Looking to Purchase Outside of California. Any advice?

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Looking to Purchase Outside of California. Any advice?

Kayla M.
Member since 2018 · 19 posts · 13 votes

Hello everyone! I just joined BiggerPockets and I am excited to interact with a community of people who don't think I'm crazy for wanting to invest in real estate. I've been told so many times that it's a bad idea and it just doesn't seem that way to me. 

I know it's recommended to start in your local area and that's just unrealistic for me. I'm interested in buying single family homes for under 100k outside of California (because it's obviously impossible in CA). If anyone has any advice and could recommend good, safe cities and states to start in that would be amazing! Also, if anyone has experience and is in a similar situation I'd love to hear about your experience as well as get references for great property managers in your area, contractors, realtors, etc. People that hustle, are responsive, and great at what they do! 

Maybe I'm crazy in thinking that buying out of state for under 100k and still getting cash flow is possible. If this sounds unrealistic and highly unlikely let me know! I want to get into real estate out of state, I just want to learn from people and get advice first. I look forward to hearing back from yourselves! :)

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Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Originally posted by @Kayla M.:

Sorry I goofed up the tagging. I'm still figuring out this discussion set up. Lol!

I haven't found anything that interests me yet. I've been looking for about 3 months now. I want under 100k, single family home, in a safe area, with a growing population. That sounds too perfect and I don't know which of those 4 things is least important because I know I can't have all of them. Maybe I'm being too picky, maybe I'm stuck in analysis paralysis, maybe it's something I haven't figured out yet.

What is your experience in real estate investing? Is there experience in purchasing property? I'd love to hear about your experience, even if it's different than what I'm looking for.

Post up some of the areas you've been looking out the deals you've found? I can tell you when I started I was all over the place trying to find the "best" spot to invest... but "best" doesn't do anything. There's always something "better" and I soon realized I needed something that worked for me. I ended up picking KC, variety of reasons... but mostly because it's easy to get to from CA and at the time (few years ago) it was affordable. 

It's still affordable now, but everyone wants that sub 100k house.... and not everyone really cares what they pay for it.  If you're chasing OOS rents... you want something that's quality and in demand... not something that's cheap. 100k in KC for a house, probably not going to get you a "great" fit because it'll likely be older (read that as maintenance/repairs), probably small and 1 ba (read that as turnover as tenants outgrow the space), and it'll likely be near or in the ghetto...

Now a townhouse/condo/half duplex.... different story but also WAY different niche than SFH.

As for me... good schools and 2 baths or good night life and 2 bds... popular area w/ something that fits the lifestyle. I also don't like to do rehab myself, rather let someone do it while back and have it be serviceable for renters... and then I can upgrade in future before I sell to current market trends..

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  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    Do a little digging.... it's easy to find this answer.

    1Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y
    @Matt K. Thanks Matt! I’m interested in starting a conversation from my own post and hearing perople’s personal experiences that way. I have read plenty and will continue to read up on the subject. I’m just not sold on any particular location yet. Thanks for the response!
    2Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Kayla M.:
    @Matt K. Thanks Matt! I’m interested in starting a conversation from my own post and hearing perople’s personal experiences that way. I have read plenty and will continue to read up on the subject. I’m just not sold on any particular location yet. Thanks for the response!

    So why not ask about the areas you've looked or are interested in....  Asking a real question like "tell me about xyz" will get you much more meaningful info that can help you move fwd investing.

    0Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y

    @Matt K. I haven't found anything that interests me yet. I've been looking for about 3 months now. I want under 100k, single family home, in a safe area, with a growing population. That sounds too perfect and I don't know which of those 4 things is least important because I know I can't have all of them. Maybe I'm being too picky, maybe I'm stuck in analysis paralysis, maybe it's something I haven't figured out yet. 

    What is your experience in real estate investing? Is there experience in purchasing property? I'd love to hear about your experience, even if it's different than what I'm looking for. 

