Investor · Denver, CO · Member since 2016 · 5 posts · 0 votes
I live in the Denver Market and have a buy and hold property in Boulder. I am looking to grow my portfolio but having trouble wrapping my head around the metrics of making the cash flow work in the Denver or even Front Range, Colorado Markets.
I am looking at a few properties in other states but am concerned about the challenges of not being present to keep an eye on the property or being local in case something happens. Is this really as big of a concern as I am making it? Or if the numbers work? Is it worth the risk to put the management into someone else's hands?
The barrier to entry is lower outside of my own market, but I am viewing it as more risky.
Flipper/Rehabber · York, UK · Member since 2013 · 895 posts · 453 votes
10y
@Taylor Horowitz a lot of people in Colorado share your thinking. Why buy one rental for $200k or $300k when you can pick up a handful somewhere else that will cashflow better. Your concerns are valid and you should come up with good answers to them before buying anything. Savvy out of state investors start with an area where they have resources (ie they grew up in Milwaukee and have family who could run over to a property in a pinch). Others go and visit places where there are established and reputable turnkey operators. @Jay Hinrichs has started a service called Turnkey Reviews which helps people vet those operations.
There are tons of people on BP who can give you good advice or make good connections, so listen to your concerns but don't let fear get in your way!
Investor · West Linn, OR · Member since 2015 · 100 posts · 58 votes
10y
I think it's a matter of spending a little time in your target market and meeting with a variety of people there. I am doing this now. I live and invest in Portland Oregon, but am adding a couple of lower cost, higher cash flow, duplexs up in Washington State several hours away from my primary home. I am a bit old school so I have been doing a ton of calls to people up there followed by some quick speed dating type in person meetings. So far, it's working and I feel good about who I am comfortable and excited about doing business with and who not to.
I love looking at property and meeting new people so I have no problem making the drive to meet with people and check things out.
Investor · Denver, CO · Member since 2016 · 5 posts · 0 votes
10y
@Kory Thaut Thanks for the feedback. I am looking at heading into those markets in a week or two when I get back from a work trip. I am really excited about going outside my local market as I think it will allow me to grow my portfolio quicker but with that excitement comes a lot more skepticism.
I will head that way and try and spend a few days and hours in the other markets to get a stronger feel.
Flipper/Rehabber · York, UK · Member since 2013 · 895 posts · 453 votes
10y
@Taylor Horowitz a lot of people in Colorado share your thinking. Why buy one rental for $200k or $300k when you can pick up a handful somewhere else that will cashflow better. Your concerns are valid and you should come up with good answers to them before buying anything. Savvy out of state investors start with an area where they have resources (ie they grew up in Milwaukee and have family who could run over to a property in a pinch). Others go and visit places where there are established and reputable turnkey operators. @Jay Hinrichs has started a service called Turnkey Reviews which helps people vet those operations.
There are tons of people on BP who can give you good advice or make good connections, so listen to your concerns but don't let fear get in your way!
Portland, OR · Member since 2012 · 66 posts · 30 votes
10y
I'm not that familiar with your area but I would be weary of venturing out of state (as in it's unreasonable to travel to a unit in a day) unless you've fully exhausted all the markets within, say, 100 miles of you. Are you confident you've analyzed everything near you? I mean even one neighborhood can be different than the next!
I find that people with less experience that own out of state units usually have some sort of tie with the area. Maybe relatives living there or traveled to in the past, something that gives them a sort of 'feet-to-ground' connection so that it's not completely unfamiliar. If you do decide to venture out, do you have any areas like this that you can look into first?
And of course, a great manager can make or break even the best deals.
Investor · Denver, CO · Member since 2016 · 5 posts · 0 votes
10y
@Micki M. Thanks! I will take a look and keep learning. I took a quick look at Turnkey Reviews and it looks like they aren't in the markets in which I am looking at the moment. But I will keep them bookmarked as a resource!
Investor · Denver, CO · Member since 2016 · 5 posts · 0 votes
10y
@Richard Warner I have not fully exhausted the markets within the 100 mile radius that you mentioned. However, the market I am looking out of state in is within 100 miles. Generally, my search is within about 30-50 miles but I was seeing what was slightly outside that and found some things that peaked my interest.
