Newbie Taking Action Out of State - Buy & Hold

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Newbie Taking Action Out of State - Buy & Hold

Andrew Kougl
Chula Vista, CA · Member since 2017 · 195 posts · 104 votes

Hello BP Community!

First post here and I'm super excited to connect with like-minded individuals. I am interested in REI from a Buy & Hold perspective focused on cash flow. I live in San Diego and it's crazy expensive here so have to look out of state for my first investment property (already own a house in SD).

I'm specifically thinking 3/2 SFH in a B class neighborhood would be the ideal scenario to get stable tenants and good cash flow, primarily in the Midwest. Looking specifically at $60k-$90k properties in Indianapolis and the suburbs of Chicago. I know both areas can be hit and miss and you need to know the area which is why I plan to travel there in a month to check both out. Are there other areas in this range that are large metros that cash flow?

I want to make the best use of my time so would love to be pointed in the right direction when it comes to Real Estate Agents, Property Managers, local lenders and General Contractors (hoping to find something fairly turnkey...paint, carpet, updating appliances). Also considering the possibility of Turnkey providers if there are any that service those markets.

Thanks for reading and appreciate the help!

Andrew

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Jay Bhatt
Tarrytown, NY · Member since 2016 · 79 posts · 43 votes
9y

@Andrew Kougl

I was in the same boat as you last year. I did exactly the same. Visited the markets I was interested in and met the turnkey providers. Ultimately i decided to go on my own in NW indiana.

As couple of people have mentioned, if you decide to go turnkey route in NW indiana you won't find better product and team than @Sharad M.

If you decide to visit NWI, PM me and I can send you contact details of local brokers, GC , Property Managers.

Good luck!

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  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    9y

    @Andrew Kougl Your approach makes good sense. Indianapolis is a strong cash flow market but as you noted, you have to know the areas. Kansas City is also an excellent market and very similar to Indy. We sell turn key properties in both markets and know them well. I'd be happy to share my insights on both if you'd like to chat. Feel free to contact me.

    1Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    9y
    Originally posted by @Andrew Kougl:

    Hello BP Community!

    First post here and I'm super excited to connect with like-minded individuals. I am interested in REI from a Buy & Hold perspective focused on cash flow. I live in San Diego and it's crazy expensive here so have to look out of state for my first investment property (already own a house in SD).

    I'm specifically thinking 3/2 SFH in a B class neighborhood would be the ideal scenario to get stable tenants and good cash flow, primarily in the Midwest. Looking specifically at $60k-$90k properties in Indianapolis and the suburbs of Chicago. I know both areas can be hit and miss and you need to know the area which is why I plan to travel there in a month to check both out. Are there other areas in this range that are large metros that cash flow?

    I want to make the best use of my time so would love to be pointed in the right direction when it comes to Real Estate Agents, Property Managers, local lenders and General Contractors (hoping to find something fairly turnkey...paint, carpet, updating appliances). Also considering the possibility of Turnkey providers if there are any that service those markets.

    Thanks for reading and appreciate the help!

    Andrew

     Hi Andrew,

    Welcome to BP! This is a great place to learn more about out of state buy and holds. Did you happen to narrow down a few markets in the Midwest? I only ask because it is huge and some markets are better than others. I am sure you have noticed some have become over saturated with investors while others have better potential! Good luck!

    0Reply
  • Bruce May
    Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
    9y

    Welcome @Andrew Kougl. If you get serious about buying turn-key properties in Indiana connect with @Sharad M. He lives locally and works in Indiana. I haven't bought anything from him yet, but sure liked his business model.

    1Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    9y

    Hi @Bruce May

    Please let me know when you are available and I would love to do a call with you just to tell you a little bit more about the market I invest in.

    I live here in Carlsbad not too far from you so if someday you would like to get together for coffee or lunch, I am available to do that.

    Sharad

    Podcast Guest on Show #155
    1Reply
  • Andrew Kougl
    OP
    Chula Vista, CA · Member since 2017 · 195 posts · 104 votes
    9y

    @Mike D'Arrigo Thank you, appreciate the feedback. I did look at Kansas City as well, but not as much came up on Realtor.com but you might have inventory I can't see...Looking for homes within 20 years of age versus 50 or below in my search to avoid getting a house with a lot of deferred maintenance. Not sure if that strategy will avoid that issue but that was my logic. Will be reaching out.

