Help Defining Strategy for New Investor

[Sarah Szuhay]

Hello BP community! I've been casually learning about real estate over the last year or two but am ready to take it more seriously and make my first deal. My struggle right now is determining the right strategy for me. If anyone is willing to offer input/advice for my situation, it would be greatly appreciated!

Here is my situation: I have about $30k in cash to invest and a good credit score. In the coming months I'll be moving from Portland, Oregon to the Bay Area, so investing locally (Bay Area) is out of the question for my budget. I currently own my home in Portland and will be renting it when I move- CF will be slightly negative but I believe the property will appreciate significantly so I want to hold onto it.

I've decided I want to invest in Pittsburgh- it's my hometown so I know the area, visit regularly, and the numbers look good for both cashflow and appreciation. I have a demanding job so will not be able to put a ton of time/effort into my investment and I will definitely need to hire a PM.

My ultimate goal is CF...the dream is to generate enough CF to "retire" early. For me, that would be ~$10k/month. So I need to get started :)

I've narrowed down to four strategies for my first investment:

1. Buy and hold SFH in B-ish area- I think this would ease me into REI- there would be high likelihood for good tenants and having less doors starting out feels less intimidating. I'm willing to pay for cosmetic rehab as part of my total investment, but not significant reno (seems difficult to manage from across the country).

2. Buy and hold MFH (2-4 units) in C-ish area- This is appealing because more doors= more CF opportunity, but as mentioned above, starting out in MFH feels intimidating.

3. Lease option SFH- Lease options are very appealing to me, since once you get the tenant in, they take care of all maintenance. Plus it can really benefit the tenants by giving them a chance to own a home when they might have trouble otherwise. However, I'm not sure how I would find rent-to-own tenants remotely or if there are businesses that offer this service for OOS investors.

4. Turnkey- Appealing but probably would generate the least CF and the least learning for future deals.

If you were in my shoes, what would you do? Thanks in advance!

[Jonathan Greene]

@Sarah Szuhay your first instinct on investing out of state is the smartest, you are way ahead of the curve. Investing in your hometown where you know the area and know the streets and have contacts is imperative to the market knowledge you need to not screw up out of state investing. Pittsburgh is definitely a viable market for you to do this in. Don't be sure you need a PM company to start when you are from there. I have used friends in out of state areas for years to start managing one-offs and sometimes start with a handyman and then convert them to a PM when more properties come in.

I don't think turnkey would be worth it in Pittsburgh as there are way too many value-add options where you can make more by doing that instead of taking a finished project which are usually overpriced. I like option 1 to start based on how much time you have to manage. Even when you hire a PM, you still need to track your investment. Single-families are a great way to bank on appreciating areas. My best investments have all been single-family homes. Multi is what everyone wants, but it is also a headache, even with a PM. Two units = twice the problems. Four units = four times the problems. To do #1 you can find a property to lipstick flip (light reno for renters) which is ideal or if it needs more work you just make sure you rental value will go in line with your reno.