@Richard Warner I have not fully exhausted the markets within the 100 mile radius that you mentioned. However, the market I am looking out of state in is within 100 miles. Generally, my search is within about 30-50 miles but I was seeing what was slightly outside that and found some things that peaked my interest.
I hear you! We're in Portland, Oregon and "out of state" is quick 10 minute drive over the river!
You are totally fine, you can easily travel that distance in a day! *Thumbs up*
I live in the Denver Market and have a buy and hold property in Boulder. I am looking to grow my portfolio but having trouble wrapping my head around the metrics of making the cash flow work in the Denver or even Front Range, Colorado Markets.
I am looking at a few properties in other states but am concerned about the challenges of not being present to keep an eye on the property or being local in case something happens. Is this really as big of a concern as I am making it? Or if the numbers work? Is it worth the risk to put the management into someone else's hands?
The barrier to entry is lower outside of my own market, but I am viewing it as more risky.
Hello Taylor,
Congratulations on your other investments! It sounds like you have a great handle on everything so far. It terms of having properties out state, that is a tricky one. The ideal solution to holding out of state is setting yourself up with a good turnkey provider, or property management company. You will need to have someone you can trust running things for you. Since you will be unable to view the property as often as you'd want, you will need someone who has your back. Always do research before you select a company or a market to get into. We typically see many out of state investors who have horror stories of companies not helping them where it counted.
Feel free to send me a message if you have any questions. I'd be happy to share some advice!
Real Estate Agent · Boulder, CO · Member since 2014 · 87 posts · 24 votes
10y
There are some local wholesalers that specialize in out of state properties. I've got 12 doors in Buffalo, NY and with solar city coming in and dumping billions, I think that could be a good appreciation play along with good cashflow. I highly recommend you take at least a week to get to know the market where you plan to invest by traveling there and interviewing PMs. Let me know if you'd like me to share wholesaling contacts.
Investor · Eagle, ID · Member since 2014 · 82 posts · 75 votes
10y
Hi Taylor, plenty of good advice and points! I live in the greater Seattle area and own homes in Salt Lake City. No, I can not be there for a quick fix problem, nor do I want to be. I work as a sea going captain, and spend months at sea. You do have to be more organized. This hinges on a trust worthy management company. And people you can trust. I was very worried myself, and had a hard time seeing the venture work out. It has! I am at seven rentals, and looking for number eight. Do your home work, and consider a place where you do like to spend time, for what ever reason. Good luck!
Real Estate Broker · Portland, OR · Member since 2016 · 17 posts · 8 votes
10y
I live and have a real estate agency in Portland. I'm considering doing the same (real estate investing) in other markets outside of Portland so I'm interested in hearing everybody's thoughts on this topic. I've worked with a lot of out of town investors and typically their approach is to find a local realtor and property management company to help them understand the market before they commit any money to the market. I do get calls often from investors, some of which choose to put money here and some who eventually do not. I'm happy to give you some insight into the market here if you'd like.
Littleton, CO · Member since 2016 · 39 posts · 7 votes
10y
Hi Taylor,
I actually started in property investing out of state. I live in Denver, but starting investing in the Phoenix area. I did have someone there that I knew and trusted that looked at properties for me and is now managing them. I'm actually in the process of selling some of my Phoenix properties and buying in Denver. I'm not sure why everyone seems so down on the Denver market. I'm seeing good cash flow here and the potential for great appreciation.
Investor · Lake Forest Park, WA · Member since 2015 · 108 posts · 35 votes
10y
@Taylor Horowitz, what is drawing you to look at Washington and Oregon markets? I'm in the Seattle area, and I'm actually looking back east to do my investing. Anything on the west coast is going to be more expensive than Midwest and Southern markets. On average, those markets are less expensive and cashflow better. Given that we have limited funds upfront to invest with, I would want to get the most bang for my buck (3-5 properties instead of one for the same amount) as well as diversification to lower the risk, with trusted property management in place of course. Kansas City, Memphis, Indianapolis, Cleveland, Dallas, Houston, and Birmingham are some of the places where turnkey companies have set up shop to provide ongoing service to out-out-state investors. None have chosen markets in the west coast, though, because cash flow is harder to attain there.
