New To Real Estate Investing

[Jose Garcia]

Hello my name is Jose! 

Don't really know how to start off. New to Real Estate Investing. Would like to know how much is a good amount to start off with. I'm currently living in Los Angeles area. 

I want to know areas that are good to start the journey with little money (like 15-30k) Unless i have to have more?

Places that are a max of a 12hr drive to check out these properties. Any Tips?

[Devin De Lange]

Hi Jose,

Welcome to the world of investing! 

I understand where you are coming from. When I first started I was so overwhelmed by everything I was learning, I fell into analysis paralysis. My biggest suggestion is when you find your right location, don't be afraid to pull the trigger.

It sounds like you have some capital for a down payment so that is positive. For some folks that is a hard step to pass. So, now you are ready to do some research into a location for your first property. It sounds like you want to self-manage, but if you have to drive 12 hours, let's say, they you are already in the lane of long-distance real estate investing (because it's not local to you). If that is the case, I would say you could open up your search to broader markets that are further away and be open to property management. Property management takes typically 8-10% of the rent off the top, but it allows you to purchase properties in other states that are more affordable. If you are looking for something in the 100-200k range (based on the capital you have for a 20% down payment), places like Ohio or other places in the midwest are great opportunities. These typically don't appreciate as much as other locations, but they have more potential for cash flow and can be a great way to get started. 

If you are wanting to stay in the 12 hour range, I would suggest researching smaller areas within a 12 hour radius of LA. Is there a small town outside of a city/larger town where people tend to live because its cheaper? You are in an expensive part of the country, so this may take some time to find something. There are also more regulations in CA, if you want to stay there for your first property, which is another reason I mentioned looking in another state and thinking about long distance real estate investing. 

The first step is information gathering and researching markets. Answering the question -- do I need to be able to drive to my property and if so what cons are there to those limitations? Or can I explore other areas of the country to start off? 

I hope this helps!

[Remington Lyman]

Quote from @Jose Garcia:

Hello my name is Jose! 

Don't really know how to start off. New to Real Estate Investing. Would like to know how much is a good amount to start off with. I'm currently living in Los Angeles area. 

I want to know areas that are good to start the journey with little money (like 15-30k) Unless i have to have more?

Places that are a max of a 12hr drive to check out these properties. Any Tips?

 I would probably continue to save so you can increase your budget

[Kristen L Garner]

Hi Jose! Depending on the loan product used - to purchase a non owner occupied investment property you will need a 15-20% down payment plus closing costs. (different loans have different seasoning periods for your funds and different guidelines on allowing gifted funds - something to consider) To determine closing costs you can call a local title company in your chosen area and ask them for their fee sheet and your lender should be able to provide you with any other fees associated with the loan. I would start with narrowing down a location and property type and then making sure you are connected with a lender so you are running your numbers with accurate data. I'd be happy to connect and chat if you'd like to throw ideas around. I invest out of state as well.

[Andrew Syrios]

Welcome to BiggerPockets Jose and best of luck investing!

[Jose Garcia]

Quote from @Devin De Lange:

Hi Jose,

Welcome to the world of investing! 

I understand where you are coming from. When I first started I was so overwhelmed by everything I was learning, I fell into analysis paralysis. My biggest suggestion is when you find your right location, don't be afraid to pull the trigger.

It sounds like you have some capital for a down payment so that is positive. For some folks that is a hard step to pass. So, now you are ready to do some research into a location for your first property. It sounds like you want to self-manage, but if you have to drive 12 hours, let's say, they you are already in the lane of long-distance real estate investing (because it's not local to you). If that is the case, I would say you could open up your search to broader markets that are further away and be open to property management. Property management takes typically 8-10% of the rent off the top, but it allows you to purchase properties in other states that are more affordable. If you are looking for something in the 100-200k range (based on the capital you have for a 20% down payment), places like Ohio or other places in the midwest are great opportunities. These typically don't appreciate as much as other locations, but they have more potential for cash flow and can be a great way to get started. 

If you are wanting to stay in the 12 hour range, I would suggest researching smaller areas within a 12 hour radius of LA. Is there a small town outside of a city/larger town where people tend to live because its cheaper? You are in an expensive part of the country, so this may take some time to find something. There are also more regulations in CA, if you want to stay there for your first property, which is another reason I mentioned looking in another state and thinking about long distance real estate investing. 

The first step is information gathering and researching markets. Answering the question -- do I need to be able to drive to my property and if so what cons are there to those limitations? Or can I explore other areas of the country to start off? 

I hope this helps!

