California Or Out of State????

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California Or Out of State????

Jason Holtzinger
Santa Rosa, CA 路 Member since 2017 路 18 posts 路 9 votes

Hi BP community, Please keep reading through this intro to get to the guts of my question.

I have decide that I am going to purchase my first multi family property. I purchased my first home in 2012 and held for 8 years in the north bay and came out very well ahead after purchasing my next home in the country. Now I am after cash flow specifically and am looking for a minimum of $200 per month after expenses for my first rental property. I am not as concerned with appreciation as my goal is to buy and rent and hold and repeat. I currently run a construction company and through our business we are comfortable and are able to do pretty much everything we want....at the cost of 80 hour plus weeks for me. My goal is to eventually have enough rental income to not be so reliant on my construction business for all our income.

Now we are on the hunt! The problem is finding a deal in the North Bay of CA that cashflows is insanely difficult. Finding a deal that cash flows without buying for cash seems near impossible do to the large loans needed to purchase the crazy priced properties. after some research of other markets,we could buy a property for cash in Detroit metro or Columbus outright and cash flow on month one.

I really want to invest locally since I know the state very well but just cant seem to make the numbers work.

Should I stay in the hunt or move on to a different state that is landlord friendly and has properties that can actually be purchased with a reasonable loan or for cash?

Thanks!

4Reply
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
4y
Quote from @Jason Holtzinger:

You're already working 80 hours a week. Do you really want to take on management of a property in the most heavily regulated place on earth?

Buy in another state and hire someone to manage the property. Better yet, invest in a syndication to get a similar or better return with no need to worry about tenants and toilets.

The DIY Landlord Book4.7247 Reviews
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9Reply
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  • Michael Millet
    Member since 2022 路 13 posts 路 3 votes
    4y

    Hey Jason, just out of curiosity, what's your budget?
    I know you didn't mention Arizona, but I'm just curious what sorts of options I could find you at your price-points since we do have some great options.
    If nothing else, you could use it to help figure out if CA is your best choice.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
    4y
    Quote from @Jason Holtzinger:

    You're already working 80 hours a week. Do you really want to take on management of a property in the most heavily regulated place on earth?

    Buy in another state and hire someone to manage the property. Better yet, invest in a syndication to get a similar or better return with no need to worry about tenants and toilets.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    9Reply
  • Jason Holtzinger
    OP
    Santa Rosa, CA 路 Member since 2017 路 18 posts 路 9 votes
    4y
    Quote from @Michael Millet:

    Hey Jason, just out of curiosity, what's your budget?
    I know you didn't mention Arizona, but I'm just curious what sorts of options I could find you at your price-points since we do have some great options.
    If nothing else, you could use it to help figure out if CA is your best choice.


     The Only reason I mentioned Detroit & Columbus is because there have been SO many people talking about these areas lately and the prices are cheap. Ideally I could find something that worked closer to me on the west coast. Maybe the Reno,NV area or Arizona or Idaho (although Idaho seems like it has already caught up to our prices). These places ae very easy for me to drive or fly to for a quick trip. My wife went to school in NC and we visit friends there pretty often so Charlotte/Charlotte outskirts are enticing to us as well from the stand point of viewing properties and knowing the area. Id like to stay under the 500k purchase price mark but that is really kind of arbitrary.

    1Reply
  • Jason Holtzinger
    OP
    Santa Rosa, CA 路 Member since 2017 路 18 posts 路 9 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Jason Holtzinger:

    You're already working 80 hours a week. Do you really want to take on management of a property in the most heavily regulated place on earth?

    Buy in another state and hire someone to manage the property. Better yet, invest in a syndication to get a similar or better return with no need to worry about tenants and toilets.

    I Definitely don't want to manage any property. I don't have enough time to do it myself. I haven't actually researched syndications yet. I will look into that today. Thank you for the advice. 
    1Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    4y

    Out of state 

    Come invest in Austin Texas 

    0Reply
  • Carlos Ptriawan
    Member since 2019 路 7k+ posts 路 4k+ votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Jason Holtzinger:

    You're already working 80 hours a week. Do you really want to take on management of a property in the most heavily regulated place on earth?

    Buy in another state and hire someone to manage the property. Better yet, invest in a syndication to get a similar or better return with no need to worry about tenants and toilets.


     best education ever !

