130k to BRRRR Where would you invest?

Question

I have been lurking on bigger pockets for a couple of years now, and I feel like I have been in analysis paralysis for much of it. Here is my situation… I currently live in Las Vegas, I have 130k to invest, and zero debt. I have already been approved for financing and would have liked to bought something in Vegas but have not found anything that cash flows. I have decided to start looking out of state and try to BRRRR my money. I would like to start with a single-family that cash flows and in a decent area with good jobs. If you were in my position, where would you invest? I started looking in parts of Florida but I am open to suggestions! Thank you so much in advance.

Percy Matsunaga · Answer

@Courtney M.

You are in a great position with $130K.

Before you start to invest ask yourself if you want to be near your properties or you are comfortable being in a different state where you invest.

This is going to be a very important question to answer and don’t lie to yourself.

If you decide that you can be in another state than your properties then I would start researching some TK properties iE; REI nation with Chris, Rent to retirement with Zach are just a couple of them that I’m in the process of evaluating.

I’m in CA and I plan to visit the area that I eventually decide to invest in. From there I plan to purchase and scale my properties.

Dan DiFilippo · Answer

@Courtney M. I used to do rental management in the Fayetteville, NC area.  I'm in transactional now.  It's a pretty good market due to military causing constant turnover. Houses are always for rent and for sale and there are always renters and buyers so the market is extremely liquid.  Always new homes to buy.  There are a lot of VA foreclosures too, so there are flip or equity-add opportunities for BRRRR's.

Michael Tully · Answer

@Courtney M.

Good luck to you in your investing future!

The hard part with Vegas is that you really need to know your area. @Terry Lao is arguably THE expert when it comes to multi’s in Vegas and his expertise and success prove that. I’m sure you’ve seen his posts in your time lurking (fellow long time lurker here as well). I have a friend who maintains a 0% occupancy in his multis on the Far East side of town (he niched down hard and rents to Hispanic families who may not have the easiest time getting into apartments) and has never had nonpayment issues. It helps that Spanish is his native tongue and connects with his tenant base.

As far as investing in Vegas goes, if you can become an expert in an area/niche you can do well here. You can use your knowledge to minimize risk. Vegas is just tough because the multifamily options are limited. Some areas I’ve looked into are larger SQFT duplexes near downtown (2/1s and 2/2s) that you can add a third bedroom to. If you can find some they’re usually  near blocks where flippers are active and “in the path of progress”. Most have tenants in place already with lower rents. The delta isn’t huge but with the extra room and a coat of paint you could get up to the low 700’s (currently in the $500 range). A lot of the appreciation has already been built in to the properties from the downtown revitalization but finding ways to add value in some of these less desirable areas and holding for a year or two could be a winning combination.

At least on the properties I’ve been looking at FWIW.

Ivan Terrero · Answer

Jacksonville, Tampa, Lakeland, Kissimee, Fort Myers/Cape Coral

Dave Spooner · Answer

@Courtney M. from my experience, you'll find a good combination of affordability, stability, and rent growth in the Midwest. There are certainly better options for rent growth, but you lose a lot of cash flow on purchase price. Florida is good option too. I'd suggest secondary cities like Orlando and Pensacola.

Good luck making the leap!

Terry Lao · Answer

@Courtney M.

Yes, you are missing something. You got to do your home work. You are correct that most are in bad areas. There are pockets of good areas, east of 95 freeway near Summerlin 450-550k, Spring Valley near Chinatown 450-500k, and behind MGM casino off Maryland/Tropicana (350-400k).

I own several 4plexs, east side and behind MGM casino. In hindsight, I just should stay in the areas that I mentioned.

Below is a map of areas that I mentioned.

Darius Ogloza · Answer

It's hard to give any concrete advice without an appreciation of your current circumstances and goals.  Do you already own your own home or rent?  If the latter, have you considered buying a fixer in Las Vegas, adding value through a remodel/fix and making some additional profit that way?  Are you mainly interested in a generating a few hundred bucks a month in cash for pocket money or in building long term wealth?  If the former, there are opportunities in the midwest and south assuming that the ongoing maintenance costs (you would be surprised what damage a Midwestern winter will do to a home) do not swallow all of your profits.  In short, pro formas showing $300 or $400 per month in free cash can easily be swallowed up by the cost of a new furnace or roof or in some cases by a difficult tenant who knows the rules of the game.   As for distant management, no one is going to go out on a limb for you for $100-$150 per month.  If your interest is in building long term wealth, I would focus on growth markets and make sure to research, research, research if you intend to go far afield.  If it's too good to be true, it isn't real.

Shawn G. · Answer

@Courtney M. If you decide to invest in Orlando or surrounding areas, let me know. Happy to help!

Greg K. · Answer

@Courtney M. Look at Invitation Homes and American Homes 4 Rent.  Single family rentals with no effort on your part.  Park your cash there until you’re ready to pull the trigger.  You have to be able to divorce yourself from bad areas and good areas. If the numbers are attractive it reflects a risk premium for the area.  Real estate is an institutional asset class that is pretty efficient in pricing.  Just figure out what risk level you are comfortable with and go with it.  I shoot for 15-20% cash on cash return and buy condos so I don’t have to worry about maintenance which allows me to buy from a distance.

130k to BRRRR Where would you invest?

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