Considering buying rental property investment (newbies)

[Yulyana Karpava]

Hi! We'd like to start investing in real estate, have some money saved. Have no previous experience. But we live in SF bay area and the real estate market is crazy there. So we're considering other markets. Need some advice. While on vacation in Florida we looked into West Palm Beach area and visited a few properties there which seemed really nice. Does it make sense to buy an investment property that far away from where you live? One was a townhouse for $169,000 (2-bedroom, 2-bathroom) with a living tenant paying $1550. Another townhouse in the same association priced at $160,000(2-bedroom, 2-bathroom) but after eviction and needs some work to be done, like vanity replacement, tile replacement in the shower cabin and a condo at $100,000 (1 bedroom, 1 bathroom), little work to be done. It could be potentially rented out for $1100 as real estate agent assured us. But after running all the numbers, looks like the cash flow would be around $100 for any of it. Is it worth it? What is considered a good cash flow for a condo/townhouse?

Thank you!

[Tim Herman]

@Yulyana Karpava  There is a possibility of a recession, no doubt about it. If there is a recession the stock market is going to tank.  Let's play the game. The great depression lasted 10 years. Using the same numbers 10 year no growth rent decrease 10% or $100. Cash flow neutral. $37000 mortgage paydown- $9000 selling cost= $27000 cash in year 10. Invest $20000 in stock market lose 30%= $14000. Look at B areas wherever you decide to invest. A areas will be hit the hardest and the most rent decrease. I didn't lower my rents during the downturn in CA in 2008. I keep mine slightly under market. From what I read B areas only went down 10%. Tax benefit to having real estate, to shelter your other income. If you like Florida invest there, you can write off part of your trip to invest there. Income plays are in the Midwest: Indianapolis, Columbus, KC,Detroit, Cleveland. I am going to look in Ohio.