 Thank you for the feedback. You gave me a different thought process on it. gathering and researching different states, Im utilizing zillow and redfin just loooking.

What would be better to start off. I dont know whether like a Rehab is good or fix and flip. I think i want to fix and flip unitl i have enough to do a rehab. Any tips on that as well?

[Jose Garcia]

Quote from @Kristen L Garner:

Hi Jose! Depending on the loan product used - to purchase a non owner occupied investment property you will need a 15-20% down payment plus closing costs. (different loans have different seasoning periods for your funds and different guidelines on allowing gifted funds - something to consider) To determine closing costs you can call a local title company in your chosen area and ask them for their fee sheet and your lender should be able to provide you with any other fees associated with the loan. I would start with narrowing down a location and property type and then making sure you are connected with a lender so you are running your numbers with accurate data. I'd be happy to connect and chat if you'd like to throw ideas around. I invest out of state as well.

 Thats good to know, I am getting more information and looking around to start off. Yes, i want to get more informed

[Rick Albert]

There are a couple of things:

1. You don't have a ton of cash, which can be risky on some level. I say this because if there are repairs to be done, after closing costs and down payment, you won't have enough.

2. I'm not sure what you could buy that would actually be worth investing in that is within a 12 hour driving radius. It would likely be somewhere rural, which although everyone needs a home, could pose problems later on with finding tenants, getting repairs done, etc.

3. I would consider house hacking in LA. With $30K as a first time home buyer, you can put as little as 3% down with conventional loans up to certain loan amounts. Citi Bank came out with a program with no PMI if you purchase in certain neighborhoods. That stretches your money farther, have better appreciation, loan buy downs, and tax write offs as a primary residence.

[Devin De Lange]

Quote from @Jose Garcia:

Quote from @Devin De Lange:

Hi Jose,

Welcome to the world of investing! 

I understand where you are coming from. When I first started I was so overwhelmed by everything I was learning, I fell into analysis paralysis. My biggest suggestion is when you find your right location, don't be afraid to pull the trigger.

It sounds like you have some capital for a down payment so that is positive. For some folks that is a hard step to pass. So, now you are ready to do some research into a location for your first property. It sounds like you want to self-manage, but if you have to drive 12 hours, let's say, they you are already in the lane of long-distance real estate investing (because it's not local to you). If that is the case, I would say you could open up your search to broader markets that are further away and be open to property management. Property management takes typically 8-10% of the rent off the top, but it allows you to purchase properties in other states that are more affordable. If you are looking for something in the 100-200k range (based on the capital you have for a 20% down payment), places like Ohio or other places in the midwest are great opportunities. These typically don't appreciate as much as other locations, but they have more potential for cash flow and can be a great way to get started. 

If you are wanting to stay in the 12 hour range, I would suggest researching smaller areas within a 12 hour radius of LA. Is there a small town outside of a city/larger town where people tend to live because its cheaper? You are in an expensive part of the country, so this may take some time to find something. There are also more regulations in CA, if you want to stay there for your first property, which is another reason I mentioned looking in another state and thinking about long distance real estate investing. 

The first step is information gathering and researching markets. Answering the question -- do I need to be able to drive to my property and if so what cons are there to those limitations? Or can I explore other areas of the country to start off? 

I hope this helps!

 Thank you for the feedback. You gave me a different thought process on it. gathering and researching different states, Im utilizing zillow and redfin just loooking.

What would be better to start off. I dont know whether like a Rehab is good or fix and flip. I think i want to fix and flip unitl i have enough to do a rehab. Any tips on that as well?

Hi Jose, what I've learned the hard way is to know yourself enough to know what you can handle. A fix and flip sounds good because of the capital it can produce, but you will have to manage a team from long distance, which has its challenges when you are just starting out. It also requires a lot more capital with the potential of using hard money loans. All of these things are great methods of getting into real estate investment, but they are complex and have a lot of ups/downs. I started with a property that needed mainly cosmetic fixes -- new granite, knobs, paint, floors, etc. It was more expensive than I thought it would be and took longer than I thought as well. So, when you are searching, I would look for spaces that have good bones and already have the bigger projects done. For example, you find a space with good floors (LVP, tile, pretty good carpet - can be cleaned), but needs a paint job and some granite/new counters. Those small renovations can make a huge difference, and a lot of people can't see past the paint and clutter in photos on Zillow/Redfin, and that gives you an advantage. 

Feel free to message me if you have any other questions. I am here to help! It was hard to get started. 

[James Carlson]

@Jose Garcia

First off, do you already own the place you live? If not, I think buying your primary is your first step. You gotta pay to live somewhere. Might as well pay yourself.

