Which market to start in for beginner?

Question

Hi!
My husband and I are looking to invest in property to both flip to sell and flip to keep for renting. We are SO NEW and still learning so much, but we’re struggling on deciding WHERE to begin. We are looking to invest out of state, and we have small cash to start. Any suggestions for newbies looking for more inexpensive homes?

Thank you!!

Kerlous Tadres · Answer

Hey Noelle, welcome to BP! I would highly recommend that you focus on what you want to start out with first, flip or long-term rental. If I'm you I would focus on getting a long-term rental property and learn the market that you are investing in. Doing a flip from out of state can be fairly difficult. Would seriously focus on your game-plan and what you want to do for investing in the long run. Keep reading the forums and learn from other investors is a great way to start.

Noelle Hoyne · Answer

Thank you for your advise! I definitely plan on starting small and making sure I’ve taken the time to learn and really understand my goals.

Noelle Hoyne · Answer

Thank you for that advice! I’m definitely trying to take my time and LEARN!

Noelle Hoyne · Answer

Thank you for your insight Randy!

Bradley Buxton · Answer

@Noelle HoyneWhere to begin... The best area to start investing are in your own neighborhood, county, or within a few hours by car or plane where you can go to, take care of business, and be home in a day. CA investors like to invest in Reno, NV because the landlord friendly laws, low property taxes, above average appreciation, and the proximity to CA. Others like the low cost of the mid-west and have the, skills, time and energy to manage a project long distance.What strategy to deploy will depend on your goals and what your skills, lifestyle, and capital allow you to accomplish and the balance of those 3. As other have stated flips can go wrong and so can long term rentals. Also flips can mean different things, it could be carpets and paint or down to the studs. Start small with your limited cash and avoid decisions that will take you out of your investing game.

Randall Alan · Answer

@Noelle HoyneI would strongly caution you to be close by your first flip. They are not for the faint of heart. Being out of state on a first flip could be a major nightmare. You want to be able to keep your eyes on the whole process. Did your contractor show up today? Where is all the new stuff that we had delivered to install? Did someone steal it? Hey, that's not the way I wanted it to look (times 1 million!!) You can't monitor what you can't see, and you can't see it if you are a thousand miles away!I would suggest doing a very cosmetic first flip. Even if it is paint, flooring, some new appliances, and some yard improvements. Don't go off the deep end and get into something that is way over the top in need of repair! There is a HUGE learning curve with Flips. It's not impossible... it just comes at you from every direction. "Hey... I just flushed the toilet and it's backing up into the shower (Sewer / Septic). "Hey, the AC isn't holding temperature and it's making a funny noise outside". Are those German roaches? What are all these little wings by the windows (termites). "I didn't see this crack last time, but look - it runs all the way up to there!" (foundation issue?) I could go on for hours! You REALLY need to keep close tabs on a flip until you are to the point you aren't so green and you know you have trusted vendors and such. Contractors can be some of the least reliable people on the planet - no offense to the good one (singular) reading this. Contractors are frequently working multiple jobs - and if they know you are out of town investors - how much priority is your job to them, versus meeting with other customers for their next job or finishing people who have their eyes on them. Plus - where do you find good ones? (I think the real ratio is about 50 bad ones to 1 good one!) The "small cash" part of your comments is also suspect. For flips you not only have to buy the house up front -but also be able to afford to do all the repairs - the ones you planned on; plus all the ones you find later once you tear into things. Not to scare you - but we made one mistake on a flip - replacing old wooden windows instead of rebuilding them - and it ended up costing us $50,000 to our $175,000 profit margin. The inspector came in and said - you now have to bring all these window casings up to code. The windows weren't the problem - it was the framing around them where they weren't strapped with metal at the bottom of the posts - and the framing requirements were totally different in 1908 when the house was built. All the (already installed) windows had to be removed and reframed, and reinstalled. Lesson learned - as soon as you modify something - it has to meet current code!!!! The problem was we had already finished the inside of the house and so all the repair work had to be done from the outside without totally tearing up everything already finished on the inside. Cost us $2,000/window (beyond the cost of the window itself) for 25 windows! We still made plenty of money... but you don't know what you don't know... and in Flips, that can get very expensive, very fast. I'm sure you'll lean towards a General Contractor if you go out of state. Hopefully that will help. But just remember - you've been warned - start local, start small!All the best!Randy