Specialist · Lancaster, PA. · Member since 2015 · 45 posts · 7 votes
Happy New Year BP members! I am looking for my first multifamily property but theres just one problem I'm running into. I can invest in my local markets due to the prices. Im living in San Diego California and plan to make my first investment within the next 3 to 4 months. I have researched a couple areas such as fort worth, Texas and Philadelphia, Pennsylvania. Im just wondering what i need to really be aware of when trying to buy out of state properties. Im super weary of doing this because its my first purchase and I feel as if I need to physically be there to get all the necessary steps taken care of such as inspections and meeting the owners to get a good understanding of what the properties are operating at. I just want to know if this is a good idea for my first purchase and what other people who have done this has run into so I can try to have a better first experience.
Specialist · Indianapolis, IN · Member since 2014 · 670 posts · 352 votes
9y
@Garrette Becker and @Blake La Grange the key to finding good property management for turnkey is having property management in house, meaning the turnkey provider performed the repairs, placed the tenant and then manages the property. If they do not do their own property management, it needs to be held very close otherwise a turnkey provider has no inventive to provide quality work and to place the best tenant they can. As far as turnkey multifamily, if at all possible try and seek a value add purchase as you can maximize your investment capital to its full extent. @Sean Tarpenning is a fantastic option in Kansas City. If your looking elsewhere, PM me, I'd be happy to assist.
Rental Property Investor · Marina del Rey, CA · Member since 2016 · 17 posts · 7 votes
9y
Hey Garrette,
I live in LA and help operate my real estate company based out of the greater Philadelphia area. Naturally, there are plenty of considerations when settling on a location; however, irregardless of where you choose as an out-of-state investor, finding a group of professionals you can trust in that location is priority number 1 (reducing the need to be present at the location of the property to a minimum is paramount).
Happy to talk on the phone/email or in person if you're ever up toward LA.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
9y
@Garrette Becker One of the biggest hurdles after you find the property and close on it is managing it. I am not clear what size mf you are looking at, but of course management is key. Typically the smaller the property, the harder it is to get professional management. There are some areas I wouldn't buy since I cannot find good management.
Specialist · Lancaster, PA. · Member since 2015 · 45 posts · 7 votes
9y
Thanks @Jeff Greenberg, thats something I haven't really thought of. Im looking for 3 to 4 units to start and see how i handle that and move from there. Is there any advice you have on finding good management? I'm sure there are things that raise red flags.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
9y
Get references from other owners. Those smaller ones are tough. You will get a lower quality tenant than you will get in a SFH, but your way to small for onsite employees. Get references and interview several. Ask on BP. Find an apartment association in the area. Go to the local reia and ask there. Ask the broker you are working with.
Property Manager · Philadelphia, PA · Member since 2015 · 515 posts · 196 votes
9y
@Garrette Becker I just had this conversation with a friend. No matter where you invest you must know value. Otherwise, its important to have a local advocate - Someone that knows the laws, nuances, neighborhoods and contractors, home inspectors, solid title cos, ect.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
9y
Garrette Becker
I try to be really clear on what I want. Give quality feedback based around numbers when I am given an offering. It's really tough. I would like to learn what you are doing.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
I live just north of you up in LA and have always bought out-of-state properties. My first question would be- what kind of property are you wanting to buy? I know you said MFR, but do you want one needing rehab/work or one that is rent-ready already, etc.? For MFRs, you aren't going to find properties in Ft. Worth that will pencil out for numbers. Philly does have MFRs that pencil out though. Once you decide on the location, it goes back to how you want to buy. Do you want a foreclosure that needs work, do you want turnkey, etc? If you go turnkey then PMs will come with the property. If the property needs everything done to it, it's up to you to interview and find contractors and PMs and such.
Not sure your budget, but if you do have some capital, there are some really interesting cash deal options in Philly that are a good combo of turnkey but also with the ability to force appreciation. Message me anytime if you want more details. Happy to help.
I currently only have 25k but plan on saving just a little more before jumping in. I wouldn't mind getting something at a good discount through foreclosures and do some value add work but if I find something turn key that has just as much potential I wouldn't be against looking into it. I also thought more about philly so far but just need to do more research to find the right areas with a demand for rentals. Have you purchased any properties in the philly market, and if so how did you go about finding the right areas to start looking?
