All Forum Posts by: Todd Anderson

@Nicholas Pool,

Welcome to the BP community. Congratulations I'm making the decision to take your first step into the world of REI.

In today's world of high prices and high interest rates is difficult to hit some of the old metrics. The 1% rule has been talked about for many years, but in most areas it's hard to hit. I have seen that many times the cash on cash is a better metric, and still able to be met in mini markets.

When I talk with investors who are interested in your market near Charlotte North Carolina we talk about different ways to solve for this problem. We have been able to find Build 2 Rent deals in smaller markets 30 minutes outside of Charlotte that still makes sense for an investment. When working with a new construction turkey investment, the builders are able to give us incentives that make the cash on cash work to the investors favor.

There are many strategies that can be used in REI. In today's environment, you need to find a strategy that solves for today's problems.

Best of luck in your REI journey

@Diedrich Wiebe,

Welcome to the BP community.  Great job getting set up to make your first investment.

Along with getting physically prepared to invest OOS, make sure that you continue to use this for him to get educated before your first investment. I worked with the number of investors who have gone down the road you're looking at just chasing cash flow, cheap housing, and they have found when looking at the end of the year, the deal is not making money. When investing out of state or out of the country, it is very important to keep in mind all the variables that go into net income. At the lower price point houses maintenance can eat up your profits very quickly.

Many of the foreign investors that I've worked with have found investing in a more stable investment with more moderate cash flow is many times better in the long run.  I have told many of the investors that I've worked with on your first few deals, look for base hits not home runs.  When I work with foreign investors, we look for markets that are growing in population and employment, so that their investment can get in the way of obvious appreciation. This is the best way to build wealth with Real Estate.

Keep asking questions and learning, and best of luck in your investing journey.

@Victor Mejia,

Welcome to the BP community. Good for you for taking the first steps to start your REI journey.

@Randall Alan, makes many good points about investing 00S. It can be difficult to find cash flow if you were paying someone else for everything done on your property. I would suggest that you look into a tweak for this strategy. I have found that investing in new construction properties solves for many of these problems.

The growing build to rent model, allows investors to look 00S add a property that has been designed to be a rental. The investors I work with find that by new construction solves for the maintenance issues that can come with such a price for OOS investing.  With this strategy, you are owning the property during the best years of its life, when it does not need capital improvements or much of the maintenance that older properties need.

Some of the builders that I have worked with,  also solve for some of the other problems. Many investors find that builders will offer incentives to the investor that make finding cash flow easier. Some of these may include rate by downs and even free property management.

Please connect if you have more questions.

Best of luck

@Lauren Stanton,

Welcome to the BP community.  This is a great way to get started.  

I believe that you are on the right track.  Using a house hack on a diplex for your first investment is such a powerful way to start.  You are able to control a valuable investment property for such a small investment that it will jump start you wealth growth. 

With your situation, both having full time jobs, I may suggest that you may want to look a New Construction as a way to house hack.  We find that builders are building properties just on the outside of major cities where that land is cheaper.  There are some great advantages for your situation with the Build to Rent model.  You will have a new property that does not need work for you to handel, and it is more attractive to other renters so we find higher rent and tenants that stay longer.  We also find that builders are able to give some incentives that you cant find anywhere else.  

Stay on the corse of a house hack, it is by far the most powerful way to get started in REI.

Feel free to connect with more questions.

Best of luck.

@Noah Mac

Congratulations about thinking about REI at your age and welcome to the BP community

In your situation, I would tell you the same thing I would tell my 23-year-old daughter. Find a good house hack where you wanna live. I would not suggest that you look out of state in your position. The best thing that someone in your position can do is buy a small multifamily, under 4 unit, and live in one unit.

When doing this, you can get into the unit for a very small down payment 5%. You'll need to live in the property for a year. Bill equity, save money, and do it again next year. After you've done this three times in five years then you will have the experience, the track record, and the equity to continue to build a very nice portfolio.

Best of luck to you on your REI journey. With your mindset at this age, I know you will be able to take advantage of wealth creation.

