Open to method and area. Newbie needs help!

[Andrew K.]

I am a newbie to this and am looking to invest in real estate. Initially I was going to buy out of state, but I think I've been sold (thanks to those who replied to my previous post) on buying somewhere I could drive to if I needed to visit the property. Currently live in Bay Area and open to where to invest. (Based on initial thoughts, area id look into are Sacramento, Modesto, Stockton. Thoughts?) I am new to this game, and will be continuing my full time job. My options are below. Thoughts? What is my biggest bang for my buck? Ideally I want to ramp up either option over a 1-2 year period so that I can earn $300k++ per year. 1) Buy and Flip. If I were to do this, I'm looking for an area to buy something $250k or less (ideally, but open to a bit more if it truly made sense). I would need to hire a GC to run the project as my involvement could only be weekends (in person) or nights (virtual). 2) Buy and rent. Open to this by purchasing 1 house to rent . If successful, my plan would be to buy one extra house per month. realistically, how much could I net profit per month per property? Thanks so much!!!!

[Account Closed]

Hey @Andrew K. and welcome! 

I would second @Wes Blackwell on this one. If you're objective is to earn money in the short term then implementing a short term strategy is the way to go. Rentals are a long term strategy whereby you put money into them today and then see rewards over the next 30 years. While you can gain equity on the project in the short term, it's unlikely to gain $300k in 1 year (depending on where you buy of course). 

Flipping properties is how I built wealth personally over a shorter period of time. The flip market in Sacramento is over-saturated and competitive. Being a newbie it will likely be difficult to get into now but not impossible. Properties that are listed, and have flip potential receive multiple offers on them within a matter of days by cash buyers that offer no contingencies. As a newbie I'm not sure I would recommend you submit offers with no contingencies but it's up to your comfort and risk tolerance.

Saying that, from start to finish, a flip project (depending on the scope of work and area it's located in) typically takes 6 months to cash out. Let's say you earn $15k on each flip you do (which is realistic for something under $250k) then you would need to do 20 flips per year and have 10 going at once to gross $300k. 

From experience, you would likely be managing contractors full time if you had 10 flips going at once. Unless you hire a project manager to manage contractors for you - which would take money out of that $300k profit.. Just some food for thought to get you going. 

Feel free to contact me if you'd like to take a look at the Sacramento market.