    @Tom Ott I actually used Realtor.com to scour the entire US, and initially ended up with something like 72 markets that I eventually narrowed down to 5: Chicago, Indianapolis, St. Louis, Cleveland and Toledo. I don't know how to tell if a market is over saturated but that's a great point I hadn't thought of. How do you recommend I learn that information? I have keyword alerts so I am beginning to learn about the markets but it seems like everything is competitive out there, haha.

    @Bruce May Appreciate you reaching out and glad to see you are in my area. I just watched your YouTube video on Rental Analysis and am starting your BP Podcast. Do you have experience in either of these markets? It seems like there is a strong leaning towards turnkey properties which I agree is probably a safer bet for a first time real estate investor from out of state. I just want to make sure it checks out and the purchase price does prohibit cash flow. Excited to hear more about the markets you have had success in.

    0Reply
  • Timothy Murphy III
    Real Estate Broker · Cleveland, OH · Member since 2012 · 771 posts · 252 votes
    9y

    @Andrew Kougl

    Your strategy is one that a lot of investors use when their local market is too expensive. Feel free to PM me if you have any questions.

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    9y
    Originally posted by @Andrew Kougl:

    @Mike D'Arrigo Thank you, appreciate the feedback. I did look at Kansas City as well, but not as much came up on Realtor.com but you might have inventory I can't see...Looking for homes within 20 years of age versus 50 or below in my search to avoid getting a house with a lot of deferred maintenance. Not sure if that strategy will avoid that issue but that was my logic. Will be reaching out.

    One of the biggest mistakes new investors make is assuming a 20 year old house will have less deferred maintenance than a 50 y/o one. The fact is, the 20 y/o house will most likely have a lot more. Most 20 y/o houses have the original AC, furnace and roof, all of which will be at the end of their useful life. Homeowners don't replace all the mechanical's when they're selling their home like a good turn key company does. That 50 y/o turn key could very well have a new AC, furnace and roof. Bottom line, it's not the age of the house but what's been done to it and whether it's been rehabbed or not. I'd take a 50 y/o rehabbed turn key over a 20 y/o house where everything is original any day of the week.

    0Reply
  • Steve Kontos
    Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    9y

    @Andrew Kougl

    I was in the same boat, that's why I ultimately just stuck with strictly out of state investing.  There are various ways to approach this strategy. It's just a matter of seeing what your the most comfortable with.  I always highly recommend speaking to investors who have successfully done what you are looking to do.  Shadow them and learn as much as you can before just dipping in.  Best of luck!

    0Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    9y
    Originally posted by :

    @Sharad M. Appreciate you reaching out and glad to see you are in my area. I just watched your YouTube video on Rental Analysis and am starting your BP Podcast. Do you have experience in either of these markets? It seems like there is a strong leaning towards turnkey properties which I agree is probably a safer bet for a first time real estate investor from out of state. I just want to make sure it checks out and the purchase price does prohibit cash flow. Excited to hear more about the markets you have had success in.

     My pleasure. I invest in NW Indiana market in Hammond and Merrillville. If there is anything I can help with, please do not hesitate to contact me. 

    Podcast Guest on Show #155
    0Reply
  • Jeff Schechter
    Developer · Nashville, TN · Member since 2016 · 484 posts · 406 votes
    9y

    @Andrew Kougl  We do a ton of Turnkey stuff here in Indy.  Hit me up if you want more info.  Good luck!

    1Reply
  • Andrew Kougl
    OP
    Chula Vista, CA · Member since 2017 · 195 posts · 104 votes
    9y

    @Jeff Schechter Will do! Thanks

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    9y

    @Andrew Kougl No matter where you choose to invest, even more important than the particular market is the team or turnkey company you work with.  And no part of that team is more important than the property management aspect.  A PM can make or break your investment over the long term.   I suggest you visit any area you are considering investing in and meet with the turnkey or other team players you are considering working with.  @Sharad M. is an excellent choice in my view.

    1Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    9y

    @Larry Fried

    Thank you for the mention. I appreciate it.

    @Andrew Kougl

    I agree with Larry that your turnkey properties are only as good as the team you decide to work with. Definitely visit the area. Look at the team's finished projects, their current projects, talk to their existing clients and see how their experience has been.

    Podcast Guest on Show #155
    0Reply
  • Jay Bhatt
    Tarrytown, NY · Member since 2016 · 79 posts · 43 votes
    9y

    @Andrew Kougl

    I was in the same boat as you last year. I did exactly the same. Visited the markets I was interested in and met the turnkey providers. Ultimately i decided to go on my own in NW indiana.

