Not sure where to start?

Question

Hello,

I've been a long time member of bigger pockets mostly just reading.  I'm finally ready to begin to look at adding RE to my portfolio however, I'm really not sure what area to focus on.

I live on LI and really would like to start in Manhattan.  Ideally I'd like to begin with a condo and rent it out, however the CC's and taxes are so high typically, that unless I put down >30% it would not be cash flow positive.  I'm looking at studio's to start since that is what I can afford.  Condo's I've looked at range from $350K to $500 with CC's typically 500-1000/mo.  Rents would be 1700-2000/mo.  I would want to at least break even and invest primarily for appreciation over the long haul.

OR

My other option is to invest in either individual condo's or small apt buildings(16 units) in Jacksonville, FL but this would involve being a distant landlord which I'm not really that wild on.  My reason for Jax is that I went to college there and feel that I have a good grasp on the best places to purchase and get a reasonable cash flow.  The 8-unit buildings run from $600-1M and bring in an annual rent of approx $100K.

The 2B condo's run about 50-90 and can be rented out for about 1000-1100/mo.  CC's seem to run 200-400/mo.

I don't know what is a better start, a single unit in NYC or multiple in Jax and be a distant landlord but without the risk of a single tenant completely messing up my investment.

WIthout getting too specific, I could provide at most 10% on the 1M property.  Obviously more on the 2B condo's, or cash.

Any tips?

Thanks!

Chris Clothier · Answer

Justin Schlechter - If you are interested in Jacksonville, you might look up a company called Jacksonville Wealth Builders.  They are good people and have a very well run company out there including property management.  They participated in a mastermind we ran last year and have built a very good property management company and customer service department.  I am not sure if they manage for outside investors, but they may be able to assist you.

I'd also be happy to help you with our company in Memphis or answer any questions for direction on other markets or other opportunities.  It really is all about making sure you get headed in the right direction from the beginning.

Gary Parker, thank you for the recommendation as someone to check with for out of area investing.  I very much appreciate it.

All the best - Chris

Gary Parker · Answer

You may want to try full service out of state investment companies such as http://www.memphisinvest.com/  I am not affiliated with them nor do I invest with them.  One of the owners, Chris Clothier,  does post here a lot.

Luis Castillo · Answer

Justin, I have been investing over 30 years.  If my son asked me the same questions I would definitely tell him to check out the area. Do your homework on the area.  See how unemployment is doing. Check out population growth, crime, housing starts and vacancy rates just to name a few.

Second of all and almost as important is to make sure you are getting a good deal at below market prices.  If you have money and good credit, you are in the drivers seat.  We are in a buyers market.  Take advantage of it.

I want to make sure I am getting a good price and that I am buying in an area of prosperity and growth.  The property doesn't have to be in your backyard.  In the beginning you might have to visit your property two or three times a year, but once you establish a good management team whether you hire one or put it together yourself you won't need to actually visit the property as much.  If you buy right the property should cash flow enough to give you a good return and pay for your visits 2-3 times a year.

As for myself, I have purchased out of state properties and regardless of how well they are running, I still like to show my face once in a while.  I do know of a large investor who says he hasn't been on one of his properties in years and he is very successful. That will be your decision in the future.

Good Luck!

James H. · Answer

wrong thread, didn't mean to post here

William Donaldson · Answer

There are several basic pros and cons with each option.

[Invest locally]
Pros:  Close to investments, knowledge of markets, greater control, potentially depressed prices from market crash that can rebound strongly in 5-10 years
Cons:  No cash flow, only benefit is building equity, lack of diversifying

[Invest long-distance]
Pros:  Cash flow, diversifying possibilities, potentially depressed prices from market crash
Cons:  Virtually no control, lack of knowledge of market, distance from investments, potential unmitigated nightmares

After going over the options, I'm not really sure which one I would choose.  It did teach me to be thankful for what we have in areas away from the big cities.  The price range you listed in the cities buy nice McMansions here.

Not sure where to start?

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