How should newbies proceed in this kind of Market?

Question

My wife and I are just getting started. We want to purchase our first Rental/investment property. However because the properties are so high we find ourselves wondering if we should wait for the market to change before we purchase. However we keep hearing also of the importance to get moving taking action. So we have been looking at properties out of state. So do we flip, do we buy and hold, do we buy a triplex or duplex we need some advice some direction would be very helpful. We have been looking at Maine and Pennsylvania again trying to find our bearings any help would be greatly appreciated.

Brandon Sturgill · Answer

@Bryan Milian1- One month of market research on major metro areas2- Two weeks of talking to leading agents in your top 3 markets3- Four weeks of learning the markets4- Offer, offer, offer- stick to fundamentals...long-term buy-and hold small MF (your available cash will be the number one factor in determining what you can afford and what locations you will end up buying in...you'll be comparing apples to apples in your top 3 markets...as long as you have a top agent, you'll be golden)Best of luck

Stephen Brown · Answer

Hello Bryan. When investing out of state you need to consider the rule of 3:1. Disposition - the property needs to be able to have an exit strategy2. Equity - You need to have skin in the game and have ample reserves - it takes 10 properties to be financially free3. Desirable - Is this a property that, given the worst case scenario, you would move into?If your property meets these criteria and it cash flows, now is the time to buy OOS!

Bryan Milian · Answer

Eric thanks for commenting. Our challenge is that we do not have the finances to buy here in CA....and our situation at the moment does permit us to qualify for a loan. So we are trying to leverage the cash we have to purchase a property free and clear.

Eric James · Answer

Better to look for local off market properties you can buy for under market value.

Cody Maheu · Answer

@Kevin Phu Yea shoot me a DM and we can start talking shop. I have 2 partners at the moment that both live in San Diego as well.

Kevin Phu · Answer

@Cody Maheu hey! My wife and I also live in San Diego and our looking to make OOS purchases in the near future. Would love to connect one day to pick your brain and see if there is any value that we couple bring to the table!

Cody Maheu · Answer

As @Bethany Turon mentioned, my partners and I just started our OOS journey. We live in San Diego,CA and are starting to invest in Maine. We are about to close on our first property. Let me know if you have any questions on where to begin and I'll try to help as best as I can! @Bryan Milian

Joe Chirdon · Answer

Come in with reasonable expectations. Prices and competition for property have increased. Finding a strong cash flowing property has become more difficult. People looking for 2% deals should probably now be happy with 0.5-1% deals. If you can bring an inspector to showings (so you could potential waiver the inspection contingency), that could make your offers stronger too...

Bethany Turon · Answer

@Bryan MilianDefinitely very important questions to ask. First of all, many people a year ago were asking the same question about if they should wait, and planning to wait. They 100% regret that now. Anything you buy should have solid numbers and in general that’s more important than that price you buy for. As far as flip, buy and hold, etc, that’s a personal question related to your interests and skills. There are almost as many approaches to real estate as there are people, and that’s why education is really the first and most important thing you should do. There is plenty of free education on here and on the podcasts. Investing out of state can be extremely difficult, and it is essential that you build your team first - And it needs to be a solid team. Anything that requires work being done on a house is also difficult right now, many people are booked out, in my area sometimes for a year or more. Much easier at the moment if you are planning to do the work yourself - which obviously would not be a viable option if you’re not local to the property. So then you might be locking for turnkey buy and hold - which can definitely work, but in that scenario, your property manager can make or break you. A solid PM is worth their weight in gold, and myself, owning investments remotely for 17+ years, I have some real horror stories to share. Also bear in mind that wholesaling is a way to make money in the business, and can be done entirely remotely. But again, that depends on your situation. Do you have more time, or money? How hands on do you want to be? What is your goal? Share some of these answers and we may be able to help with more direction. I can definitely say that Maine is a great market to invest in, if you are looking for cash flow. @Cody Maheu is in CA and working on the same thing!

Bryan Milian · Answer

Thanks for that comment Stephen really helpful! Learning something every day thanks again.