    As couple of people have mentioned, if you decide to go turnkey route in NW indiana you won't find better product and team than @Sharad M.

    If you decide to visit NWI, PM me and I can send you contact details of local brokers, GC , Property Managers.

    Good luck!

    3Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    9y

    Hi @Jay Bhatt

    Thank you for the kind words. Much appreciated.

    We have a great group of people that we work with and we love what we do. Makes life much easier :)

    Sharad

    Podcast Guest on Show #155
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    9y

    Hey Andrew! I'm also in California (LA) and have done out-of-state as well for all my properties. There are definitely good options in both those areas you mention and in those price ranges (on the higher end of the range for decent properties). There are a couple other markets for options. Happy to share resources anytime if you want to message me directly.

    1Reply
  • Rocky Griffin
    Flipper/Rehabber · Edmond, OK · Member since 2016 · 209 posts · 107 votes
    9y
    Kody Fordyce how many properties do you own here in Oklahoma? You promote OKC a lot. I'd like to connect and see what options you have available.
    0Reply
  • John Kunick
    Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
    9y

    Tulsa is also very good market for turnkey

    0Reply
  • Steve Gregory
    General Contractor/ Investor · Tulsa, OK · Member since 2014 · 41 posts · 14 votes
    9y

    Hello Andrew,

    I've got a good friend who lives in La Mesa, and I myself lived in Pacific Beach for a couple years back in the early 80's.

    I've lived in Tulsa for almost 20 years now. My investment model (so far) consists of 7 SFH homes which I have bought for cash and "sold" on lease options with a down payment from the Tenant Buyers and monthly payments on terms. I'm flexible on their term, one couple is paying off their house in 5 years, a couple in 10 years, the longest term is on 20 years. My intent is to hold the notes for the entire term.

    I am able to buy for under 30K all in including closing costs and any rehab, and "sell" for between 50 and 60K.

    Generally speaking, I don't do any cosmetic repairs of any kind. I do repair and/or replace anything necessary to have all of the homes major systems in working order such as water heaters, HVAC, electric.

    Although, I did buy a house for 16.5K, had the hardwoods repaired and refinished, replaced the HVAC, and the flooring in the bath and kitchen. I was still all in for under 30K and "sold" the house for 58.5K

    Several of my tenant buyers have gone in before they move in the home and painted interiors, removed carpet and installed new flooring, etc. One guy is painting the entire interior, installing marble tile flooring throughout the house, built a wood fence (even though it had a chain link fence) and pouring a new driveway! All before moving in, I'd say he is committed!

    I have had to take one house back, and it was from a guy who was paying late pretty much from the get go. I was able to negotiate a "cash for keys" agreement with him that will allow me to resell the home and receive another down payment and monthly payments. 

    If you or anyone else out there in the BP community would like to hear more about my investment model, please feel free to PM me 

    2Reply
  • Anthony Angotti
    Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
    9y

    Hi @Andrew Kougl

    Pittsburgh is a great market for Cash Flow. Lot's of reasons including the growth of the tech industry here and great rent to price ratios. We also have lots of stable C/B neighborhoods that can be good for long term tenants with less turns. All depends on what you are looking for though. 

    Send me a PM if you want to talk. 

    0Reply
  • Account Closed
    Investor · Pasadena, CA · Member since 2014 · 25 posts · 8 votes
    9y

    Hi Andrew.

    I'm just north of you in Pasadena.  I've invested in 2 buy and hold properties within the last year in Indianapolis.  If you ever want to connect, I'd be happy to share with you my experiences.

    Aaron

    0Reply
  • Andrew Kougl
    OP
    Chula Vista, CA · Member since 2017 · 195 posts · 104 votes
    9y

    @Steve Gregory Wow, sounds like you are getting the best of both worlds with sweat equity and forced appreciation but also the longer term monthly rental/lease income. That's an awesome strategy that probably keeps you flush with capital so you can do it again. Curious as to why you don't choose to do a cash out refi instead to still pull the equity out but keep the properties indefinitely. Would your DTI get out of hand and prevent you from acquiring more property? Either way, I aspire to be at your level some day.

    To everyone else so far, thanks for all the advice! I'm reaching out to most of you directly.

    One thing I am still unclear on is financing. Do lenders typically hang out on BP or are they usually a package deal with either the agent or property manager or do all the turnkey's have their own financing. Haven't heard from any lenders yet so I am curious. Also happy to hear from any other out of state investors who invested in either Indianapolis or Chicago or recommendations for agents in either market.

    Thanks!

    0Reply
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