    0Reply
  • Brandon GoldsmithBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2020 路 1k+ posts 路 1k+ votes
    4y

    I would recommend going where the numbers make sense. I think you answered your own question in your analysis and you will be able to scale more in OOS investing

    [email protected]614-963-3340
    1Reply
  • Matt K.
    Walnut Creek, CA 路 Member since 2015 路 3k+ posts 路 2k+ votes
    4y

    Figure out your budget, that'll narrow your search to something that fits.

    1Reply
  • Carlos Ptriawan
    Member since 2019 路 7k+ posts 路 4k+ votes
    4y
    Quote from @Jason Holtzinger:

    Hi BP community, Please keep reading through this intro to get to the guts of my question.

    I have decide that I am going to purchase my first multi family property. I purchased my first home in 2012 and held for 8 years in the north bay and came out very well ahead after purchasing my next home in the country. Now I am after cash flow specifically and am looking for a minimum of $200 per month after expenses for my first rental property. I am not as concerned with appreciation as my goal is to buy and rent and hold and repeat. I currently run a construction company and through our business we are comfortable and are able to do pretty much everything we want....at the cost of 80 hour plus weeks for me. My goal is to eventually have enough rental income to not be so reliant on my construction business for all our income.

    Now we are on the hunt! The problem is finding a deal in the North Bay of CA that cashflows is insanely difficult. Finding a deal that cash flows without buying for cash seems near impossible do to the large loans needed to purchase the crazy priced properties. after some research of other markets,we could buy a property for cash in Detroit metro or Columbus outright and cash flow on month one.

    I really want to invest locally since I know the state very well but just cant seem to make the numbers work.

    Should I stay in the hunt or move on to a different state that is landlord friendly and has properties that can actually be purchased with a reasonable loan or for cash?

    Thanks!


    There're very few duplexes in North Bay in MLS with $600k price it can yield you $1,000/mo net and it seems it's turnkey quality. The thing is you already have a very strong competitive advantage of having a contractor company, if I were you I will just keep rehab property in Peninsula.

    If you invest OOS, you no longer have competitive advantage. 

    1Reply
  • Aj Parikh
    Rental Property Investor 路 Centreville, VA 路 Member since 2019 路 1k+ posts 路 799 votes
    4y

    Similar to your market in CA, I am in the Northern Virginia market and the prices are too high for SFH and there is no opportunity for small multi family. I decided to go out of state and invest in Cleveland back in 2020 and its has really helped me scale my portfolio to 12 units now. Let me know if that is a strategy you are interested in and we can connect.

    4Reply
  • Tracy Keffer
    Real Estate Agent 路 Columbus, OH 路 Member since 2019 路 35 posts 路 41 votes
    4y

    I personally invest close to me. It's not right or wrong but it's my comfort zone :-) Yet I have a ton of clients from CA investing in Columbus OH with the reasons mentioned by you and others above. Some of them NEVER been to Col and never met me, their property manager nor know how the city looks like except all the research tools online. End of the day it's numbers, the strong team you can rely on and that's it. I am the ears and the eyes for my clients. He loves Google Map to see the area, the neighbors etc and all the statistics then I can reinforce his research with my local knowledge. It's doable hence my clients keep buying here. I can connect you with them so you can pick their brains if you would like.

    5Reply
  • Teresa Springer
    Orange Los Angeles Riverside, and San Bernardino Counties 路 Member since 2018 路 1 post 路 3 votes
    4y

    I agree with above mentions of investing in other areas. I am in Southern CA, and I have the benefit of being closer to lower-budget areas (Riverside County, San Bernardino County.) 

    The price of a property management company is well worth it. Find an agent that you trust in the area where you want to invest. 

    3Reply
  • Michael Millet
    Member since 2022 路 13 posts 路 3 votes
    4y

    Okay, interesting. I'm working with investor clients who I find properties for. I had secured a duplex for them that had been fixed up, about a month ago.. 

    $535k for two units, each earning solid $2400 per month in rent. They wanted it but got in their own way and asked for a 20 day pause, so they lost it to another buyer. Kinda painful to watch. 馃槕

    Anyway, I have a nack for the research on finding the best places, would it be helpful if I sent you some examples? Then you can at least compare it to what's available in other places, if nothing else. 

    No pressure, I just hate to do all that work and then nobody gets to benefit from it.. haha

    I find solid duplexes for under $500k all the time, so staying under your budget is very conceivable. 

