New Investor, have capital, need suggestions.

[Rob Bryant]

The wife and I sold a property and took a check of 400k after sale. We moved to an area that is overpriced RE and are happy to rent for now. Rent is now 1850. Household income is 260k pa. What are my real estate options? The 400k is sitting in a bank and I am considering investing with a turnkey company as I don't plan to be involved too much in property management. Should I invest cash or take a loan and leverage? Is SFR through turnkey companies with 10% annual returns good idea or can I do something better with that capital? I also have a 100k in equity in a vacation rental property which isn't appreciating or giving any positive cash flow. It's breaking even. What is the community's advice for my position?

[James Wise]

Originally posted by @Rob Bryant:

The wife and I sold a property and took a check of 400k after sale. We moved to an area that is overpriced RE and are happy to rent for now. Rent is now 1850. Household income is 260k pa. What are my real estate options? The 400k is sitting in a bank and I am considering investing with a turnkey company as I don't plan to be involved too much in property management. Should I invest cash or take a loan and leverage? Is SFR through turnkey companies with 10% annual returns good idea or can I do something better with that capital? I also have a 100k in equity in a vacation rental property which isn't appreciating or giving any positive cash flow. It's breaking even. What is the community's advice for my position?

 Welcome to the site Rob. I see a lot of folks in a similar position to you in that you are living in an expensive market so you look towards turnkey companies to get the cash flow you are seeking. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cleveland, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.