Investor · sacramento, CA · Member since 2013 · 39 posts · 13 votes
since here in Sacramento CA , the prices are so high and there are so many cash buyer investors , that there is barley any inventory left for new investors like myself , is it smart to go ahead and buy houses from websites like Auction.com online in other states (i see houses selling on last bids for less than 20K in some states like NC , TN , TX , KY , ... ) without actually looking at poperty itself ?! is there any limit or legal action that prevent a person from investing in other states for buy , flip and hold ?!
That's going to take a very long explanation to answer and it comes down to, It depends on you. What risk are you willing to take if the house/s have issues? What research are you able to complete prior to purchasing? Who is going to fix up/manage the property for you and how will you check them out/hire them? If you are very new investor and intend to focus on a new area I recommend you learn as much as you can about purchasing/renovating/managing homes for a few months minimum first. Then find the area that fits the risk/returns/goals that you have set and then VISIT that city to meet the contacts you have found for purchasing/fixing/managing the properties. I, myself, would not purchase from an auction site or realtor unless I knew the area and had the people in place to ensure I would be successful. One option to consider, but with lots of due diligence, is a turnkey company. While the returns don't seem to be as high the quality and management is in place. You still need to research the companies and locations.
I currently own eight properties in CA and agree the prices are going up. August last year I asked myself the same question you posed. I spent a month doing research and then flew out to Memphis, TN for a week, where my wife is from. I chose Memphis because my wife goes there a few times a year and has family there. We met with realtors, turnkey companies, property managers for a quick but very intense tour of the city. I ended up purchasing one home even though my goal was three. I found that after spending weeks researching and physically walking many homes that it still was difficult to meet my goal.
Luckily I found another person selling homes out there. I closed on my 2nd Memphis home this past Friday and am working on the 3rd deal now.
To sum it up, don't rush into another area, do your research and, if possible and you are set on it, visit the area you want to invest in. A $1,000 trip for five days will be much better than a $30k+ disaster. Feel free to message me if you have any specific questions. I'm not an expert but I am also learning. Good luck.
If your PM is charging things like that, you have a bad PM. A good one will not nickel and dime you. The only way a good PM will constantly charge you things like that is if you buy a property in poor condition that legitimately needs all of those repairs. So for one, the margins on any properties you find should be high enough to accommodate some repairs expenses and for two, those are bad PMs that you don't want to have if that is happening to you.
@Sam Hadad - a lot of good opinions here so I'll be brief with my thoughts since they overlap with others.
Investing in out-of-state properties = good. If you know the market.
Investing in out-of-state properties via auction sites = potentially bad. Unless you are intimately familiar with the market. I just think it's too risky but if there's a zero-risk on down payment money for the auction then that would eliminate the risk. I've never done an online auction so I'm not familiar with the typical terms.
I live in NYC but invest in markets across the US. It's working out really well for me. The key is to know the market, have team members you trust there and have free-looks at properties (i.e. refundable earnest money deposits).
I disagree with you on a bad PM nickel and dime-ing.
Every PM in the Seattle/Puget Sound area nickles and dimes. This is how they make money. They collect 10% for rent and charge for all maintenance calls then bills the owner on top of the 10%. I have talked to PMs and people who use them.