Where to buy first property( Nevada or Texas)

[Angeli Castrence]

I am a complete newbie and am planning to buy my very first investment property (very first property to be exact). I live in Los Angeles but the real estate here is way out of my price range. Does anyone have any advise on purchasing real estate from out of state (Nevada or Texas)? I have family in Nevada who knows the area relatively well and also have a real estate agent. In Texas, I have no connections except for friends who have no interest in real estate. My question is, how/where do I start and how do I choose which state to invest property in?

[Jon Schwartz]

Originally posted by @Angeli Castrence:

@Jon Schwartz

Yes, I’m interested in the Carmelina property. What do you think about tenants not paying rent due to the pandemic?

They have already started construction in that corner. There’s also a low-income apartment building being constructed in Bundy and Nebraska, where the animal shelter used to be. You’re right, plenty of development in this area.

 Angeli,

Tenant non-payment is definitely an issue because the eviction moratorium is in place until Jan 31, 2021. So a few things are important when pursuing a property now:

Firslty, you want to get the last six month's payment history for the property, and then you want to verify it with bank documents. If the tenants have been paying this entire time, they're unlikely to suddenly stop because there's a new owner. Tenant who have continued to pay rent have maintained they jobs or care too much about their credit to take advantage of the situation or both.

Secondly, you want to go into the deal with additional reserves. If you househacked this property and moved into the lowest-rent unit, you'd be collecting about $6000/month from the other units. You might want to have 6 months, or $36K, in reserves to cover any unpaid rent that might occur. If all tenants have been paying rent, you might only need 3-4 months reserves. Having reserves insulates you against the risk of non-payment.

I've made a spreadsheet that I called "The Househacker Calculator." Enter the basic info, and the spreadsheet auto-populates the rest with a pro forma and a longterm projection. Here's what the results for this property look like:

Given the price and current rents, I think this is a really good candidate for a househack!

Best,

Jon