Buy and Hold Markets for Beginners

[Traver Freeman]

I've been doing research on markets for buy and hold for about a month now. I'm checking unemployment rates, population growth, purchase price, rent rates, percentage of renters, etc. and I'm still having trouble identifying a solid market for my price range. 

My main problem is I don't have a whole lot, but I want to begin investing. I've been interested in investing for about a year, but circumstances have propelled me to start taking action. 

I'm living in San Diego, and starting out here with a family and one income at entry level is relatively killer. I've been working two jobs and still barely paying our bills. We've cut down and cut back on every possible avenue and it's still not enough. My wife just got a part time job, and that will allow us to be positive monthly, but we will hardly see each other and never have the weekends off together. 

So my current plan is to find a good cash flowing property to "help" offset our deficit, though my main goal is to save the positive income for future investments. 

Right now I've got about $28,000 in the bank and $16,000 in comfortable playing around with.

Putting 20% down, I'm looking at buying two $30,000-$40,000 properties or one $60,000-$80,000. I'm looking for advice on which direction to go as well as what market falls into that category. 

I've looked at a few cities that seem to meet the criteria for a good market in that price range, but I have no idea if that's how much the ordinary house costs or if I'd be buying the dumpiest house in town.

I appreciate any and all insight either about markets or suggestions and how to take the few funds I have and put them to good use. 

[Chris Clothier]

Originally posted by @Traver Freeman:

I've been doing research on markets for buy and hold for about a month now. I'm checking unemployment rates, population growth, purchase price, rent rates, percentage of renters, etc. and I'm still having trouble identifying a solid market for my price range. 

My main problem is I don't have a whole lot, but I want to begin investing. I've been interested in investing for about a year, but circumstances have propelled me to start taking action. 

I'm living in San Diego, and starting out here with a family and one income at entry level is relatively killer. I've been working two jobs and still barely paying our bills. We've cut down and cut back on every possible avenue and it's still not enough. My wife just got a part time job, and that will allow us to be positive monthly, but we will hardly see each other and never have the weekends off together. 

So my current plan is to find a good cash flowing property to "help" offset our deficit, though my main goal is to save the positive income for future investments. 

Right now I've got about $28,000 in the bank and $16,000 in comfortable playing around with.

Putting 20% down, I'm looking at buying two $30,000-$40,000 properties or one $60,000-$80,000. I'm looking for advice on which direction to go as well as what market falls into that category. 

I've looked at a few cities that seem to meet the criteria for a good market in that price range, but I have no idea if that's how much the ordinary house costs or if I'd be buying the dumpiest house in town.

I appreciate any and all insight either about markets or suggestions and how to take the few funds I have and put them to good use. 

Hey Trevor, Welcome to BiggerPockets.com. As someone who works with a lot of investors and have assisted new and experienced investors, I would suggest you forgo buying a property for right now and look to build your nest egg in a different way. I would network here on BP and look for JV partners and opportunities - you may find them right there in SD.

I would look for opportunities to put your money to work by lending it in a partnership and letting it grow until you have a more comfortable position to invest in better properties.  

As Curt noted for you, lower price properties are a very, very risky route to take - especially if you are looking to create less stress on your household by providing extra income.  Then again, just buying one property that may cost a bit more can become an expensive headache for you so far from home.  You will only have one house so you will always be either 100% happy with your portfolio that it is occupied or 100% upset with your portfolio that it is vacant.  With one property there is no in between.

I would love to tell you how great certain markets are or all the great things you can do buying houses with your money - but, my advice is to keep building your investment funds by partnering your money first.  It is important to build before you buy.  You can build and provide some cushion for your household at the same time and take less risk than if you purchased just one property or two cheap junkers. 

DO NOT fear that the best time to invest in properties is already past.  You can find good investment deals every day - in every economic cycle and in every market.  You do not have to be in a rush, but you could certainly relieve some stress by earning 10% on your money or more by partnering.

Just my .02 worth of advice - best of luck to you with whichever way you go!