Buying property in another state - How do I do it???

Queens Village, NY · Member since 2017 · 19 posts · 25 votes

Hello Bigger Pockets Community!

Currently I live in NYC and am looking to invest in a property (first one). As many of you may know, NY is expensive! Because of this, I'd like to look into a rental property out of state since the prices can be much lower (estimate about $40k down payment). I've done some research and saw that Florida (Tampa for example) have homes within the price range I'm looking for.

My question is how do I go about doing this? Do I need a lawyer/accountant from the state of purchase? Any suggestions on up and coming cities that show appreciation and rental potential?

Thanks!

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Linda LabbePro Member

Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes

Buying properties out of state is easy you have to have a great team on the ground to be your eyes and ears and hands.. I do a lot of work in Ohio and Missouri where there are great prices and returns and yes you can get a property there duplexes even for 40 k fully renovated and rented and property management all in place . More then willing to share my contacts they are great people

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Brandon M.
Agent / Investor · Clearwater, FL · Member since 2014 · 573 posts · 281 votes
9y
Jagpreet Singh you will want to find an agent knowledgeable in investments and rental properties in the area you are focusing on. Hopefully an agent who also does their own investing. Here in Florida we as agents use a standard real estate contract so you don't need a lawyer to draw one of those up for you. You also don't need an accountant who is local, your CPA can do your taxes from anywhere.
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Jagpreet Singh
OP
Queens Village, NY · Member since 2017 · 19 posts · 25 votes
9y
@Brandon M. I appreciate the feedback, thanks! How's the market looking in Clearwater? I've read good things about the area and it's potential for price appreciation.
1 Reply
Priyanshu AdathakkarPro Member
Realtor · Columbus, OH · Member since 2017 · 313 posts · 245 votes
9y
@Jagpreet Singh have you considered Columbus Ohio? among the top rental markets in the country. $40,000 down can get you a good property in A class area with good rents.
3 Reply
Linda LabbePro Member
Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
9y
Buying properties out of state is easy you have to have a great team on the ground to be your eyes and ears and hands.. I do a lot of work in Ohio and Missouri where there are great prices and returns and yes you can get a property there duplexes even for 40 k fully renovated and rented and property management all in place . More then willing to share my contacts they are great people
5 Reply
Jeff Wallenius
Specialist · Indianapolis, IN · Member since 2014 · 670 posts · 352 votes
9y
Jagpreet Singh while it may be easy to buy out of state, finding the right team on the ground will be key. Plenty of pitfalls to avoid, one of them is buying in the lower class neighborhoods. These are homes typically advertised at $25-40k all in.
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Jagpreet Singh
OP
Queens Village, NY · Member since 2017 · 19 posts · 25 votes
9y
Thank you all for the feedback. I am definitely looking for towards "bigger cities" along the east coast. I agree @Jeff Wallenius, having a solid team is what I'm looking for because I will be interested in investments in the future if the first one turns out to be a good one. Seems to be a few agents from Ohio responding here so I'll do some research on the area.
1 Reply
Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Jagpreet Singh You don't need a lawyer or CPA to be in the state. You do need (or I would advise) a realtor in the area you're interested in and when you get close to a deal, start talking to property management companies. If I were in your shoes I'd look at what my money could get in a variety of markets. And I don't really mean the size of the property. What I mean is does my money get me into a C- area or a B- area. Your ROI might be lower in a B- area but so will your headaches. Real estate is far from "passive" even with a PM. In general, I think you'll find that as the area quality decreases, your headaches increase (and increase at a disproportionally high rate).
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Jagpreet Singh
OP
Queens Village, NY · Member since 2017 · 19 posts · 25 votes
9y
@Andrew Johnson Thanks Andrew! That is a great point. One of the other reasons I dont want a rental in NY first is because real estate laws are tenant friendly. I've heard stories of people getting by for months without paying rent. I've narrowed my search to only owner friendly states. Less headache, the better.
Is there a way I can look into what are A-areas and B-areas in certain cities?
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Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Jagpreet Singh There are as many options as you can come up with! You can look for the best school district, lowest crime neighborhood, a radius around a Starbucks or Whole Foods, etc. I'd take the opposite approach, just while out the C and D neighbors and see what's left. I'm the odd guy that (if he sees something interesting) will use Google Maps and their street view to "walk" up and down the street. I can't tell you "good" but there are times it can really signal "bad".
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
9y
Welcome to the site @Jagpreet Singh
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Lance LvovskyPro Member
Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
9y
@Jagpreet Singh It is not necessary to have a CPA in the state you are investing in. You want a CPA who also invests in real estate and works closely with other investors.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Jagpreet! I live in LA and do the same thing due to prices. The thing you want to be cautious of is not necessarily what properties are in your price range but the returns you can expect to see on them. Tampa isn't all that likely to cash flow due to their prices and higher insurance and taxes being that it is coastal FL.