If you do already own, and you're truly looking for your first investment, saving up a bit more so you can get into a SFH isn't a bad idea, but don't discount condos. Our first three investments were condos, and they all did well for us. And if you'll get discouraged by waiting to save up more money and won't end up doing anything, then definitely buy something now, get the ball rolling and build up again from that.

[Jose Garcia]

Quote from @Account Closed:

Hey Jose! 

Welcome to the world of real estate investing! Starting with 15-30k is a good range, but remember, it's not just about the initial investment. You'll also need to consider ongoing costs like maintenance, taxes, and possibly financing. 

Since you're in LA, you might want to look into nearby areas like Riverside or San Bernardino for more affordable options. As for tips, research is key! Look for up-and-coming neighborhoods, study market trends, and network with other investors for advice and insights.

okay, i was planning on maybe using like 20k. hmmm good point! im definitely going to keep that in mind!

im starting to really like the idea of out of state investing. like you any apps or websites recommended?

[Jose Garcia]

Quote from @Rick Albert:

There are a couple of things:

1. You don't have a ton of cash, which can be risky on some level. I say this because if there are repairs to be done, after closing costs and down payment, you won't have enough.

2. I'm not sure what you could buy that would actually be worth investing in that is within a 12 hour driving radius. It would likely be somewhere rural, which although everyone needs a home, could pose problems later on with finding tenants, getting repairs done, etc.

3. I would consider house hacking in LA. With $30K as a first time home buyer, you can put as little as 3% down with conventional loans up to certain loan amounts. Citi Bank came out with a program with no PMI if you purchase in certain neighborhoods. That stretches your money farther, have better appreciation, loan buy downs, and tax write offs as a primary residence.

 whats the average that would be wasted with repairs? based on your experience?

im starting to look into the out of state

gotta look into that, thank you!

[Jose Garcia]

Quote from @Devin De Lange:

Quote from @Jose Garcia:

Quote from @Devin De Lange:

Hi Jose

. A fix and flip sounds good because of the capital it can produce, but you will have to manage a team from long distance, which has its challenges when you are just starting out. It also requires a lot more capital with the potential of using hard money loans. All of these things are great methods of getting into real estate investment, but they are complex and have a lot of ups/downs. I started with a property that needed mainly cosmetic fixes -- new granite, knobs, paint, floors, etc. It was more expensive than I thought it would be and took longer than I thought as well. So, when you are searching, I would look for spaces that have good bones and already have the bigger projects done. For example, you find a space with good floors (LVP, tile, pretty good carpet - can be cleaned), but needs a paint job and some granite/new counters. Those small renovations can make a huge difference, and a lot of people can't see past the paint and clutter in photos on Zillow/Redfin, and that gives you an advantage. 

Feel free to message me if you have any other questions. I am here to help! It was hard to get started. 

 any recommendations for out of state, low state tax, with population and job growth ? 

[Greg Parker]

The current metro area population of Montgomery in 2023 is 374,000, a 1.91% increase from 2022. The metro area population of Montgomery in 2022 was 367,000, a 1.94% increase from 2021.
In a number crunch of 300 cities using 10 metrics ranging from home prices to tax rates to vacancy levels, WalletHub determined that Montgomery, Alabama, was the nation’s most affordable city for homebuyers.

Montgomery county tax estimate formula is: appraised value x 20% (without homestead) x .0365!

[Rick Albert]

Quote from @Jose Garcia:

Quote from @Rick Albert:

There are a couple of things:

1. You don't have a ton of cash, which can be risky on some level. I say this because if there are repairs to be done, after closing costs and down payment, you won't have enough.

2. I'm not sure what you could buy that would actually be worth investing in that is within a 12 hour driving radius. It would likely be somewhere rural, which although everyone needs a home, could pose problems later on with finding tenants, getting repairs done, etc.

3. I would consider house hacking in LA. With $30K as a first time home buyer, you can put as little as 3% down with conventional loans up to certain loan amounts. Citi Bank came out with a program with no PMI if you purchase in certain neighborhoods. That stretches your money farther, have better appreciation, loan buy downs, and tax write offs as a primary residence.

 whats the average that would be wasted with repairs? based on your experience?

im starting to look into the out of state

gotta look into that, thank you!

 There is absolutely no way to say how much repairs will be. It can be $1 to $1M. Each property is different. The safest route is new construction or buying something already extensively remodeled. You could also go a condo/townhouse route which could still have repairs but generally it is internal (no roof, sewer line, etc.).