All Forum Posts by: Lindsay Davis

@Bliss Hu,

At your age, you’re well ahead of the curve. $300,000 is more than enough to acquire your first property, even in New Jersey. You’re right, though, that you’re unlikely to generate much cash flow, if at all, if you invest in your home state.

One option would be to look out of state. Markets in the Sunbelt—like Birmingham, AL, or Chattanooga, TN, for instance—offer far more favorable rent-to-price ratios, so you’re more likely to find cash-flowing opportunities there than if you constrained yourself to NJ.

You also make a good point about the BRRRR approach. I think it can be profitable for seasoned real estate investors who have both the time and expertise to make sure their rehab project stays on budget, but I definitely wouldn't recommend biting off more you can chew and doing BRRRR for your first deal.

@Keegan Darby,

How much equity do you have in the property? I'm probably preaching to the choir here, but you don't have to sell (and incur transaction costs, potentially realize a taxable event, etc.) to generate liquidity. As an alternative, would a cash-out refinance, a home equity loan, or a HELOC make sense for you?

That way, you can keep the property around and, at the same time, have the liquidity you need. Just a thought!

@Kyle Collins,

I think you’re off to a good start. $100,000 is definitely enough to acquire a long-term rental in Montgomery—it’s one of the most affordable markets in Alabama, after all.

As for your concern about being unable to lease the property out, I imagine you’ll be fine. The citywide vacancy rate is about 8%, which is on par with the national average. For what it’s worth, Montgomery’s vacancy rate is lower than that of Miami’s, which sits at 12.65%.

@Sandra Ho,

I'm a little late to your thread, but you pose a good question—neither of these situations are ideal. I would contend, however, that it’s better to have no tenant than deal with one who’s a credit risk. The logic here is that it’s far more difficult (and costlier) to evict a nonperforming tenant than it is to screen for a good one.

Like @Greg Scottsaid, see if lowering your asking rent increases the number of applications you receive. Remember that you’re incurring a vacancy loss every day you don’t have a tenant in place, so you should consider the trade-off here.

@Alyssa Dinson,

I see that you listed Alabama as a state you’re interested in. I also notice that @Gregory Schwartz mentioned Huntsville in particular—I definitely think that it’s a strong market for long-term appreciation.

As for your concerns about investing out of state, I think an investment strategy that is as close to passive as possible would be best.

A do-it-yourself approach—where you acquire a property, place a tenant, interview a bunch of property managers, and handle maintenance yourself—is going to be pretty tough to do remotely. And even if you hire a property manager to take things off your plate, that process isn’t foolproof, as Gregory illustrates.

Buying a turnkey property (ideally with a tenant in place), or opting for a syndication or fund, could be a better bet if you’re looking to invest outside California but don’t want to deal with the hassles of “landlording.”

@Muhammad Kashif,

Your options are pretty limited here since debt’s completely out of your picture. I second what Jonathan Greene is saying here—turnkey is probably best bet given your constraints. I’ll also add that it could be an especially good fit for you given that you’re primarily after cash flow.

The other options you list—land, multifamily, commercial real estate, etc.—can also be acquired on an all-cash basis, but your initial outlay will be a lot higher, and leasing cycles will be longer and more complex than single-family.

@Steve Reutzel,

I hear you—the same deals that penciled out in 2019 just won’t work in 2024. But there are still opportunities out there. I’m personally having good success with single-family rentals in the Sunbelt.

A good number of markets in that region are very affordable. 3-bed, 2-bath single families in B/C neighborhoods in Montgomery, for example, can be had for $130,000 or so. Monthly gross rents in those same areas hover around $1,000, so “immediate positive cash flow” could be possible if you identify a good property that doesn’t have immediate capex needs or deferred maintenance issues that need to be addressed.

@Kim A. Yes, we do! In addition to properties across central and north Alabama, we also have options in Chattanooga, Tennessee. Birmingham is a great market for real estate investment right now—it offers solid rent-to-price ratios, affordable home prices, and consistent rental demand.

If you’re thinking about investing in Birmingham, I can provide some helpful data and share insights about neighborhoods that align with your goals.

@Kim A.

Welcome! I’m active in Huntsville as an investor and turnkey property manager. Happy to serve as a resource for any questions you may have!

@John Salcedo,

You mentioned Alabama as one of the states you’re interested in. It’d be great to know a little more about your market preferences and non-negotiables, since Alabama’s pretty diverse in terms of what it can offer.

For example, the Huntsville area is a much higher-growth market than Birmingham, and the median home in each area is priced accordingly to reflect that difference.

Even individual markets can vary widely by zip code—properties in a Birmingham suburb like Forestdale are going to fetch dramatically different rents than homes in a neighborhood like Mountain Brook or Vestavia Hills.

In any case, let us know what your buying criteria look like, and we can give more pointed recommendations.