Seattle, WA · Member since 2015 · 500 posts · 243 votes
10y
@Charles Moore - One reason I could see an investor finding the Seattle area attractive is the recent trend of high appreciation. I am not inclined to bet on it myself, but many investors have started grabbing properties with the anticipation of continued influx of high-paying jobs into the area that has driven property values and rents to ridiculous highs.
Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
10y
If you decide to invest in Texas let me know. I am willing to partner with out of state investors in one or multiple deals. I will manage them and since I will have skin in the game it is a lot better than paying a property management company. I am familiar with all of Texas, especially Waco to San Antonio.
Investor · Wheat Ridge, CO · Member since 2009 · 78 posts · 8 votes
10y
Hi Taylor,
I'm not far from you at all (Wheat Ridge) and have 5 buy and holds In Golden, Denver, Lakewood (2) and Wheat ridge. I feel exactly the same as you with regard to buying for cash flow here. I have currently been looking into the KC market to grow my rental count and plan to go out there within the month to speak to some turnkey providers. Let me know how your search goes!
Investor · Lake Forest Park, WA · Member since 2015 · 108 posts · 35 votes
10y
@Alex Chin, yeah, I could see some people doing that, but it's a hot seller's market right now in Seattle, so they're not exactly getting bargains. It's just like buying hot stocks when everyone else is when the price is high hoping it will go up more. Doesn't always go the way they think it will, and definetly not something value investors like Warren Buffet recommend.
Real Estate Agent · vancouver , WA · Member since 2015 · 39 posts · 16 votes
10y
Chris I have looked in KS and the margin is great but if you look at Zillow there is a ton of rentals and the listing rentals have been there for 60 to 90 days why the rents are staying so high I do not know so be careful I gave up and am looking in Cleveland same margins less rentals on the market.
Real Estate Services · Olathe, KS · Member since 2015 · 329 posts · 57 votes
10y
You definitely should look to the Midwest! We work with investors interested in the Kansas City market and we constantly see great returns. Hit me up if you are interested in learning more!
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
10y
@Taylor Horowitz this has been batted around a few times. The largest post of recent times is here. Lots of good thoughts there by some of the best thinkers on bigger pockets. It doesn't have answers but it does have many good insights.
My simplistic thought is if my real estate is not generating enough cash flow then I need more properties. I tried out of state and with my skill set and mindset. I failed. I think most failures flow out of our own deficiencies so my advise would be to make an inventory of what it takes to be successful out of state and then compare that to what skills you have.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
Alex Chin Charles Moore
In 2012-2013 I wasted a lot of time looking for rentals in King, Snohomish, and Pierce county and nothing cash flowed. If you want I can send you the spreadsheets where exported all the MFH (yes I went to multis because I was that desperate for cash flow) to excel and underwrote the expected cash flow. Back then I wasted a lot of time finding a cool exponential equation with rents and acquisitions for those counties but anyways now prices are even worse.
Also during that time I hit up the auctions briefing meeting that a lot of brokers host and I was in a room with 30-40 with inexperienced Microsoft/tech who did not know what they were buying and would out bud each other. It was crazy. Today Silly money for Asian playboys are coming over buying anything. Not saying it's a bad deal for them or that the represent the majority but it's a sign that Seattle and California is a bit over heated. If your going to do a deal I NEEDS to be off market.
To me the real risk is not that a PM company is going to screw you (there are steps you can do to mitigate this) but the real risk is you lack of buffer in your Cashflow to weather a soft renal market or unlucky string of repairs or cap ex..
I spent about a year trying to pick apart this out of state thing and have pretty much figured it out after making a bunch of mistakes that I didn't realize till later.. The main thing is building the relationships and know who has he integrity out there and like anything you have to buy a few and go through process of buying selling and holding a while to learn the even flow of it.. But tactically it's no different than what I have learned in corporate America by setting expectations and keeping people accountable via email remotely.. Trust but verify to be corny.