@Antonio Waller

Congratulations on being a new investor and welcome to the BP community.

As of there have said on this thread, this is a very common question for new investors. But it is not only a question for new investors, depending on your situation, it may be a question that you will be asking during your entire REI journey.

Investing only in your backyard, or taking the time to build a team in each OOS market that you were interested in is certainly a solid way to invest. Many investors never get to making their investment because they spend all their time researching and building their team. For people who don't have the time to spend on this or are looking for a more passive way to get into REI, turkey is a very nice option.

I would agree with others that not all situations are the same. You need to fully vet any team that you work with. But for the investor, who doesn't want to spend all their free time building teams, finding the right turnkey team once that can help you invest multiple times, maybe a good use of your time.

Best of luck on your investing journey.

@Reed Lederman

Welcome to the BP community. 

Good for you, with all you have going on, to think about bettering your future with REI. For a busy professional this is actually the best time to invest with the idea of growing wealth for the future. I have always been very impressed with people who consider REI for building wealth while they are building their career.

I've worked with a number of investors in your position. They have good strong careers or W-2 jobs that they don't necessarily want to give up. I actually think that is better if you don't go in to Real Estate full-time. People can still invest into real estate while doing what they are good at or enjoy doing, it doesn't have to be Real Estate full-time.

I would suggest that you look at a turkey way to invest that has the team built around the investment. I suggest to the investors that I work with to look at Build to Rent investing. With this strategy, you were able to get a new property that takes less headaches for maintenance and repairs. You were also able to own a property for the best years of its life. The strategy that I talk to investors about is to then exchange that property before the property is ready for improvements. There are many great markets available. If you are willing to invest 00S.

Best of luck on your REI journey and feel free to connect with more questions

@Bryan W.

Welcome to the BP community. This is a great place to get the information you need to make your first deal.

Making the first deal is normally the toughest for any investor. It's good to learn exactly what to be looking for, and then look at a number of deals to see if you can find it. Make sure you give yourself a realistic timeframe to look at deals. This means look and talk to people about specific REI deals for one to three months until you're comfortable with the deals you're seeing and how to do the underwriting on each.

At this point, you will have to push yourself to move. I talk with a number of investors through the years that get caught in the "analysis paralysis". They get to the point of looking at deals, but are always looking for the perfect one I have found over 30 years of investing. They rarely is a perfect one. There's always some peace that you have questions on. That is why all investing is a risk. As others have said, I would strongly recommend that you go with a lower risk strategy on your first deal. You don't need to hit a home run the first time at bat you just need a base hit.

Best of luck on your journey, please connect if I can help in anyway way

@Ven Perla

Welcome to the BP community and welcome to your REI journey

It's great that you've been doing your research and it looks like you're coming to very good conclusions. I talk with investors each week that are in your situation. They want to get into REI but it doesn't make sense in their local area. You identified three great markets, all of which are growing in population and employment. This is an important step one. Make sure the market that you invest in gives you the opportunity to get in the way of appreciation.

It sounds like you need to start looking at some deals now. I would be happy to help if you'd like. The investors that I have worked with have found good deals in each of these markets. As you brought up, we find that looking towards new construction has many benefits.

Best of luck on your REI journey.

@Steven Le

Welcome to the REI world. It's great that you found the BP community because it's such a good place to learn.

Trying to find your first deal, I told the investors I work with, to look for a "Base Hit". As an OOS Investor, it gives you the option to find a strong market for your first deal. Find a market that is growing in population and employment but still has good areas with slightly lower price points. In a market like this, you can find a house that will take a little less maintenance to run and will allow you to get in the way of appreciation.

When I talk with investors in your position, investing from out of the country, I suggest that they look at new construction investing. There are many builders out there right now that are building properties that were great as rentals. Some of the builders are able to offer great incentives to investors to take properties that are already completed. Some of the investors I work with are able to find great right by Downs and even free property management.

As you get started in REI, I feel the best way to start is with an easy base hit. This will keep your risk down, but still allow you cash flow, appreciation and knowledge of REI.

Best of luck on your journey.