Appreciation in general, with where we are in the real estate economy as a whole is a bit squeezed right now due to high prices. That's why cash flow is going to be important (i.e. you'll want it). A lot of the Midwestern cities are good right now- Indy and Kansas City have been really popular, I like Chicago, but also closer to you Philly has had a lot of cash flow luck lately. A lot of it will depend on your budget and what kind of property you are looking for. Happy to talk in more detail and bounce ideas if you want to message me.
You don't need an accountant from whatever state you buy in, you can just use who you want. A lawyer you'll only need if you want one, they aren't always required. The thing that is specific to the state you buy in is the lender you use.
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Jagpreet Singh
OP
Queens Village, NY · Member since 2017 · 19 posts · 25 votes
9y
@Ali Boone That's a great point. A lot of this is new to me and I should take all things into consideration, like taxes and insurance in the cities. I'll start to look at some of those mid-western states. Lately, I've noticed I could find a multi-family unit in some cities for the same price of some Condos in NY!
Would love to keep in touch and exchange helpful information!
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Gordon CuffePro Member
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
9y
@Jagpreet Singhi think the most important factor in out of state investing is the property manager. My first property manager in St. Louis ended up being a crook and I found out he swindled money from many investors .you can get good cash flow from many of Midwest states mentioned above but if your property manager is terrible it can ruin your monthly cash flow .
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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
9y
@Jagpreet Singh Hi and welcome to BP! I started my out of state investments via a turnkey company in Jacksonville, Fl that is excellent. Turnkey is probably the most frequently used method for investing out of state in buy and hold rentals, but the provider quality can vary widely. In addition, many of the cash flow markets have grown tight on inventory and prices have risen. Cash flow is more modest now when buying turnkey. While it is a relatively passive investment when you work with a really good team that includes excellent property management, finding that team may be harder than you think. Of course turnkey is not the only passive out of state REI strategy, and I have written about three different routes I've used in my BP article:
Three Key Routes for Passive Real Estate Investing
All best in your REI!
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Account Closed
Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes
9y
@Jagpreet Singh have you considered the many smaller city's in Florida ? For example .. Inverness has been on my radar .. It is about 1hr north of Tampa and is gearing up for some pretty big companies that are coming there soon .. from what I hear they should be bringing around 3500 new decent paying jobs ( $50k +) they are also putting in a pipeline through there as i type this .. now for the really good news ..because the property values dropped so much during the bubble burst, they are going up at a really good rate .. I think it is around 12-15% appreciation .. cant beat that with a stick .. most properties are undervalued still as much as 70% .. most need a bit if updating just to rent out but there are plenty of tradesmen looking for work here. I put a ad on facebook for a handyman and i had to take the ad down 4 hrs later .. I had almost 100 replies, my phone didn't stop ringing.. if you decide to check out some of the outlining city's in Central Florida , I can certainly help you with it .. I am working on offering a boots on the ground type of service for out of state investors .. someone that can give a unbiased opinion of any properties that a investor might be interested in .. I can even give a pretty accurate rehab est. if needed .. I have Gc's and other tradesmen avalible if you need referals or want me to manage it for you .. I already work woth a few out of area investors but we mainly do fix and flips right now .. Although, I hope to be buying my own rentals by the end if the year .. I also wouldnt be against partnering up with other investors in a multi type of property .. so if any of this appeals to you then just reach out ..I'm available most days and seem to be on here almost daily .. I wish you the very best on the difficult decision you have to make and hope I may help make it easier in some way ..
God Speed,
Michael Short
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
I wrote an article on investing out-of-state a while back that you might find helpful: https://www.biggerpockets.com/renewsblog/2014/12/23/investing-out-of-state-essential-items-to-vet/. The main point is to be very careful and do as much due diligence as possible.
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Alicia SierraBusiness Member
Real Estate Agent · Saint Louis, MO · Member since 2015 · 132 posts · 70 votes
9y
Andrew - I agree. I've worked in that space a long time and I often have seen it fall apart on the management side. Lots to say on the topic! Due diligence, checks and balances are key.
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Phil Bach
Investor · Tampa, FL · Member since 2015 · 76 posts · 55 votes
9y
@Jorge Vazquez and Graystone Investment Group is an excellent provider of turnkey properties in the Tampa Bay area. I would reach out to them if you are interested in investing in quality real estate without the hefty New York price tag.
3 Reply
Craig Haskell
Real Estate Professional · Phoenix, AZ · Member since 2014 · 26 posts · 30 votes
9y
Buying in an area you know nothing about is like going into the African jungle without a guide. You need a guide so that you don't get hurt.
I've always found learning the local market dynamics for my own knowledge is important to my success. Do lots of research before making any acquisitions to find where jobs are growing, where new businesses are moving to, where new development is taking place, where there is good supply/demand dynamics and so forth. As you go through this process you will start to meet some of the market players (top brokers, top managers, top contractors, community leaders and the like). These experienced professionals will help guide you around your local market jungle.
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Branden Irvine
Lewis Center, OH · Member since 2017 · 2 posts · 1 vote
9y
Originally posted by @Priyanshu Adathakkar:

@Jagpreet Singh have you considered Columbus Ohio? among the top rental markets in the country. $40,000 down can get you a good property in A class area with good rents. Let us talk if there is interest.
Sir - I am in Columbus and am looking to start. I am considering coming to your meet up tomorrow. Everything I've read says find a mentor starting out so I am hoping to start the path soon.
0 Reply
Priyanshu AdathakkarPro Member
Realtor · Columbus, OH · Member since 2017 · 313 posts · 245 votes
9y
@Branden Irvine Hi Branden, I look forward to meeting you tomorrow! Best Pri.
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Morgan Hawthorne
Investor · Gainesville. FL · Member since 2017 · 5 posts · 5 votes
9y
I agree with everyone who said it's important to have feet on the ground where the property is at. I'm sure many people have invested before without seeing property in person, but it's risky.
Real estate transactions in Florida are pretty cut and dry, and I think wanting to invest in the Tampa area is a good choice. I guess I'm a little biased because I live here, but because I've been here for so long I've witnessed the market trends. Your dollar is going to stretch much further in FL than NYC, and you can expect appreciation as long as you play your cards right. There's lots of areas you'll want to stay away from in the Tampa area but there's also some real gems. There's some well-known areas that have always been booming, and neighborhoods that are making a comeback that some might overlook. I think the latter are more interesting to investors.
I saw you ask about Clearwater, and for that area, I think it would be good if you got something pretty much anywhere near the water. But over there something I've noticed is that a lot of rentals have been hitting the market and rent has been decreasing as a result, just something to note. Just like Tampa (or any other city), there's some really "not good" parts of Clearwater you'll want to steer clear from.
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Brett Clothier
Rental Property Investor · Memphis, TN · Member since 2008 · 14 posts · 7 votes
9y
@Jagpreet Singh There are plenty of articles and discussions on this site discussing different markets that are ideal for out of state investing. The most important thing you will need to find is a quality team. I would encourage you to take the time and spend the money to go visit several different companies in each of the cities you might be interested in. If you are going to spend $40,000 on each property to build your portfolio, then it would prudent to spend a few thousand dollars to get on a plane and go visit different places where you intend on investing. Take the time to ask questions, especially regarding property management, and work to verify and confirm what they tell you in terms of vacancy rates, etc. There are many great companies out there, just take the time to find the right one for you.
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Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
9y
Originally posted by @Branden Irvine:

Originally posted by @Priyanshu Adathakkar:
@Jagpreet Singh have you considered Columbus Ohio? among the top rental markets in the country. $40,000 down can get you a good property in A class area with good rents. Let us talk if there is interest.
Sir - I am in Columbus and am looking to start. I am considering coming to your meet up tomorrow. Everything I've read says find a mentor starting out so I am hoping to start the path soon.
Where is the meetup for tomorrow? must have missed that.
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