Out of state investing - Where to begin?

12 Replies

So I've been lurking these forums for the past year (and saving up some capital for a down payment). I was wondering if anyone could give me a quick walk through on how buying out of state works (looking into the midwest area, ie Kansas City and Indianapolis, if that makes any difference). I imagine it would go something like this:

1. Find a property management company - let them know I'm an out of state investor, find out more about the micro environment of particular neighborhoods, etc. Perhaps get recommendations on realtors?

2. Get in touch with a real estate agent from the area and start getting property deals that I can check out/analyze. 

3. At the same time, find a local bank to get pre-approved for a loan so that when I find a deal I like I can immediately put in an offer.

Does that sound about right? Or should I find an agent first? Should I do it through a bank or should I be looking for private lenders/seller financed homes? This is my first property (ever!) that I plan on buying. Never owned a home in my life so any advice would be greatly appreciated :)

You may want to think about a partner in that knows the market, usually has all the above in place already, and is your boots on the ground.

Thanks for the reply @Joe Villeneuve . What does getting a partner entail exactly? Would it be as simple as asking around on BP? Or do you mean going through sites that have deals listed e.g. Ali Boone's hipster investments site.

Eric T- I would familiarize yourself  with investors or realtors in the area you have an interest in and find them here on BP. Most will have a reputation either good or bad, so figure that out. I don't think the order you work your list in matters too much. You have to have all the pieces to complete the puzzle. I also suggest you find threads on the areas you like or by members that want to help you. 

Fullerton- Here is a fun fact about your city. I grew up at 917 w. Valley View drive and went to Sunny Hills high. By business where I made all my early money was at 2401 and 2451 E. Chapman ave. close to 57 Freeway. I owned the 2 buildings and had my office and held RE seminars there. I have some threads here on BP you might find fun and also discussed these buildings in my Book.

Dallas, TX- Widen your midwest horizon. Dallas can't be beat for tons of reasons. I put my money where my mouth is , having just tied up 3 buildings consisting of 343 apartments. Great area.

Good luck and e-mail if You need more input.

Rich

@Eric T.

I do think that turnkey companies can provide a ton of value for some of the use cases you have. There are plenty of folks on the forums who are anti-turnkey, but you also want to evaluate it from several positions:

1) You have a W2 job and don't plan to quit it to do full time real estate.
2) You have no connections whatsoever in a marketplace that you like.
3) You want to avoid the cost and time overhead of linking all the pieces together.

Well oiled turnkey operations do make their money up front. However, a good one will also get most of the agonizing pieces in place for you: Management, finding tenants, finding property, even attorneys and LLC formation in the state is helpful. For a busy person, that's worth 2-3% off the top difference I would make if I had run the deal myself.

Note: There are a ton of really bad operators. Be sure to get testimonials and go and visit the operation. If something looks and smells funny, it probably is. A flight and a Friday off work is a small price to pay for missing a bad down payment.

Out of state investing definitely has some major risks that accompany it. I know I'm in a similar boat and looking to possibly move out to Utah. The 3 things I must do that come to mind is - 

1. Find a real estate agent or partner you trust and knows the area well

2. Travel out there attend the REIA meeting to network and get a taste of what strategies are working in that area.

3. Start hitting craigslist and calling wholesalers who can add you to their buyers list (if you're rehabber like me ... actually did this today!) 

Wish you the best of luck!

I think hitting craigslist to find wholesalers in a specific market especially if your plan for  it is but and hold is a terrible idea!  If your worried about an actual TK provider being shady, just imagine what the normal craigslist wholesaler is like!!!!  

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

@Eric T.

 There are a couple of ways you can go.  Identify a TK provider as @Trevor Ewen suggests that you can really trust - ie: do your due diligence, or you can partner with someone on the ground in the area you invest in.  You bring all or most of the money, they bring the effort, management and experience.  The TK route is probably the simplest, but the partner route can be very worthwhile as some here on BP have done.  Finding the partner, ah now that's the biggest challenge.

Larry Fried, Real Estate Agent in OR (#201211636)

I am in the same  position as you, out of state investor. One thing I did that was very important is to visit the location get to know the area, find other areas in that city that might be good investments.  Otherwise you are really taking a shot in  the dark and hoping that the people you are working with are stearing you straight.

We have properties in many states and most I have never visited.  Couple pieces of advise...

1- Do your homework now. Find 2-3 metropolitan areas that you really like.  Then do your homework on what communities to look at and which to stay away from.

2- If you are looking for rentals, talk to a few property managers and see what they say about your findings and get their two cents. If it's a flip, then talk to realtors and do the same.

3- Look honestly about your financial situation and get ready to make bidS. 

It's scary, but that is what we are here for

Thanks everyone for the advice! Definitely starting to feel more comfortable about all of this. I'll look into finding potential partners/turnkey companies and explore my options.

Local banks may not like that you are not also local.  You may want to look for a national lender that is familiar with you and your business that you can partner with repeatedly. 

Originally posted by @Eric T. :

Thanks for the reply @Joe Villeneuve. What does getting a partner entail exactly? Would it be as simple as asking around on BP? Or do you mean going through sites that have deals listed e.g. Ali Boone's hipster investments site.

 Yes to all you said,...and then some.  If you are looking to invest in some other state, then you need to look there.

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