Happy New Year BP members! I am looking for my first multifamily property but theres just one problem I'm running into. I can invest in my local markets due to the prices. Im living in San Diego California and plan to make my first investment within the next 3 to 4 months. I have researched a couple areas such as fort worth, Texas and Philadelphia, Pennsylvania. Im just wondering what i need to really be aware of when trying to buy out of state properties. Im super weary of doing this because its my first purchase and I feel as if I need to physically be there to get all the necessary steps taken care of such as inspections and meeting the owners to get a good understanding of what the properties are operating at. I just want to know if this is a good idea for my first purchase and what other people who have done this has run into so I can try to have a better first experience.
How will you be managing this investment? Do you have a property management company, or are you going turnkey with this investment. Make sure to do your research before you make an offer! There are many different ways an out of state investors can do this.
Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
9y
Well in my honest opinion, I have both in SD and out of state, properties and I will never buy my first Multifamily out of state, I rather just buy the cheapest Multifamily maybe in Vista or La Mesa then, just is a risk factor not to get you paranoid or anything but I heard nightmares, out state should be more once you have some deals under your belt just take it as my opinion doing this for the past 9 years.
Specialist · Lancaster, PA. · Member since 2015 · 45 posts · 7 votes
9y
Thanks for advice @Account Closed. I plan to look in the La Mesa area as I get to educate my self more and have a better plan for out of state properties. I want to meet more people in the areas I plan to invest before jumping into any commitments. Who would you want on your team before jumping into out of state investments and why?
Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
9y
I guess, my first guy on the ground a trustworthy Real estate agent that I met face to face, maybe comes recommended just cause the fact he knows the area and you really had to trust the guy since you don't know much, then also I have done in the past just go around the area, se what kind of people hang at the coffee shops etcs, you cant judge a book by its cover but you can formulate a opinion and compared with data you may find on the crimerate monitor and talking with the agent.
Specialist · Lancaster, PA. · Member since 2015 · 45 posts · 7 votes
9y
I never really thought about going to the local shops and grocery store to see how the environment feels, I like that idea I'll definitely be implementing that thanks again @Account Closed. If I were to purchase out of state how would you go about management if it's only a duplex but was turn key. Is it worth going with a management company or just save the extra couple bucks for the first few years and try to take care of any problems that may come up.
Turnkey Investment Provider · Kansas City, MO · Member since 2015 · 1k+ posts · 116 votes
9y
We have some MF properties in Kansas City, MO that you might find attractive especially considering the taxes are much lower than areas you have listed! Let me know if I can be of any help.
I am in the exact spot you're in. I own in Vista. Have 70k to play with. And am looking to team up with people in the area to conquer out of state :) Let me know if you wanna team up!
Specialist · Lancaster, PA. · Member since 2015 · 45 posts · 7 votes
9y
Hey @Blake La Grange I would be interested in connecting more and seeing what your plans and strategies may be for the future! If you PM me we can exchange contact info and try to get something rolling.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
I haven't bought there personally but I've been working with people buying there pretty heavily for at least 3 years or so now, maybe getting closer to 4. They've all been turnkey though, except for the forced appreciation turnkey method but same company, so those guys were how I found out about the areas and such. I went out there in February of last year to check out the operations and the properties and locations and such and I liked what I saw.
As far as turnkey vs value-add, it really depends on how much effort and risk you want to put in. $25k can definitely buy you a good turnkey there with financing. Value-add will require down payment for buying the property plus cash out of pocket for rehabbing, unless you do a hard money loan.
Specialist · Indianapolis, IN · Member since 2014 · 670 posts · 352 votes
9y
@Garrette Becker and @Blake La Grange the key to finding good property management for turnkey is having property management in house, meaning the turnkey provider performed the repairs, placed the tenant and then manages the property. If they do not do their own property management, it needs to be held very close otherwise a turnkey provider has no inventive to provide quality work and to place the best tenant they can. As far as turnkey multifamily, if at all possible try and seek a value add purchase as you can maximize your investment capital to its full extent. @Sean Tarpenning is a fantastic option in Kansas City. If your looking elsewhere, PM me, I'd be happy to assist.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
9y
@Garrette Becker Texas has some of the highest property taxes and insurance in the country and PA also has high taxes so that will have a big impact on your cash flow. MF can be tricky. In general, you have a different class of tenant than you will in SFR and quite often have high vacancies and turn over costs to make rent ready. You also want to know the neighborhoods very well. I love the Indianapolis market and have sold turn keys there for many years, but with rare exception, won't touch MF there. Most of the MF are in older, rough areas. We've had much better success with MF in Kansas City than Indy but wherever you go, know the neighborhood down to the street level.
