New investor - need tips - how to get started

[Lawrence Chen]

Could anyone give any recommendations on the steps I need to take before buying a rental property? 

I live in California and would like to invest in other states like the midwest since the properties there are much cheaper. 

What states/counties should I consider? how to find the right property manager? lenders you would recommend? 

Any guidance will be greatly appreciated!! Thank you so much!!! :)

[Brian Koons]

Hey Lawerence!

Welcome to BP!

For preparing yourself to purchase property, a few general principles are always good, but technically not make or break

1. Credit score. The higher the better. ~740+ is looked at the same as the best.

2. Reserves. Depending on what you're looking to do, some places will require you to have up to 6 months mortgage payment in reserves. this also helps prepare you for unexpected expenses. "you can go broke buying a good deal" - someone else... quoted by Brandon Turner

3. An investor friendly Real Estate Agent. They will bridge the gap and be able to hold your hand through the process. The better the agent, the easier it will be to get over the hurdle of the first deal.

I live in San Diego. I house hack a $1.2M 4-plex near downtown. I put literally no money down to purchase it, yet reap the debt pay down and appreciation benefits of $1.2M vs something cheaper. So if price is the only limiting factor of why you don't want to invest in Cali, it may be worth it to reassess (I would love to chat if you would like to). 

If you're looking at out of state, there are many economic factors to consider (I.e. job growth, types of jobs, economic diversity, price to rent ratios, past appreciation, home court advantage, etc.) 

Finally, like I said, I would recommend finding a rockstar investor friendly agent. The are the hub of all the other people you'll need such as lenders, PM's, etc.

Good luck, and let me know if you have any questions!\

Brian Koons

IG - @Koonsinator