23 Out of College with 100k?

[Ryan Verbist]

Hello Bigger Pockets Forum,

I am located in Los Angeles, CA and have just graduated college. I am liquid 100k cash. My best bud from childhood is in the same boat with 100k cash. Together we are looking to start our real estate empire with 200k working capital. 

I really love the Brrrr strategy and maximizing cash flow. Although a flip is also appetizing for the short term profit. 

The market is pretty high in Los Angeles although we are extremely connected and have access to lot of off market deals for when we have more money and are smarter. 

The next market where I am most connected is Dallas, Texas and it appears the price for property is much cheaper and in our range.

What type of advice would you give a young entrepreneur in these shoes ?

And what type of real estate strategy would you start with first to initiate the empire?

[James Wise]

Originally posted by @Ryan Verbist:

Hello Bigger Pockets Forum,

I am located in Los Angeles, CA and have just graduated college. I am liquid 100k cash. My best bud from childhood is in the same boat with 100k cash. Together we are looking to start our real estate empire with 200k working capital. 

I really love the Brrrr strategy and maximizing cash flow. Although a flip is also appetizing for the short term profit. 

The market is pretty high in Los Angeles although we are extremely connected and have access to lot of off market deals for when we have more money and are smarter. 

The next market where I am most connected is Dallas, Texas and it appears the price for property is much cheaper and in our range.

What type of advice would you give a young entrepreneur in these shoes ?

And what type of real estate strategy would you start with first to initiate the empire?

Welcome to the site Ryan. BRRRR is a great strategy but best done locally. That may not be in the cards for you given the cost of your market. Good news is that you aren't alone. There are tons of investors who live in expensive markets who invest out of state. The majority flock to the turnkey markets. There are tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cleveland, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Huntsville, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.