Good Markets to Get Started

[Bastian Kneuse]

HI BP- Community,

I am a new investor and have been studying real estate investing for quite some time from the sideline. The time has come to get my feet wet and actually make something happen. However, I feel that I am suffering from analysis paralysis. I have absorbed so much information (possibly too much) that I don't even know where to start. The first hurdle I am trying to take is identifying a 2-3 good markets to invest in. I am currently living in the San Francisco Bay area and look to invest out-of-state, given the crazy housing prices here. I am looking for a market that would be good for a newbie investor. More specifically, I am looking for SFH in the range of $100-150k in a balanced market (acceptable cash flow – ideally around the 1% rule and acceptable value appreciation). The goal is to hold the property long-term. I totally understand that my first property will most likely not be the deal of the century, which is ok. My goal is to get my feet wet and learn the ropes of real estate investing by getting involved and slowly building up a portfolio, which generates passive income.

I have been hearing a lot about markets such as San Antonio, Kansas City or Indianapolis as good markets to get started given the healthy local economy (economic and demographic trends, housing inventory, rental demand) and also the good supply of real estate agents, contractors and property managers. Given this is my first rodeo, I would really value any insights all of you may have. Originally, I looked into Jacksonville, FL, but that does not seem to be a good place to invest anymore. In summary, I am trying to find answers for the following questions:

1. What are good markets to invest in for newbie investors?

2. Is now still a good time to purchase investment property given where we are in the economic cycle? Pro – still low interest rates/Con – real estate prices have come up quite a bit (seller market), looming recession

3. Given this is will be my first deal and it will be a long-distance investment, should I look for a turnkey property or one that needs some work? I have read David Greene’s book on long-distance real estate investing, but my guts tell me that it won’t be that straight-forward as outlined in the book.

I would appreciate any insights/thoughts/feedback/concerns. 

Thank you very much!