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2017 路 6k+ posts 路 7k+ votes
    4y
    Quote from @Jason Holtzinger:

    Hi BP community, Please keep reading through this intro to get to the guts of my question.

    I have decide that I am going to purchase my first multi family property. I purchased my first home in 2012 and held for 8 years in the north bay and came out very well ahead after purchasing my next home in the country. Now I am after cash flow specifically and am looking for a minimum of $200 per month after expenses for my first rental property. I am not as concerned with appreciation as my goal is to buy and rent and hold and repeat. I currently run a construction company and through our business we are comfortable and are able to do pretty much everything we want....at the cost of 80 hour plus weeks for me. My goal is to eventually have enough rental income to not be so reliant on my construction business for all our income.

    Now we are on the hunt! The problem is finding a deal in the North Bay of CA that cashflows is insanely difficult. Finding a deal that cash flows without buying for cash seems near impossible do to the large loans needed to purchase the crazy priced properties. after some research of other markets,we could buy a property for cash in Detroit metro or Columbus outright and cash flow on month one.

    I really want to invest locally since I know the state very well but just cant seem to make the numbers work.

    Should I stay in the hunt or move on to a different state that is landlord friendly and has properties that can actually be purchased with a reasonable loan or for cash?

    Thanks!


     Make the jump to Columbus

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    0Reply
  • Jason Holtzinger
    OP
    Santa Rosa, CA 路 Member since 2017 路 18 posts 路 9 votes
    4y
    Quote from @Michael Millet:

    Okay, interesting. I'm working with investor clients who I find properties for. I had secured a duplex for them that had been fixed up, about a month ago.. 

    $535k for two units, each earning solid $2400 per month in rent. They wanted it but got in their own way and asked for a 20 day pause, so they lost it to another buyer. Kinda painful to watch. 馃槕

    Anyway, I have a nack for the research on finding the best places, would it be helpful if I sent you some examples? Then you can at least compare it to what's available in other places, if nothing else. 

    No pressure, I just hate to do all that work and then nobody gets to benefit from it.. haha

    I find solid duplexes for under $500k all the time, so staying under your budget is very conceivable. 


     What area are you talking about finding these?

    1Reply
  • Patrick DruryBusiness Member
    Real Estate Agent 路 Columbus, OH & Cleveland OH 路 Member since 2021 路 1k+ posts 路 2k+ votes
    4y

    @Jason Holtzinger
    I would definitely recommend Columbus OH. It's a solid hybrid market of cash flow and appreciation. Columbus has lots of job opportunities and population growth.

    [email protected]614-412-4565
    Reafco-556 Reviews
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    1Reply
  • Lane Kawaoka
    Rental Property Investor 路 Honolulu, HAWAII (HI) 路 Member since 2011 路 4k+ posts 路 2k+ votes
    4y

    I used to live in Seattle (now Hawaii) and started with turnkey remote rentals in 2009-2015 then went into syndications once my net worth went over 500k. So I think it depends on your net worth but if you want cashflow which is prudent I would go out of state.

    1Reply
  • Trent Ecklar
    Real Estate Agent 路 Columbus, OH 路 Member since 2017 路 203 posts 路 170 votes
    4y

    Out of state in Central Ohio

    0Reply
  • Linda LabbePro Member
    Investor 路 North Bay, Ontario 路 Member since 2015 路 709 posts 路 263 votes
    4y

    Ohio all day long  numbers are great  and people are friendly and helpful we live in Ontario and have been working there for 7 years now more then willing to share what we have discovered with anyone who wants to chat

    1Reply
  • Joseph Stern
    Investor 路 Tampa, FL 路 Member since 2020 路 287 posts 路 152 votes
    4y

    @Jason Holtzinger Hey Jason, I can understand wanting to stay in state. I will say this, Tampa FL is a booming market right now and St. Petersburg which is just across the bridge on the gulf now allows ADU's to be built on SFH lots that are at least 4500sq ft. There are tons of properties in St. Pete that have detached garages, old work sheds, or oversized en suites already with electrical and plumbing ready to go. They can easily be converted to legal 2nd units to rent that will get you the cash flow you are seeking. Prices are still attractive for properties in decent areas, still in the 200s+ with lots of upside. Shoot me a message if you have any more interest.

