BiggerPockets

Being in California I'm of course looking elsewhere to invest, and I've considered vegas as one option. The other option I've looked at is Arizona- Phoenix- maybe Chandler area, which seems to be up and coming. Anyone else investing in Arizona? Any potential there?

I'm looking to do buy and hold, providing the cashflow is there, but I'm trying to get a feel for the market- vacancies, employment,etc-anyone?

We live and buy in the Inland Empire of Southern California. Many great deals to be had.

Indianapolis, Texas, Detroit, and Tennessee seem to be other places I hear many California investors buy in. I don't know much about Arizona but the couple investments I have looked at seem to have a much higher vacancy rate (like 15-20%), but that may not mean much as I have noticed that trend from looking at 5 apartment buildings 2 yrs ago.

The problem with investing out of state is control of your properties. Unless you have a enough units to warrant a live in manager you have to depend on property managers. Not only do they cost you money, but many of the them are just rent collectors and don't really care that much about your property.
I've found a good way to invest in houses out of state is with lease options. People that plan on eventually buying the propery tend to take better care of it.
Good luck,
donrock

Well Chris

I will give you a word of advise. Do what others are not willing and you will get results that others envy.

Here's what I mean. I here all the fear about investing out of state. Here is the main problem with investing out of state. If you do not have your business set like a business then you will get what you get.

Here is a example and I love to give real examples not speculative. I just purchasing a property in either St. Louis, MO or Detroit, MI tomorrow morning. I do not have fear of what the property will bring because I already know my strategies with the property. I am going to fly to the city and while I am there I will touch base with two main sources. Property Mgr three of them and I will sit them down and interview them. After that I will go to the local REIA association and join. Well I am already a member, but I am giving you the gist of what will take place. After that I will get a list from the REIA of who the good contractors are in the area. I will set up an appt with three of them to get estimates already knowing what most of the rehab will cost. After that I will put a sign in the yard, advertise with a real estate company looking for a LEASE OPTION or a STRONG renter that I will screen myself through a company called

NATIONAL TENANT NETWORK.

See it is not so much the out of state investing that is a problem I see to many investors not knowing which direction they want to go and staying the course. Now, I own several pieces of properties in these areas already and I have not had any problems that could not be solved over the phone or by contacting the tenant. It is all about how you want your business to be run.

You can work on your business or you can work in your business you choose.

Let me know if I can be of help to you and anyone else trying to overcome the fear of investing in another market.

Better to invest in another market than not invest at all. You made a very powerful point, where you are you can not CASH FLOW. If you call $50-$150 CASH FLOW then more power to you. Just to say that the property is local and I can what SEE IT. Well I do not see my out of states that much, but I do SEE the CHECK every mth and that is what matters.

SUCCESS BREEDS SUCCESS

Thanks for the advice guys.

John when it comes to places like CA AZ and NV I think letting the numbers make the call is the best move. If the numbers start to make sense, then it becomes worth investigating.But as you pointed out, I could get 7 houses for a $700 cash flow in another state versus 1 house @ +/- 300k in California for $100 profit. Even commercial has a 6-7% average cap rate-which is lower than one likes to see, correct? It doesn't make sense.

Also, I've heard and read that the bottom is still a ways off in the west, or at least in California.. I'm hearing another 20% drop(on these boards among other places) and another year before the market here starts to bottom. even then I have to wonder if the numbers will add up.

As for Michigan/midwest, I'm from there, and I know that any uptick is highly dependent on the big 3, so until there's resolution there, places like Ohio, Michigan and Indiana will continue to have high vacancies and low appreciation- At least that's how I see it. Of course there are still viable areas in Michigan you can get cash flow out of, if not appreciation that aren't as dependendant on automotive (Ann Arbor, Ypsilanti, are 2 college towns that come to mind). But if I'm wrong, please tell me why, I'm here to learn.

MikeOH will probably have a different view on OH, but I've come to see him as the exception to a lot of general rules.

Chris

As far as the mid west like Detroit and surrounding areas. We are not finding the problems that you speak of concerning the big three. People no matter what will always need a place to live. Your job is to find the most viable place to invest your cash and get a GOOD return.

I love investing in Michigian. I live in North Carolina. I invest in three states and I have not had any of the problems that you are speaking about. You first have to get your mind ready and stop reading all the HOOPLA about appreciation and decline in market.

Well if you know anything about investing that is when you want to invest in a down market. You pick up GOOD properties CHEAP and then you put a LEASE OPTION tenant or RENTER whichever you prefer and let them pay for your investment.

Just purchased one in Detroit. Paid $5,500 Nice 3/1 with basement. Needs about 10k in repair. So I am in this house for $15,500 and I can rent it out for $600 mth.

But, I won't. I will put a 100% owner financing sign in the yard and advertise it where I know that I have had success and I will owner finance someone who has had some credit issues. This is the way you make money not continually speculating on what the BIG 3 will do.

Just seems to make sense to me and anyone else who understands real estate. I think what you all have gotten accustom to in Cali, Arizona, Vegas and Florida is all the nice weather and the FAKE APPRECIATION and now it is coming back to bite everyone in the butt and they are SKEPTICAL and PARINOID about everything. I will take what I have set up any day whether the BIG 3 FOLD or not.

I am the Warren Buffet believer that when all of you were trying to make the money that you made. I was really skeptical then and now that, that time period is over you see who the REAL PLAYERS are in the game. When people can't get financing or when the house you purchased for $150k is only worth $95k. What do you do?

Well continue to read and continue to SPECULATE again about the appreciation factor and I'll tune in a few yrs from now when the market corrects itself and see if you have jumped in and OVERPAID for the same piece of property that you could have gotten for pennies on the dollar.

SUCCESS BREEDS SUCCESS

I do not have a clue about Omaha, sounds cold there. :)

I wouldn't totally rule out California as there are areas that have really been hit by foreclosures such as Kern county where prices have really come down. Homes that sold for over 200k in 06' down to 50k or less. Rents for 3bed homes seem to be around $1000/mo . Might not be as good as something out of state but within a 2 hour drive of Southern CA. Better than buying something for $300,000 that would barely rent out for $2000 a month.

When I looked at Vegas and Phoenix recently I was amazed how much prices have come down there as well. I would say understand the area before you invest anywhere.

Jason,

Congratulations on your success. I think people often there is a stigma attached to certain areas. People have heard that a certain area is no good, but they often have no idea what the area is like.

In a way I guess this is good because it means that there would be less people likely to purchase investment properties there...less competition.

I think your advice is very good, to have a good team and also researching the area.

A property might seem like a great deal at $25,000k living in California, but if the comps are at $15,000 for example that property is overpriced.

That is great you have some great realtors on your team, I know some are hesitant to deal with 'out of towners" ..but once you prove that you are serious it doesn't seem there is a reason to be this way.

I think a lot of realtors assume that 'out of town' investors are not serious because they live far away, which is frustrating.

And on the note of know your area, how's detroit faring lately? k