buying out of state/non-local property

16 Replies

Hello everyone, I live in an outrageously expensive HCOL city (Seattle) but I want to invest in RE.  My 80k isn't going to go far here. So I'm looking elsewhere in the NW and out of state.  Is it a bad idea to do this?  I just sold my first rental but that was in town/driving distance so I was doing the maintenance when necessary. It was also relatively new construction so not much maintenance to deal with.

Is long distance a no-no for someone starting like me?

Hi @Mary O. My best advice would be to go slow and build a solid ground team before you make any major purchases.

When it comes to non-local investors, I work with a few located just outside my core market (Atlanta), others who are way out on the West Coast and several on the other side of the world. Across the board, the most successful owners have nurtured relationships with local real estate brokers, property managers, home inspectors, and other professionals who can collectively assist them in making high-quality acquisitions.

I'm not a fan of the "turn-key" trap of working with a single "one-stop-shop" company: You want a team of independent, best-in-class operators who are beholden only to you as their client.

If you'd like, I'd be happy to put you in touch with some of the folks I know who are doing this today. Connect with here on BP if you are interested.

Thank you @Mitch Messer !  I hadn't thought of that ground team much - you've given me a lot to think about.....

I'm down in LA and have always gone out-of-state for my properties and it's been fine. As long as you are smart about how you do it and who you work with, it can be good. It's just a different mindset- instead of managing a property, you're managing managers. As long as you stay up on the people working your property, it can have great returns. You won't find much in the NW for cash flow, but the further east you go, you can start finding things. Kansas City is a good one for $80k, Indy, midwest, etc.

@Mary O. Hi and welcome to BP. I am a former long time Seattlite myself, now a bit south in Oregon. I have been investing out of state since 2012, and there certainly are hazards along the way. You do have to be very careful about who you choose to work with, and trust should be built over time. Not sure how passive you are wanting to be in your REI, but there are multiple routes to take, and I have written about Three Key Routes for Passive Real Estate Investing in my BP blog.

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

Hi Mary! Many investors who live in markets that are saturated turn to out of state investing. This is very common, even for newbies! I have helped several people make their acquisitions. In house property management is definitely a must in this situation! 

Mackaylee Beach, Real Estate Agent

Thanks everyone - my understanding of property management was they market the house, find a renter, see through rent collection and maintenance.

With my budget, most of the SFH homes I see need a bit of "refreshing" before hitting the market for tenants. In that scenario, who - as an out-of-state owner- do I hire/find to do that part before I turn it over to property management? Examples of the minor work would be: painting, replacing some appliances, etc. Thank you.

Mary.

I invest out of state 100% and can answer any questions that you might have about investing out of state. Would you be looking to invest for cash flow or flip? 

Originally posted by @Mackaylee Beach :

Hi Mary! Many investors who live in markets that are saturated turn to out of state investing. This is very common, even for newbies! I have helped several people make their acquisitions. In house property management is definitely a must in this situation! 

 Property management.... the most important part of out of state investing. 

Originally posted by @Mary O. :

Thank you @Mitch Messer !  I hadn't thought of that ground team much - you've given me a lot to think about.....

 Mary. The ground team is the most important part. 

When you invest out of state you're just a decision maker, your team puts out the fires so you have to make sure they know what they're doing. 

@Antoine Martel thanks very much! I'm gonna ask a very basic question here but when everyone talks about groundteam, what does that team look like? Are there property management companies that do it all A-Z? Or do most out of state REI's have 1.) real estate agent and 2.) handyman and 3.) property management ?

Originally posted by @Mary O. :

@Antoine Martel thanks very much! I'm gonna ask a very basic question here but when everyone talks about groundteam, what does that team look like? Are there property management companies that do it all A-Z? Or do most out of state REI's have 1.) real estate agent and 2.) handyman and 3.) property management ?

 Depends on what kind of projects you're doing, if you're buying turn key then all you need is a good property management company.

If you're doing flips out of state then you need contractors, inspectors, realtors, property management, etc. 

Originally posted by @Mary O. :

Hello everyone, I live in an outrageously expensive HCOL city (Seattle) but I want to invest in RE.  My 80k isn't going to go far here. So I'm looking elsewhere in the NW and out of state.  Is it a bad idea to do this?  I just sold my first rental but that was in town/driving distance so I was doing the maintenance when necessary. It was also relatively new construction so not much maintenance to deal with.

Is long distance a no-no for someone starting like me?

Investing out of state can be great when you live in a market such as your's. The Midwest can provide a much better ROI if you are looking.

I would suggest checking out:

How to Find the Right Turnkey Real Estate Investment Company for You

and

What to Ask When Working With a Turnkey Provider

Tom Ott, Real Estate Agent in OH (#2016003865)
440-749-4043

@Mary O. - Similar to you I started local to get my feet wet. But while working full time, the best way I saw to increase my cashflow and networth was turnkeys. Besides my 5 local multifamily homes, I have 8 turnkeys in Indianapolis. It can be done with the right due diligence. PM me for details if you'd like more info...

Hank 

@Lane Kawaoka @Antoine Martel   I wish i could give your comments more than a single vote :) 

I absolutely LOVE what @Lane Kawaoka is saying.  $80,000 goes a very, very long way in most areas outside of the west coast.  Even after financing and property management should should be able to get +$300 per unit in most areas.  

@Lane Kawaoka where did you buy?  

Patrick Britton, Real Estate Agent in WA (#120557)
360-927-0959

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