Rental Property Investor · Rochester, NY · Member since 2016 · 303 posts · 154 votes
9y
Hi Garrette Becker how are you. I am guessing CA is very expensive and therefore branching out to other inexpensive areas is your goal. Have you looked into rochester NY. I would be happy to help
You out here. Best of luck!
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
9y
@Garrette Becker. I think you got some great advice here and are on the right path. I would physically go to the target market and align yourself with a property manager and a broker you really trust, and get them looking out for properties for you. Get the property manager to critically tour any asset the broker comes up with, and ask them to give you reasons not to do it. And by all means, don't fall in love with any property. Best wishes!
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Garrette Becker One thing to consider when looking at out-of-state purchases in the expense associated with travel to both view properties as well as check-up on them. If you have a nest egg of $25K to start and it takes 2-3 trips to find a suitable property at $2K a trip (not that hard to do) you could end up spending 20% of your investment budget just on looking for a property. Maybe others will recommend buying without seeing a property but I sure won't. Not to mention that if your experience is mine you'll find properties that pencil out well, look good in pictures, but when you put your feet on the ground you start to realize the area isn't great, condition is worse that you think, that roof doesn't look quite as nice as in the pictures, etc. However, if you have friends or family in those local markets that don't mind driving by addresses you give them it can really help. You wouldn't really look for a "yes" but rather a "hell no!" As @Mike D'Arrigo already mentioned, street level matters.
All of that said, I own 3 multifamily properties (ranging from 4 to 27 units) in Arkansas that are cash-flowing well.
Real Estate Investor · Kansas City, MO · Member since 2015 · 222 posts · 121 votes
9y
For your first purchase I recommend going out to the city you choose to invest in for a day or two. You will be able to meet the company you choose to work with, see their quality of work and get a better feel for the community. If that is not an option with your busy schedule though, that's okay too! I help several investors with their out of state investments and want them to feel at ease with their purchases. I am able to provide photos, videos, scopes of work and anything else they might need to justify their new acquisition.
Happy New Year BP members! I am looking for my first multifamily property but theres just one problem I'm running into. I can invest in my local markets due to the prices. Im living in San Diego California and plan to make my first investment within the next 3 to 4 months. I have researched a couple areas such as fort worth, Texas and Philadelphia, Pennsylvania. Im just wondering what i need to really be aware of when trying to buy out of state properties. Im super weary of doing this because its my first purchase and I feel as if I need to physically be there to get all the necessary steps taken care of such as inspections and meeting the owners to get a good understanding of what the properties are operating at. I just want to know if this is a good idea for my first purchase and what other people who have done this has run into so I can try to have a better first experience.
Garrette,
I have been involved in many transactions where a buyer purchases a property out of state and everyone does it a little differently.
On the more aggressive side of the scale some of them buy property completely sight unseen, often without ever even physically talking to a representative into the town they are going to purchase in. They handle everything through emails, photos and 3rd party inspection reports.
On the more conservative side of the scale the investors will fly out to the town they are going to purchase in and meet the team, drive the neighborhoods and tour several properties that they are interested in purchasing. After they tour the property and make the offer they typically fly back home, then repeat when they are ready for their next purchase.
In the middle of these two is where the majority of the buyers fall. They will fly out, meet the team and tour the varies neighborhoods to get a feel for an A-Class. B-Class, C-Class and D&F-Class neighborhood. Sometimes they make an offer while they are in town other times they go back home think on it for awhile then make an offer from their home state. After the initial visit they typically handle everything through phone calls, emails, photos and inspection reports.
If you are brand new to investing, especially investing out of state I do not recommend you do everything without first flying out to the area you are thinking about investing in. Many new investors often have questions like "is the neighborhood good" that is a loaded question that can have a totally different answer based upon the perspective of the person answering it. It's best to get out there so everyone is on the same page. After that initial visit and several purchases you will be further advanced in your investing career and developed more of a risk tolerance it may make sense to move on deals without seeing the neighborhoods as the very best deals (& sometimes very worst deals) are had by the ultra aggressive investors.