First Property- Invest in Home State of NJ or Elsewhere?

Question

My boyfriend and I are looking to purchase a 2-3 family as our first property in the 250k range or lower. We would definitely do an FHA. We currently live in Rutherford, NJ, only 17 minutes from NYC. We are dying to get out of NJ, we're basically just looking for a change. Our combined savings is 50k. We're 26 and do not have anything holding us back from moving out of state. We know the NJ area well to invest in without hesitation.  My questions are:

1. Do you suggest we stay and invest in our own backyard of NJ?

2. We were looking into Cleveland, Indianapolis and Sacramento. However, we would like to know what other cities do you suggest that have a good job market as well? We are both at tech start-ups, but we are not limited to that industry. (We will be visiting the cities for a month before we would invest there) Any specific neighborhoods would be a great help, too.

We definitely want this first property to set the tone for the 2nd, 3rd, 4th, etc.

Apologies if this is very broad, we are kind of all over the map since we are so open to moving around.

Any insight would be greatly appreciated from all of your expertise.

John P. · Answer

a lot of great things in Sacramento but cash flowing rentals ain't one of them. I'd look elsewhere.

Ritch Bonisa · Answer

I see some good things happening in Cincinnati - I have a contact you could reach out to if interested.  Indianapolis - many of the areas that are undergoing gentrification right now have duplexes.  I've been in many of them.  I think they have promise.  Saw 3 last week that were fabulous, but they do need considerable rehab.  You have older larger homes being rehabbed 70- 140k going into them, there are duplexes peppered throughout those areas.  I would not touch the multi-family properties in those neighborhoods where there has been little or no renovation, They aren't even worth considering. I don't know what your situation is, but I am seeing many many investors buying wholesale, then rehabbing.  Like anything else, when you don't live in the area - you have to be careful.

Patrick B. · Answer

@Brittany Dave In regard to Indianapolis, you might browse http://www.techpoint.org/ and see if anything there interests you. You mentioned a 2-3 family ... it has been my impression that multi family in Indianapolis seems to be a bit more sparse than you'd see in St. Louis, Cincinnati, Chicago, etc. It is out there -- just seems to be less prevalent. I wonder if your $250K would be better utilized with two $125K single family homes in Fountain Square, Bates Hendricks, Fall Creek Place, SoBro, Saint Clair Place, etc.

James Wise · Answer

Welcome to the site Brittany.

One thing I always like to stress to new investors is to invest in your backyard whenever possible. Always go towards your competitive advantages. In your situation however it appears you want a life change so that eliminates NJ.

Leaving you with Cleveland, Indianapolis and Sacramento to choose from. Your money will go much further in Cleveland & Indianapolis than it will in Sacramento but Sacramento is of course more desirable real estate. I don't know much about Indianapolis then the prices are similar to what we see here in Cleveland so I won't speak to which of those markets is any better or worse than the other one.

When looking into Cleveland I think you will find some value in reading The Ultimate Guide to Grading Cleveland Neighborhoods.

Good luck to you in whichever market you choose.

Ritch Bonisa · Answer

Oh, I forgot.  If this is your first - in my opinion, you want to keep it close to home if at all possible.

Mike D'Arrigo · Answer

@Brittany Dave Of the markets that you mentioned, I think Indianapolis is by far the best. Sacramento is too expensive and won't cash flow. Cleveland has a declining population and little job growth. Indianapolis on the other hand has a growing population, growing jobs and a diverse economy yet is still affordable enough to cash flow well. As @Patrick B pointed out however, it's not a great market for MF. Most of the MF is in old, rough neighborhoods and does not perform well. You didn't mention Kansas City but that is another excellent cash flow market where you can also get good MF units. We sell turn key properties in both Indy and KC and know the markets well. Feel free to reach out if you'd like more insight.

Matt Motil · Answer

@Monica Pope is in NJ and she's been pretty happy with her investments here in Ohio! I'm biased to this area though!

Brittany D. · Answer

Wow, thank you, everyone, for all of your input. I am more than grateful for all of your advice and suggestions. Didn't think I would get responses so quick!

First Property- Invest in Home State of NJ or Elsewhere?

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