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Updated over 7 years ago on . Most recent reply
I live in an expensive area and the numbers aren't working
I've been researching REI'ing for the past 6 months and I have yet to purchase a property. I live in New Jersey where property values and property taxes are very high. I don't have any construction experience, so I figured I should avoid flipping. Instead, I've been focusing on rental properties, specifically vacation rentals at the Jersey shore. The numbers just don't add up. Even with a multi-family, the best ROI I can get is like 3%. I've been looking at properties between $500-600K and the monthly rents are only $2,000-$2,400 (roughly 4%).
I've also looked into properties that are not vacation rentals, but the numbers are roughly the same in this area. 4% is clearly not going to work.
Flipping seems to be the better choice in this area, but that makes me nervous since I don't have construction experience and I will have to sub out all of the construction work and I fear I could lose all of my profit that way.
I'm starting to get frustrated that I can't find a deal that works. I'm determined to buy a property this year, but I don't want to buy something unless I can make the numbers work.
Do any of you out there in the BP Community have a similar problem with living in a high-priced area? Does anyone have any suggestions for me? I'm very eager to start investing!
Thanks in advance for any advice you may have!
Most Popular Reply
Hi Casey! I live in LA and the problem is the same out here. I've always just bought out-of-state properties. That way I have lower entry prices, higher cash flow, etc. So investing non-locally is one option. Flipping would be the other option, but my hunch is to say follow your hesitations about not having experience or feeling like that's what you should do. Flipping can of course be an option, but it's honestly a very different animal than just having a rental property. If it calls to you do it, but only do it if it really calls to you. Otherwise you could end up with a significant amount of stress to deal with...