Newbie thinking of investing out of state

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Newbie thinking of investing out of state

Account Closed
Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes

what should one be looking for when researching a potential target area? 

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Elizabeth Colegrove
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
11y

Cash Flow

Appreciation

Rental Market

Job growth and stability

Current Demand and Supply for rentals

Current prices versus history

Expenses

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  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    11y

    Cash Flow

    Appreciation

    Rental Market

    Job growth and stability

    Current Demand and Supply for rentals

    Current prices versus history

    Expenses

    3Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    Welcome to BP. You might consider working this in reverse. Look for the ground team first then the property. The other option is buying from a turnkey company direct as they usually have all the team in place as is. 

    If you are holding look for areas with low taxes,insurance and not on the hook for water. In some areas this can be 3 to 4 months rent alone but no one really advertises that part much. Vegas is one that meets that criteria as far as low holding cost.

    What areas were you thinking? There will be BPers there to help too.

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  • Account Closed
    OP
    Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes
    11y

    thanks for the replies, @matt rosas. When you say the ground team who is that made up of. an agent, pm, contractor? Im thinking of milwaukee as a family freind is currently doing and id have a connection to the area.

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    For sure Ariel you got it right. Ground team is contractor perhaps, good handyman, agents, property managers perhaps, plumbers, yard guys, attorneys etc...sometimes a good handyman can do almost all of it. Basically, all the dudes to help while you are 2k miles away. I believe we have some awesome bpers in WI that can chime in soon.

    I would get their ground opinion on those properties and some can do the team part as well.

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    Now FYI, I think Milwaukee would not qualify on average for low holding cost as compared to say NV, AZ, CO.

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  • Account Closed
    OP
    Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes
    11y

    thanks a lot! i also meant to ask, you metioned vegas that would be much closer to home but does that fall under the issue with water being scarce.if I'm understanding you correctly when you say on the hook for water.

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    Vegas has some big plans for water. I am talking about some midwest areas...think rust belt..that make owners responsible for water bills. It can cost as much or more than a PM. Those areas almost always come with high property taxes too just for fun:) These become cash flow killers sometimes.

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  • Account Closed
    OP
    Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes
    11y

    yikes! thanks for the info Ill definitely be looking out for that.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    Take the list provided by @Elizabeth Colegrove and add to it the following:

    *  In state Property manager

    *  "Boots on the ground" partner...at least until you are established in that state both physically and mentally. 

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  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    11y

    @Account Closed 

    To find out about an area gGo to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

    You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

    Paul

    3Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    I think the #1 thing you should be looking for is a good property manager.  If you have a good property manager, they can help you out even with a bad property (if they are willing).  But a bad property manager will only help you lose money, even on a good property.

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  • Account Closed
    OP
    Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes
    11y

    Thanks all, these are great tips. @Dawn Anastasi at what point should one have management set up and does a manager play a role in marketing for tenants?

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Account Closed:

    Thanks all, these are great tips. @Dawn Anastasi at what point should one have management set up and does a manager play a role in marketing for tenants?

     You want to call PM companies and interview them as well as their references before you even get properties.  If you find that PM companies aren't calling you back, or aren't answering their phone during business hours (and not giving you timely call backs) then you can expect that your service as a customer will be the same if not worse when you are a prospective customer.

    A PM does play a part in marketing for tenants. Check out their website and see if they post ads on Craigslist or Postlets or ask them when you interview them where exactly they market.  Maybe they only put signs in front of the yard. Different markets may have different means of effective advertising to get tenants, and someone local to the area will know that.

    For me, I get the largest majority of my responses off Craigslist, but I also get some from Zillow, Hotpads, and Trulia (in that order).

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  • Joe Moore
    Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
    11y

    I invest in Houston.  I do not have a pm, I self manage.  I do have a good handyman who do tIe repairs.  Whatever he can't do, he gets connections to do.  Yes you will need a ground team.  You need someone to go look at prospective properties.  An RE agent, handyman, contractor, someone who can trust their opinions of the property and neighborhood.  Plus that person must understand that what you want maybe different than your criteria.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Joe Moore 

      Joe your the rare one that can pull that off from out of state... I suspect you have some experience.. for someone new to RE investing I think trying to go it your own from afar would very risky... All it takes is to somehow get with the wrong contractor who takes your rehab money then won't answer calls or e mails... Happens more than we like to think.

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  • Joe Moore
    Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
    11y

    Thank you.  Yes I do have experience.  If you read his post closely, he will be investing in his hometown, his root.  He will have some help back there.  He knows the neighborhoods and will mostly likely has eyes on the ground and a ground team. If no team, I'm pure sure he can build one through friends, associates, and family members.   With the help of the many different types of seasoned investor at BP, he will probably come out smelling like a rose.  I'm pretty sure you would have a good chance to succeed with out of state properties if you had live there before for years as this young man have.  Once again he is investing in a place he knows.

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  • Kevin Rowghani
    Involved In Real Estate · Media, PA · Member since 2010 · 24 posts · 14 votes
    11y
    I have never invested in Real Estate outside my local area. I would be cautious since a lot can go wrong. I suggest having all agreements reviewed by experienced folks. Choose a partner you feel is honest and also experienced.
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Joe Moore 

      I did miss that part  !!

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  • Joe Moore
    Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
    11y

            @Jay Hinrichs Sorry for the above post.  I switch to thread by error.  I was reading a different newbie post that above post has nothing to do with this thread.

            That being said, out of state property can be profitable and can become a growing thriving portfolio.  Out of state do pose a risk because it is far away.  I would suggest that those who can go to that locale and spend some time there and get to know the landscape.  Make some contacts and ask questions.  Never ever go on one person opinion, try get at least three.  If you dealing with a company, check the BBB for a report on that company.  Go to Google maps, Yahoo maps, and cruise around the neighborhood.  I have use title companies to buy properties by buying title insurance to protect myself.  An extra cost but you bring in professional into the deal.  Also I check the property tax on the property on the county website where the property is located to see who own it and if tax is up to date.  You can get a qualified property inspector to check the property.  Yes you can n with out of state property, but your due diligence is a must. 

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  • Joe Moore
    Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
    11y

    Must be Xmas.  As far as bad contractors, they are everywhere.  There are something that you can do to cut down the risk is to check with www.Angieslist.com You can also check any state's contractor's license board.  You can check the www.BBB.com.  You can call some of the property management companies, real estate companies, You can also call the local carpenters' union in the area you want to invest.  I save the best for last, ask on BP who do they recommend and don't recommend.  Home Depot, Lowes, Osh, True Value,  and Ace can make recommendations.  You will probably find the good contractors more than once.  Due diligence is both your protector and friend.  Use it.

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