All Forum Posts by: Benjamin Ying

Benjamin,

You're on the right track by focusing on macro trends like job growth and population increases, these can justify investments even if the 1% rule isn't met. Leveraging your friend's connections in Provo could lower risk and give you a head start, especially if the market fundamentals are strong. Your target metros make sense, and direct flights are a convenience, but if Columbus or Huntsville offer better returns, they’re worth considering despite the extra travel.

For OOS investing, a property manager is highly recommended, especially for a first-time investor. While it eats into cash flow, it prevents costly mistakes and keeps operations smooth. Minimal or negative cash flow in the first year or two isn't uncommon, especially in appreciating markets, but make sure you have a plan to improve profitability.

When you're ready to move forward, I’d be happy to help with financing options to maximize your investment potential.

Best,

Drago

@Benjamin Ying

Every one has given some great advice! 

As far as Colorado Springs you can definitely manage a rental from a far. Long term rentals are the easiest since you won't have to deal with cleaners and maintenance issues are relatively easy to deal with by calling someone. 

In Colorado it is mainly an appreciation market. $450k-$500k Purchase price you will have a chance to cash flow a few hundred bucks in Colorado Springs but it won't be much. 

The 1% rule is more like a .5% rule here. 

For your first investment I would aim to get some amounts of cash flow and not be in the negative. You can be negative for a few years and be okay but That is a better strategy once you have more experience with real estate. 

Very common to overthink this investment.  Most people throw $150k at a financial planner and don't batt an eye.  Real estate investing has a floor... the land+.  

I personally would say your successful friend as a guide is like gold... don't look anywhere else.  And I certainly don't think flying anywhere to scout is where you are at.  Acre of Diamonds... right there local!

Appreciation of an asset with low down payment, tenants paying principle down, tax advantages, all reasons why real estate is an investment of DOING.  

@Benjamin Ying 

Did you take the time to actually read our response to your Q #1?

Or, has your analysis-paralysis already taken over?

Lots of good advice here already. I will just say there is great vlaue in starting out in an area where you have contacts and resources (Provo) as long as you can find a cash flow deal. I think OOS investing without a property mgr is going to be challenging even though it is a cost. In addition, I have never seen Provo show up on any booming investment cities list but of course that is just one resource and not the end all be all. 

 1. Off-set is not the word I would use. It adds to the characteristics you're looking for. The 1% rule is antiquated. Don't get caught in terms, get caught in trends.

2. Doveryai, no Proveryai. Remember, nobody is looking to work with you unless it's to their benefit. Now, if you can benefit too then you analyze if that's worth it but if it's just the former, then stick to the original point.

3. Expand, but don't throw the entire country out there. Screen by what you're looking for; housing scarcity, tax implications, barrier of entry, coastal, climate risk off or on, etc. Tons of things, once you get an idea of your angle. Start screening cities that fit that.

4. Definitely no. But highly recommended, save yourself the time but more importantly the liability.I consider it a necessity, but in reality it's not.

5. In today's era, that's normal. Cash flow is a function of LTV, so this is where it gets murky.

 

Hi Benjamin,
1. The 1% Rule is a great starting point to gauge cash flow. I recommend checking market with great macros.

2. If the market aligns with your goals, it makes sense to take advantage of the connections. I’d suggest chatting with your friend about what’s been working for him, and maybe ask for some recommendations on building a solid local team

3. It's personal choice. Direct flights are a huge convenience, but what matters most is if the market fits your overall goal and strategy.

4. Yes, I always recommend out of state buyers to have PM in place.

5. It's not uncommon to have lower cash especially in markets where properties are appreciating. In some markets, it’s rare to hit the positive cash flow in B class or better, but cash flow can still be decent in the C+ areas.