OOS Investing from California - partner?

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OOS Investing from California - partner?

Kyle Marek
San Ramon, CA · Member since 2018 · 78 posts · 32 votes

I've been antsy for months to get in on my first rental property. I have the savings to do so, but I live in the East Bay in California where rentals are through the roof and cash flow is almost nonexistent. 

I have a mentor (my grandpa) who lives north of Sacramento, and we have been scouring that area for buy and hold for cash flow for some time with no luck yet.

My mentor is older and while he has had out of state properties in the past, he is not familiar with the new OOS market and the modern day advantages technology offers for finding rentals. He thinks it's sketchy (which it can be!)

I've read David Greene's book on out of state RE investing and have been searching the MLS in markets like the Midwest, TX, and Ohio. I know about the system and team I need to create if I want to do this (agent, lender, property manager, etc.).

I would feel a whole lot more comfortable if I had an experienced OOS investing partner to help me through my first deal. I realize it's asking a lot, but I'm highly motivated, have the capital, time, and am ready now! If there is anyone out there who is willing to help in any way, that would be a godsend. If not, I understand.

Regardless, good luck to everyone in their RE journey!

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Dianna Vonderheide
Real Estate Broker · Central Coast, CA · Member since 2019 · 15 posts · 10 votes
6y

I currently have 6 doors in SLO county, CA. I'm trying to shift my focus to OOS investing to achieve a higher CAP with a lower cost of entry. This was a helpful post. Thank you!

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  • Tyler Caglia
    Rental Property Investor · Fresno, CA · Member since 2018 · 112 posts · 166 votes
    6y

    @Kyle Marek sounds like you’re on the right path. I was in your shoes just over a year ago and now have multiple rentals in Ohio. Best investing decision I ever made was to get started with OOS rentals. I know sometimes it might feel like you need a partner, when in reality you just need to take a leap of faith and turn that education into action. You’ll learn a ton just by doing one deal. Partnerships can be valuable too though if it’s the right fit and the right deal, but you’ve gotta be careful. Feel free to PM me if you have any questions I can answer about getting started.

    1Reply
  • Graziano Casale
    Investor · Pasadena, CA · Member since 2019 · 42 posts · 16 votes
    6y

    @Kyle Marek

    Hi Kyle

    Like you I'm in Cali, although SoCal and I'm investing in Midwest (Indianapolis). Currently own 4 SFH and looking to grow.

    If you want to chat, send me a DM.

    I’m open to a partnership or just to share info

    Good luck

    Graz

    1Reply
  • James WachobBusiness Member
    Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 888 votes
    6y

    @Kyle Marek Listen to your Grandpa! I get a lot of phone calls from  BP subscribers looking for a way out of an investment they have purchased without 1st BUILDING the correct team. I'd highly encourage any OOS investors to fully vet and meet their team, even if it's via zoom. 

    I've created a checklist for OOS investors and would be happy to share. I'll send you a DM.

    1Reply
  • Sam B.
    Investor · Indianapolis, IN · Member since 2015 · 270 posts · 217 votes
    6y

    Notice that 90% of the people who recommend out of state investing are in the business of selling people out of state investment properties. Or newbies.

    If you want to be passive you can do two things:

    1. Buy an ultra conservative boring suburban rental property in a cheaper market at a 6 cap and be happy with it. Turnkey companies usually don't sell these. Just find a good broker who knows the area.

    2. Save yourself the hassle and lend money to active investors.

    2Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    6y

    @Kyle Marek you are on the right track. A partner for OOS is the best way to mitigate your risk though you are not likely to enjoy a great return. The biggest risk is going an OOS remote rehab, very risky. You might consider VRs as an alternative which can be easily self managed remotely which provide great returns . It’s an active biz though, ie much less passive.

    0Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    Hi @Dianna Vonderheide, that's great. Columbus, OH might be a good market to consider. 

