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Updated about 6 years ago, 09/15/2018
Rentals. Where to buy?
Hi Esther,
I'll try and answer all of your questions. First, welcome to BP! There is a gold mine of great information on this site and I'd urge you to spend some time reading and listening to the podcasts. You'll notice quickly that there is a common theme throughout the information and you just need to figure out how to apply it to your particular situation.
I'm going to assume you and your husband are looking for long term wealth and cashflow, but I would recommend you both take some time to figure out exactly why you want to invest in real estate. It's important in my opinion to know why you're looking to buy properties. It's an excellent way to make money and invest in your future, but it's certainly not for everyone. I'm not trying to talk you out of it, but I want to be honest.
Most of the markets throughout the country are very high including a lot of areas in Texas, Ohio and Florida (not sure about Louisiana). That being said, there are still good deals out there depending on your level of experience and risk tolerance. There are plenty of real estate professionals in just about every market that would love to help out of state investors. Do some basic internet research and see what cities/markets fit your investment plan and then contact an agent for help. Make sure you understand the market you're thinking about investing in. Check the crime and schools, state, county and city property taxes, insurance rates, tenant/landlord laws and rental market.
Buying rentals out of state can be tricky, especially for first time investors, but it's not impossible. If you build a good team and have systems in place, you should be able to pull it off without too much stress. I highly recommend David Greene's book Long Distance Real Estate Investing.
Good luck and let me know if you need any help in the DFW area.
Welcome to BiggerPockets.
I agree with @Troy Ramey. There are real estate investment opportunities everywhere. Some areas are tough, like St. George Utah, where the market is pretty hot right now.
The best thing I have seen is to generally purchase properties in areas that close to you or somewhere you want to visit.
If you are going to be buying big multi-family properties that are far from you like Texas, then that will work too. To me, buying a 3 bed 2 bath home in Burleson Texas when you live in Salt Lake City Utah, is really just too complicated and expensive.
If you have family or a beach or some other destination in another state, that can give you a reason to visit your investment and then it isn't so painful when you have to go do something at your rental.
Let us know what you decide to do!
Best,
James
Hi! We need more info to offer specific advice...
- Where in Utah do you live and work? It's a big state!
- What skills, attributes and experiences do you and your husband have? Handyman skills? Great credit? Piles of cash? Rich parents? Lots of time? Great organizational skills?
- Do you currently own a home you could house-hack (i.e. rent out the basement)?
- Do you plan on Living in Utah for many years?
A general bit of advice I can give is that if you plan on being a long-term landlord, price doesn't matter nearly as much as cashflow. If a property will predictably bring in more money than it costs for mortgage and maintenance, you have a good start. If it is a property that attracts and keeps good tenants, you are even further along. The easiest way to make a million dollars is to borrow a million dollars and let your tenants pay it back!
Have fun out there!
@Troy Ramey @James Call @Douglas Larson Thank you all for your great advice. You all had some really good points! To answer some of your questions. We are working on getting educated and on building a business plan (including putting together a team). We have toyed the Real Estate investment idea for a couple of years and now feel ready to take some action. We are not 100% sure which Niche to choose but we are leaning towards single family homes or multifamily and potentially doing some flipping in the future. The purpose in mind is long term wealth/cashflow. We ideally would like to find small properties for $100,000 or less and buy one or two to start and to help us learn how it works and slowly buy more but we are open to a more aggressive strategy if the opportunity is right!
We are in Northern Utah (Lehi). My husband owns a business and he is pretty busy but would love to have the cashflow that would aloud him to retire and do Real Estate 100%. He has excellent credit and has managed a business for 9 plus years. I am a stay at home mom and I've always been eager to start my own business. Three out of our four kids will be going to school full time so I will have the time to dedicate to this business. Our basement is unfinished and could potentially be rented. We do have some cash, not necessarily "piles of cash" haha but a good amount to get started. We would like to stay in Utah and we need to stay here as long as my husband has the business but the idea of moving somewhere else is not completely out of the question. Since the market here is pretty hot and prices are the highest they have ever been we feel like our only option would be investing out of state. We just need to find the right area!!. And lastly I have to add that we sold our previous home and made $60,000 profit and have $100,000 (or so) equity on our current home so we could say we do have a little bit of experience.
Thank you all again for taking the time to help us out! It is truly appreciated!
@Esther Budd That is a lot of good information.
I would go talk to a lender first and share the gory details of your situation. See what kind of money they would finance for you.
I went to a lender and said something like this:
"I make $x per year. I have $x in cash in my account. My monthly payments are about $x. I owe about $x on credit cards. My credit card company sent this link that my credit score is a X.
Within about +/- 10% how much do you think I would qualify for if I were to purchase a second home that I want to use as a rental??"
They can run some numbers in about 5 minutes and get you ballparked for something. Then you know if you are looking at $100k or $500k.
You will want to put 20% down, in my opinion, to avoid any Mortgage Insurance, and to also give you a cushion on your rent/payment ratios. If you only put 10% down, then you will have PMI that makes your payment higher, and if the market moves, you will be upside down on your rent.
We have family in Highland and we have a home in St. George. We have purchased rental property in Utah. There are some opportunities in SLC and in Provo/Orem for investors. My sister-in-law lives in AZ and just bought a home in Provo that she rents out the top and uses the bottom for family.
Thanks,
James
@Esther Budd Give it a few weeks and you should have a little bit less of a tough time finding something in the UC. School is starting in a couple weeks and as soon as that happens the market usually cools off a bit.
@Esther Budd the MF market will shift along with the residential market. The shift likely won't be as drastic, but there will be a shift.
Nobody really knows how the market is going to react to school starting this year - buyer and seller behavior has been a little bit different than in previous years so we might see something totally unique this year.
Hi everyone, just want to piggyback on this post. I'm looking at rental property in the Dallas/Carrolton Area as well. Has anyone invested in the area? What's the market right now and whereabout is a good place to start? I had my first deal out of state so pretty comfortable with it. Just need to find the right team. :)