Out of State Investing and Asset Protection

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Out of State Investing and Asset Protection

Fernando E.
Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes

Fellow BPers, 

Hope you all had an awesome Father's day celebration

I've been in BP for about 2 years now and I really appreciate the spirit of collaboration and help in this community in my investing career. Two questions I would love to get your input

1. I live in the bay area and will be investing out of state (OOS), I know by reading in the forum that Midwest is the place to go, I originally planned to go to Indianapolis however the multi family houses that I encountered are on the older side as such will have a higher cost of maintenance, the realtor I am working with setup my automated search in the 46201, 203, 205 ranging in the $120 - 190K range.  My question, where do you invest?  Is Midwest still the place to go for OOS? How about Arizona? 

2. Asset protection is key concept that I picked up from Rich Dad Poor Dad book "Unfair Advantage" by Rober Kiyosaki, and my limited understanding tells me that I should have an LLC to protect my personal assets from the property, that is a cool $800/ year here in California. If this is a great practice that will save me in the long run, I will bite the bullet and pay the cost however I wanted to get your input on the LLC.

Very much appreciate your input guys,

Fernando 

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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y

Hi Fernando.

1. AZ doesn't offer much for cash flow. Indy is probably only going to give you cash flow on MFRs in that price range that need major fixing up. How well-versed in this whole process are you? Are you wanting to fix up a property and do you know exactly what that price range offers and the risk factors with that? Typically the midwest isn't know for their MFRs to be the ones that cash flow...most of the midwest markets are more SFRs for cash flow.

2. Don't put the cart before the horse. And for detailed info on this- 

https://www.biggerpockets.com/renewsblog/2013/08/1... (and I'm a huge Rich Dad fan, so I am not just disagreeing with him for fun. What he says is accurate but not necessarily for your stage in the game (or mine)).

Hope that helps.

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  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    8y

    Hi Fernando.

    1. AZ doesn't offer much for cash flow. Indy is probably only going to give you cash flow on MFRs in that price range that need major fixing up. How well-versed in this whole process are you? Are you wanting to fix up a property and do you know exactly what that price range offers and the risk factors with that? Typically the midwest isn't know for their MFRs to be the ones that cash flow...most of the midwest markets are more SFRs for cash flow.

    2. Don't put the cart before the horse. And for detailed info on this- 

    https://www.biggerpockets.com/renewsblog/2013/08/1... (and I'm a huge Rich Dad fan, so I am not just disagreeing with him for fun. What he says is accurate but not necessarily for your stage in the game (or mine)).

    Hope that helps.

    1Reply
  • Fernando E.
    OP
    Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
    8y

    Hi @Ali Boone, thank you for the very detailed and helpful response! :)  I also read your profile, great job from moving from an engineer to a full time investor, love it! 

    For #1, if your niche is MFH, where will you invest? I thought that the Texas market was good. 

    For #2, after reading your article, it was eye opening and matches with Brandon's comments on LLC.

    I will send you a pm to connect, thanks in advance!

    Fernando

    0Reply
  • Lupe Rodriguez
    Member since 2018 · 32 posts · 7 votes
    8y
    Following. I live in the North Bay (Santa Rosa), similar situation, would also like to know about Residential Multis in East Texas (Austin/San Antonio/Dallas).
    0Reply
  • Account Closed
    Real Estate Broker · Phoenix, AZ · Member since 2018 · 83 posts · 28 votes
    8y

    I have a great off market property that is cash flowing over 8% cap rate and has VA guaranteed rents in 6 private (all have exterior entrances) spaces in a SF residence. It's in a developing area in the Valley and was mostly just rebuilt completely from stud up. This is a solid cash flowing deal perfect for an out of state investor. $330,000

    I also have bank deals that are exclusive and all over the country I'm looking to put some packages together on. Lots in the Midwest, Texas, etc.

    0Reply
  • Costin I.
    Rental Property Investor · Round Rock, TX · Member since 2016 · 1k+ posts · 971 votes
    8y

    Here is a diagram to help you in the asset protection question:

    1Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    8y

    MFRs aren't my niche, so I can't speak directly to them. I only know generally about them. I know that MFRs have never been big cash-flowers in Texas. Even when Texas cities were booming for cash flow, it was SFRs. I don't know many places you'll be able to get a rent-ready MFR that will cash flow. You can probably fix some up, but not sure where those necessarily are either. And this is all assuming you're talking about residential MFRs versus commercial MFRs. Commercial would be a whole different story.

    0Reply
  • Com M.
    Rental Property Investor · Murrieta, CA · Member since 2016 · 129 posts · 67 votes
    8y

    Welcome @Fernando E.

    I am in a similar situation living in California and currently am investing in Indianapolis. I prefer SFR over multi family in the area for my own portfolio. Classic 3/2 just outside of town.

    Look forward to seeing you around here more often. Reach out if you have any questions or need a referral.

    Best of luck!

    0Reply
  • Fernando E.
    OP
    Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
    8y

    Thanks everyone really appreciate your input, looking forward to connect with y’all. 

    0Reply
  • Kiera Underwood
    Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
    7y

    @Fernando E. I'm curious how things have played out? 

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