investing but I'm not sure if it is better to invest in a hot market like Raleigh or try to go with something a little more under-the-radar. 

For background, I'm a 23 year old travel nurse, making between $82-90k a year. I have no debt, and I keep my living expenses very low (hospital dorms for $160/mo). I have budgeted $15k for my first property's down payment (FHA 3% down) and rehab. I would like to buy a single family or duplex for less than $100k.

I am drawn to Raleigh/Durham area because the crime is low, the city is growing, and with UNC nearby, I think finding steady renters is realistic.

But as you can imagine, I am not going to be able to take a very hands on approach. I travel (currently in Virginia), meaning that I would need a strong team to manage my property. Since Raleigh is so hot right now, I'm nervous that most contractors, managers, and agents aren't going to make time for a newbie like me or they'll be so expensive my profit margin will be consumed. I do not know anyone in the area, so personal favors/connections are not likely.

Should I go with a market with less competition for my first investment? Or if the numbers line up should I take the plunge? 

Thanks! Eager to hear about your opinions and experiences.

[Jiri B.]

Hey @Kimberly Scott what a great age to start with investing in real estate! It will get very easy to get discouraged but as long as you keep pushing hard and make it all work, you will get there.

From what you said, here are few things that i would look into more:

1. FHA 3% down - for investment property you will need to put at least 20% down, conventional loan. Or fix and flip loans.

2. 15k including rehab is very little. Do the math:

   - closing cost 3k

   - 4k rehab (and this could be as little as new carpet, paint, and small fixes). If you go into something larger like new bathrooms or kitchen, you will be in the 8k-12k range work cost

- this leaves you 8k out of your 15k budget which is about 40k purchase price (80% LTV) which is very unlikely to get anything in the triangle for.

3. As you said, and that is very good observation and very true, the less time you have hands on, the more its going to cost you.

So for your situation, i would recommend going over your finances and see if you can pull more cash, i would say if you want anything local, you could get a condo or a townhome for about 60-120k that does not need much work to get it rented. Then get a good property manager and let that be your first investment and see how that all goes for you.

You can get something cheaper in other markets out of state, but you get what you pay for. I would make sure you know the market well so you know it will increase in value over time and that it would be easy to rent.

Those are the main reasons i invest locally.