Buying property out of state for a first-time investor

69 Replies

@Courtney M. Live where you want, Invest where it makes sense. If you are looking for a passive investment(rental property) no problem people do it every day. If you are looking to flip a little harder but it can be done. Please use someone that is a professional (like me) or others on BP. Do your research. Detroit and suburbs is Hott! right now. I do business with many people on the west coast.

@Brandon Sturgill , thank you. That seems to be the biggest takeaway from this post so far for me - if investing OOS, the biggest asset one can have is a great team. I'm going to make as many local connections as I can on my next trip out.

@Angela Yan , that's a great story. I do wish I had the cash to buy something in CA because the appreciation alone could be very helpful in kickstarting more investments. Would that I had the cash 5 years ago to buy! That was a great time to pick up property out here.

Yes! I was very lucky but there are market cycles that are still on its way up. Just got to do your research which is the part of RE that I find fascinating. I am also doing my first flip in Atlanta which is a great market too and they are really into design, HDTV style in some good price range. 

I’m a broker and rehabber in Indianapolis, and we work with over a dozen investors from California and NY who all buy and flip/hold in our city.

Happy to help.

Jason Basso
IRIS Realty & Development

Check out the David Greene Podcast on this site, episode 257, it has tons of useful information on long distance real estate investing.  I'm just getting started in this area as well, I live in the SF Bay area and am looking to take a similar approach as you are, prices locally are astronomical...

What useful resources have you found?  Anyone else have a similar path?

@Patrick Myers , I have purchased a few books based on recommendations here and on the podcast:

The Advanced Guide to Real Estate Investing by Ken McElroy

Remote Controlled Real Estate Riches by Adiel Gorel

Long-Distance Real Estate Investing https://www.biggerpockets.com/store/long-distance-...

I'm just getting started but between those books, this forum and the podcast I'm hoping to build a foundation of knowledge from which to approach my market.

I am very, very green and at this point I wouldn't know a good "deal" if it sauntered in front of me, let alone how to analyze it. So I think once I have that knowledge tucked away, combined with market resources, I will be in a good place to evaluate properties. At this point I just have a good idea of what I want my first deal to look like, $ wise, so I'm creating a spreadsheet of potential SFH and plan to view/tour those not only to get a better feel of the market but make some connections while I'm building my knowledge.

Originally posted by @Courtney M. :

Hello! I'm happy to be here on the BP forums.

I'm just starting to look at investing in real estate. I live in inland southern California, which is more affordable than the coasts, but still more expensive than what I'd like my first investment to be (around $100k). I grew up in Michigan and am a bit more familiar with the metro-Detroit suburbs, where starter homes are more within my desired price range.

My question is for those who started investing in real estate, did you stay local? It definitely seems easier to manage an asset when you can drive to it, not to mention are in the same time zone. Do you think it's a mistake to think about investing so far from where you live, given my lack of experience at this point?

Thanks!

Hello Courtney!!! Your post is so special to me!! Why because I am not only an out of state investor, I am a non us resident investor living in Latin America and started investing in YOUR DETROIT six months ago. We are doing well, very happy with the results so far, gathering all the local team has been the major challenge. Have a look on one post I created couple weeks ago (https://www.biggerpockets.com/forums/311/topics/58...). I think you will enjoy it.

Let me know if I can be of any help in YOUR Detroit!!!

Best

Leo.

Hi @Courtney M. - congrats on making the commitment to going out-of-state. 

My partner/wife and I followed a popular playbook: 1) local for 1st property 2) out-of-state for second... and turnkey! We've moved on to other investments since then (multifamily commercial, syndications, etc), but we've had an awesome experience following this playbook.

I'm going to make a recommendation here that I think many folks on BP.com will react with *shock* and dismay*: consider a turnkey rental property if it is your first.

Candidly, I think we could have bypassed "step 1" altogether (buying local, first). It was educational, for sure... but we very rarely actually visit our local property that's based 45 minutes away from our home. 

Our turnkey provider has been excellent and i'm happy to connect you with them and answer any other questions about our processes, partnership, etc... that helped us close on multiple out-of-state properties (without ever seeing them.

P.S. - $100k is plenty to work with to make multiple solid investments, with the right partnerships, patience, planning and process

Hi @Courtney M.

Real estate, like any investment, carries risk, but at the end of the day these risks are just a line item, with various degrees of success based on the due diligence you put into each one. Buying sight unseen does require a trusted team on the ground and the time it takes to make that team, but other than that, I found the process quite manageable.

This year I bought not one, but two multi-families with my sister (the trusted team on the ground) in the same month while living and working in another country. These were my first property purchases. Still early but Cash On Cash ROI around 12%, with 10% cap rates.

So to answer your questions, ..definitely did not stay local (though my team was) and no, it's not a mistake if you take the necessary extra steps in research and allocating resources to do it right.

Hope that helps. :)

@Courtney M. I was in the same boat, looking at different Turnkey Company but finally ended up buying an individual deal with the help of a local investor/realtor. I'm closing the home today in Alabama and I live in Boston MA. I would suggest studying the market that you are interested in and network with people in that market (BP is a great place to start) and build your team for that deal. 

I am now looking for my second deal (MI) is in my list but haven't really get connected with any local folks yet so if you ended up going that route, let me know how that goes :)

@P.J. Bremner I like the idea of BRRRR but haven't got a chance to try it yet since all the properties in MA is too overpriced to even start.

Mora Clark good for you pulled the trigger I grew up in MA actually here on a travel nursing contract. I moved to AZ much cheaper living. The funny although the cost of living in Boston is double that of AZ, however, they pay nurses the same wages? I lost money on my first house in AZ pre-construction but lucked out and bought the next one at 66K about 10 years ago. I like MA but I am so glad I moved it would be very hard to perform the BRRR Strategy in MA

@Courtney M. I also live in a very expensive market so I mainly invest out of state/province/country where the numbers make more sense. Personally, I like my properties being a flight away. When they are within driving distance I would always find myself wasting time painting, doing minor repairs, self managing trades, screening tenants, driving by to see if the grass had been cut and about a million other reasons that took me away from BUYING MORE PROPERTIES! 

Research the heck out of the market you choose (like Detroit), stick to B or C+ neighbourhoods and have multiple people look at your deal before moving forward. There will be lots of people here on BP that will be able to help you with referrals to set up your local real estate investment team in that city. A turn-key provider with a good track record might be a good idea.

@Courtney M.

Thanks for your post! My husband and I are in Santa Clarita and have been spending the last 6 months learning about REI and saving up for a down payment. We are also looking OOS and it's intimidating considering we are newbies and doing it from afar.

Thanks everyone for all the advice!