    0Reply
  • Andrew HoganPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
    6y

    Lol, well said @Sam B.

    0Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    6y
    Originally posted by @Dianna Vonderheide:

    I currently have 6 doors in SLO county, CA. I'm trying to shift my focus to OOS investing to achieve a higher CAP with a lower cost of entry. This was a helpful post. Thank you!

     A lot of OOS investing from CA tend to look at the Midwest where the prices are lower. They also like to use a Turnkey Provider so everything is done for you and it is truly a passive investment. Everything is done in-house with them so you don't have to find as many partners. 

    1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    I would be careful with partnerships. I have seen them go very wrong (for clients not myself) especially when it's set up with a contractor (they often will be too slow, over charge something, etc.) it is too easy to be taken advantage of. The times I have seen partnerships work great is when it's two long time friends who know and fully trust each other. 

    For buying outside CA just find a good area (class A or B) and buy a 3 or 4 unit that cashflows with conservative underwriting. If you are putting down 25% it's not at all hard to find this type of deal. Check Yelp and BP for property manager reviews. 

    I would avoid turnkey. If you notice all the people on BP pushing turnkey are the guys who sell them and make a profit off you. No one is getting rich off these as you tend to overpay and they depreciate once the newness wears off.

    0Reply
  • Travis Wilkes
    Member since 2018 · 29 posts · 9 votes
    6y

    I would be willing to partner with the right person/team on a multifamily property in Texas. Preferably the property would be in the major Texas markets or along the IH35 corridor from San Antonio to Dallas. Partnerships are great if set up properly. Good RE attorney who is well versed in partnerships. The docs need to go over expectations and responsibilities. As long as goals are aligned and there is a mechanism in place for adjustments as those goals shift in the future.

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Kyle Marek:

    I've been antsy for months to get in on my first rental property. I have the savings to do so, but I live in the East Bay in California where rentals are through the roof and cash flow is almost nonexistent. 

    I have a mentor (my grandpa) who lives north of Sacramento, and we have been scouring that area for buy and hold for cash flow for some time with no luck yet.

    My mentor is older and while he has had out of state properties in the past, he is not familiar with the new OOS market and the modern day advantages technology offers for finding rentals. He thinks it's sketchy (which it can be!)

    I've read David Greene's book on out of state RE investing and have been searching the MLS in markets like the Midwest, TX, and Ohio. I know about the system and team I need to create if I want to do this (agent, lender, property manager, etc.).

    I would feel a whole lot more comfortable if I had an experienced OOS investing partner to help me through my first deal. I realize it's asking a lot, but I'm highly motivated, have the capital, time, and am ready now! If there is anyone out there who is willing to help in any way, that would be a godsend. If not, I understand.

    Regardless, good luck to everyone in their RE journey!

    I know plenty of OOS investors that have landed here in Columbus, Ohio. I do not think you need a partner for the deal. You just need that core 4. 

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    0Reply
  • Manny Angeles
    Member since 2020 · 3 posts · 2 votes
    6y

    @Tyler Caglia

    Any recommendations on area in ohio to invest in

    1Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    Columbus @Manny Angeles

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Manny Angeles:

    @Tyler Caglia

    Any recommendations on area in ohio to invest in

     I would recommend Columbus, Ohio

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    6y
    Originally posted by @Sam B.:

    Notice that 90% of the people who recommend out of state investing are in the business of selling people out of state investment properties. Or newbies.

    If you want to be passive you can do two things:

    1. Buy an ultra conservative boring suburban rental property in a cheaper market at a 6 cap and be happy with it. Turnkey companies usually don't sell these. Just find a good broker who knows the area.

    2. Save yourself the hassle and lend money to active investors.

     Thats fair, but who do you expect to offer paid, fiduciary free advice? Fellow investors? I may advocate for OOS since so many of my clients do it, but its not for everyone. Lending money loses a lot more control than directing people over the internet for a property you own.

    0Reply
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