Bay Area Newbie ready to combat "analysis paralysis" Help needed!

[Nate Baum]

Hello BP community!

I was unable to find a good 1-800 number for analysis paralysis, so I figured this would be a great place to start. Thank you for building such an amazing place with a treasure trove of information, podcasts, fascinating books by David Greene, Brandon Turner, Anson Young and data... data.... data.... o man, there we go again.

My wife and I are new to the world of real estate investing. For the last 7 months, we have been getting ready to get off the sidelines and invest for our future. We moved to Mountain View, CA from Charlotte, NC about a year ago, I am a financial analyst and she is an analyst in the field supply chain management. We were both unemployed before the move, living off of savings and are truly blessed to have amazing jobs in the Bay Area while saving close to 70% of our income. 

Our goal is to invest out of state in one or two Duplex/Tri/Quad "Mom and Pop" houses, get a solid cash flow of around 10-15% and get rich slowly. We built crazy models with censuses, Zillow, labor statistics, crime rate data and have little to show for it other than wasted time. We did Identify Cincinnati & Pittsburg as a possibility along with the usual suspects (Austin, Denver, Phoenix...) 

This out of state is a little nerve wrecking and I am wondering if there are others out there that had the same reservations/fears before they invested far far away from home.

How did you determine the best location to peruse?  

Is now a good time to get in or does it make more sense to wait?

What was the "Aha!" moment that pushed you over the edge to take that first step?

What do you wish you knew back then that would have helped things go more smoothly?

Is there an active community in the Bay Area with meet-ups?

Thanks,

Nate

[Johnson H.]

Hi Nate, welcome to BP. When I first started investing in 2010, I was also a keyboard warrior looking at a few cities before selecting Phoenix. From there I flew out there three times, found the right agent to work with beforehand and we drove from one end to the metro to the other looking at properties I found online. Every trip my search parameters narrowed and I started to figure out which areas and types of houses I liked and wanted to invest in. After the third trip I had two offers accepted and I closed on two properties in the same month. After that I was able to make offers regularly and comfortably. 

For me to get comfortable with investing out of state, I had to see the area, street and property with my own eyes before buying something so expensive. Would you buy a used car without seeing it in person and test driving it? I couldn't! How do you really know an area is a B vs C area? I would see with my own eyes kids playing in the street, guys loitering at the 4plex next door, or hear a loud dog barking at a neighbors house. The internet can't tell you that. Driving around I could tell right away if the vibe of the area was right for me or not.

Also, leverage is a double edge sword. It's great if you buy a $100k house, put 20% down and the market goes up 10% you made 50% more money on your down. However on the flip side, if you have a bad tenant and found out the location is not as great as you thought and wanted to sell at the same price you bought it for, with seller commissions, closing costs and rehab to sell, it could easily be 10% of the purchase price meaning you just lost half your money. I am a big believer in "making money when you buy" so make sure you buy right so that you have the peace of mind to sleep well at night.

I just sold my last rental in Phoenix last month. What was my biggest regret now looking back eight years ago? I should have never left the Bay Area and invested in my own back yard. Come by my meetup tomorrow night in Milpitas if you would like to chat more. Good luck with your investing!