Decision on where to invest as a beginner!

[Kristina Xie]

HI Everyone! I am a beginner although I've watched my dad invest in a few properties in NYC. I am looking to venture out and purchase my first rental. I am unsure if I should invest locally (within NYC) given that it is super competitive and overpriced. Now that I work fully remote, I was thinking about investing in NJ/upstate NYC or even Connecticut. The other option was to invest as a Limited Partner in a real estate syndication. Given the options, what would you suggest? My goal is to build my rental portfolio so that I can build up my passive income. Thanks in advanced for everyone's advice and help!!

[Lane Kawaoka]

@Kristina Xie

New Your is an example of a primary market which are NOT ideal for cashflow investing.

Sophisticated investors look at the Rent-to-Value Ratio and look for at least 1% or more to be able to cashflow after expenses. You find the Rent-to-Value Ratio by taking the monthly rent dividing by the purchase price. For example a $100,000 home that rents for 1,000 a month would have a Rent-to-Value Ratio of 1%. Most people I work with live in primary markets (as opposed to Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other secondary or tertiary markets) where the Rent-to-Value Ratios are under 1%. Plus we invest in red states so we have good landlord laws on our side too.