Best Place to get a Rock Solid Process

[Michel Albert]

Hi everyone!

I am new to Bigger Pockets, new to real estate, and looking to diversify my investment portfolio.  I am interested in the process, because if I can refine that, I feel like it would be rinse and repeat when the right deal presents itself.  

My goal isn't to generate a large cash flow (although it would be nice).  My goal is to find a property that will generate some cash, but appreciate over the long term in a nice, up and coming area with economic growth, low crime, and close to amenities, restaurants, etc.  

1.) What is the process to find this property for those of you who have done it?

2.) Once you've found your target(s), how are you analyzing them knowing that your goal is to have it appreciate in value and create a little nest egg in 20 years when it's doubled in value and can be sold to pay your child's college tuition.  😂

Not looking for a magic formula, just to better understand the process of hunting, finding, analyzing, and making the offer.

I appreciate any advise for the newbie.  Thank you all in advance!

-Mike

[Dan Weber]

Hey Mike, it's great start that you have a pretty clear goal in mind – to get long term appreciation over the course of twenty years, with minimal cash flow if need be. There's no perfect spreadsheet for analyzing appreciation like there is for cash flow, since appreciation is a bit more of an educated guess. With that being said, I would target areas that have shown stable price appreciation in the past, have demonstrated population growth in recent years, and have a diverse economy with plenty of job opportunity. For example – looking for secondary and tertiary markets in the Northeast / East Coast and Southeast that meet those criteria I mentioned above. Real Estate along the coasts is always a good bet for appreciation, as there is only so much land and you can only build in one direction. Tight zoning laws that restrict development and lack of construction labor in the Northeast keep housing prices appreciating over time. The Southeast has had tons of population growth and as long as people can afford the increased insurance costs, the warm climate will continue to draw people. This is all in comparison to places in the Midwest, which appreciates slower but is better for cash flow. I can't speak to the West Coast as I know nothing about it, but you get the general idea. Once you've narrowed in on a couple markets, start running properties through a spreadsheet like you would for any deal and make sure that they are at least cash flow positive. Come up with some cash-on-cash metric that you are comfortable with and underwrite from there. You will likely be comfortable with a lower CoC knowing that you are in it for the long-term appreciation, but it still needs to support itself, plus a little. Hope this helps!