REAL ESTATE NEWBIE ADVICE!

[Morgan I Levy]

Hi everyone! My name is Morgan Levy and I am seeking advice on how to begin my real estate investment journey.

I have read several books, listened to audios, met with agents so I have a basic understanding of the strategies and steps involved in real estate investment.

My goal is to purchase a multifamily property (2-4 units) but 2 is ideal- tenant occupied.

I rented a duplex for 5 years while living in Appleton, Wisconsin and saw the potential income and decided it was something I just had to pursue. My father sadly passed away a couple years ago and was an entrepreneur. I believe it is innate in me.

With that said, I have the capital left from him so money down is not an issue. I am very, VERY grateful and I know he would be proud of me going this route. However, I was a stay at home mom while living there with a couple part time jobs. I recently moved back to Chicago, I now have a job(1 month now). So my employment history for the past 4 years hasn't been very stable.

From what I've researched, correct me if I'm wrong, employment history, isn't necessarily a deal breaker when it comes to investing. I have the capital/cash. I have decent credit. Not great, but ok minus student loans.

Wisconsin vs Chicago is a huge difference in terms of cost of living-what you get for your money. I know the market in Wisconsin is steady and prices are ideal.

I know in my heart Chicago is temporary. Essentially, I guess what I am asking is, I really want to purchase a multifamily property first and foremost and I am leaning towards purchasing in Wisconsin. The areas I am searching is about a 3 hour drive from Chicago as far as commute and, I have several connections there in the event something needs to be fixed etc.

So,has anyone started their real estate investment from another state and if so, how did you go about it? What are the risks if any? Are sellers opposed to out of state buyers?

Any advice or suggestions is greatly appreciated. I am ready to just dive in and would love to hear input from anyone who has done this.

Thanks in advance!

Morgan

[Ola Dantis]

Originally posted by @Morgan I Levy:

@Ola Dantis Hello Ola! So very sorry to hear about your mother. There are no words. I understand.

Thank you for your sound advice/suggestions. I am much more confident moving forward after asking this question. From all the responses, including yours, it got me thinking more clearly, but also learning how to tread carefully as this is an investment.

It is a risk but one I am willing to take!

Lastly, do you suggest I reach out to an agent who is familiar with multi family properties? Or in your experience, does it even matter?

Thanks in advance!

 Honestly, our agent didn't even know what Multifamily Properties were when we started looking at buying, so we were educating our agent at the time. 

Of course, if you are able to find an agent who knows MF well, then that is a plus but isn't a prerequisite. 

Also, I typically look out for 3 initial metrics:

1. CRIME: Use Trulia to find the crime gradient for the property you are looking for. You want the LOWEST CRIME. 

2. RENTERS TO OWNERS [RTO] RATIO: I use a site called City Data to find how many renters per 100 people living in my zip code of interest. The reason I use this to get an idea of how quickly (or not) my unit will be leased (occupancy correlation). The goal here is > 50%. Now, you can have some wiggle room here... 

3. RENT TO VALUE [RTV] RATIO: Divide the monthly rate/property price (or your lowest offer price) * 100. You want >= 1% (now or when stabilized). Oh, use Rentometer to get rents in the area. 

Let me know if you have other questions.