    3Reply
  • Randy Gutierrez
    Investor 路 NY 路 Member since 2019 路 171 posts 路 80 votes
    4y

    If you own a construction company why are you not flipping homes? Being you don't have much time I would look into buying turnkey properties.

    0Reply
  • Andy LanyiPro Member
    Rental Property Investor 路 Pasadena 路 Member since 2019 路 46 posts 路 15 votes
    4y

    @Jason Holtzinger

    Hello Jason,

    I am having the same problem

    In Southern California. I look at how much $ I have to invest, look at the property, and put it in the bigger pockets calculator and it does not cash flow. I want manage my property. I do not want to go out of state. What I have done is gone to a local meetup and are taking to other people about my situation. Passive investment in syndication may be the best for you until you have more cash to invest. Right you need a lot of cash to get cash flow. But your rate or return is not great though. Just go to the meetups.

    1Reply
  • Dan H.Pro Member
    Investor 路 Poway, CA 路 Member since 2015 路 7k+ posts 路 8k+ votes
    4y

    Coastal California properties historically have outstanding cash flow for long term holds.  This is because there is poor correlation between initial cash flow and actual cash flow over a long hold.  This is no by happenstance.  RE is an efficient market that prices in numerous parameters including expected property and rent appreciation. High initial cash flow markets are often markets with poor rent appreciation outlook. 

    I highly suspect that, without a refinance, a property purchased today in coastal CA will produce better cash flow than virtually all other markets over a 10 year hold.  I know this is true for the coastal Ca RE purchased 10 years ago.  

    Do not make the mistake of believing initial cash flow dictates actual cash flow over a long hold. 


    good luck

    3Reply
  • Paul E Romero
    Rental Property Investor 路 Pacifica, CA 路 Member since 2018 路 2 posts 路 5 votes
    4y
    Quote from @Jason Holtzinger:

    Hi BP community, Please keep reading through this intro to get to the guts of my question.

    I have decide that I am going to purchase my first multi family property. I purchased my first home in 2012 and held for 8 years in the north bay and came out very well ahead after purchasing my next home in the country. Now I am after cash flow specifically and am looking for a minimum of $200 per month after expenses for my first rental property. I am not as concerned with appreciation as my goal is to buy and rent and hold and repeat. I currently run a construction company and through our business we are comfortable and are able to do pretty much everything we want....at the cost of 80 hour plus weeks for me. My goal is to eventually have enough rental income to not be so reliant on my construction business for all our income.

    Now we are on the hunt! The problem is finding a deal in the North Bay of CA that cashflows is insanely difficult. Finding a deal that cash flows without buying for cash seems near impossible do to the large loans needed to purchase the crazy priced properties. after some research of other markets,we could buy a property for cash in Detroit metro or Columbus outright and cash flow on month one.

    I really want to invest locally since I know the state very well but just cant seem to make the numbers work.

    Should I stay in the hunt or move on to a different state that is landlord friendly and has properties that can actually be purchased with a reasonable loan or for cash?

    Thanks!

     I live in Pacifica CA and have two properties in Virginia Beach that I bought in the early 2000's.  One cash flows 1800 and the other 1300.  Homes in Virginia Beach do not appreciate that good but I decided to buy and hold.  Now I am looking into Cleveland and Columbus to buy more rentals.  California now is not a good place to buy investment properties so I definitely suggest you go out of state and get a property manager to handle your rentals.  And another tip I have for you, NEVER sell your home in the Bay Area!  Equity builds up fast here and you can use that to buy homes out of state!!! 

    5Reply
  • Michael Millet
    Member since 2022 路 13 posts 路 3 votes
    4y
    Quote from @Jason Holtzinger:
    Quote from @Michael Millet:

    I find solid duplexes for under $500k all the time, so staying under your budget is very conceivable. 


     What area are you talking about finding these?

    Jason, these are in Phoenix-Metro. Our MLS covers a very large land area, and 4.5+ million people. 

    Many of the ones I find could use moderate to heavy renovations, but a lot of them are just out-dated and still perfectly fine. A few are updated and ready to pick up and go. 

    If you have a tolerance for renovations, all the better, as I do factor renovation cost estimates into my calculations, to pick the ones that will be most profitable, allowing you to put fixer-uppers on a more level playing field with turn-key properties. 
    0Reply
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