    1Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y

    Sorry I goofed up the tagging. I'm still figuring out this discussion set up. Lol!

    I haven't found anything that interests me yet. I've been looking for about 3 months now. I want under 100k, single family home, in a safe area, with a growing population. That sounds too perfect and I don't know which of those 4 things is least important because I know I can't have all of them. Maybe I'm being too picky, maybe I'm stuck in analysis paralysis, maybe it's something I haven't figured out yet.

    What is your experience in real estate investing? Is there experience in purchasing property? I'd love to hear about your experience, even if it's different than what I'm looking for.

    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Kayla M.:

    Sorry I goofed up the tagging. I'm still figuring out this discussion set up. Lol!

    I haven't found anything that interests me yet. I've been looking for about 3 months now. I want under 100k, single family home, in a safe area, with a growing population. That sounds too perfect and I don't know which of those 4 things is least important because I know I can't have all of them. Maybe I'm being too picky, maybe I'm stuck in analysis paralysis, maybe it's something I haven't figured out yet.

    What is your experience in real estate investing? Is there experience in purchasing property? I'd love to hear about your experience, even if it's different than what I'm looking for.

    Post up some of the areas you've been looking out the deals you've found? I can tell you when I started I was all over the place trying to find the "best" spot to invest... but "best" doesn't do anything. There's always something "better" and I soon realized I needed something that worked for me. I ended up picking KC, variety of reasons... but mostly because it's easy to get to from CA and at the time (few years ago) it was affordable. 

    It's still affordable now, but everyone wants that sub 100k house.... and not everyone really cares what they pay for it.  If you're chasing OOS rents... you want something that's quality and in demand... not something that's cheap. 100k in KC for a house, probably not going to get you a "great" fit because it'll likely be older (read that as maintenance/repairs), probably small and 1 ba (read that as turnover as tenants outgrow the space), and it'll likely be near or in the ghetto...

    Now a townhouse/condo/half duplex.... different story but also WAY different niche than SFH.

    As for me... good schools and 2 baths or good night life and 2 bds... popular area w/ something that fits the lifestyle. I also don't like to do rehab myself, rather let someone do it while back and have it be serviceable for renters... and then I can upgrade in future before I sell to current market trends..

    4Reply
  • Alex T.
    Investor · San Jose, CA · Member since 2016 · 23 posts · 8 votes
    8y
    Not easy as it sounds. You can read all of bigger pocket posts but until you purchase one you will not understand the pros and cons of this business. Further I will caution you about the current market conditions. Interest rates are pretty high. We reached a peak and is tending downward now. Knowledge from learning and knowledge from experience are two different things. You are better off learning and watching the markets and wait.
    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Alex T.:

    Not easy as it sounds. You can read all of bigger pocket posts but until you purchase one you will not understand the pros and cons of this business. Further I will caution you about the current market conditions. Interest rates are pretty high. We reached a peak and is tending downward now. Knowledge from learning and knowledge from experience are two different things. You are better off learning and watching the markets and wait.

     Interest rates are higher than historic lows, but they're still not even to what was once "normal".... 

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    one thing to take into consideration is sub 100k and population growth and high income do not go together generally speaking those sub 100k markets tend to be more nuetral to declinng in pop growth ergo sub 100k . 

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    3Reply
  • Matthew John
    Rental Property Investor · Metro Detroit, MI · Member since 2016 · 277 posts · 269 votes
    8y

    Under (and around) 100k is my niche here in the suburbs of Detroit. 

    3rd largest city in Michigan. Population growing. Jobs growing. City development in the works. Rental demand is STRONG in the right areas. 

    If you're interested, I'd love to talk! I live in this area and have all the contacts to make it happen, looking for a cash partner to scale up! 

    1Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    8y

    What % of BP posts are Cali people asking about OOS, and people asking about buying property under an LLC?

    Has to be 50+%?

    Kayla, if it helps I live in San Diego and buy in Houston. OOS has its challenges, but so does making no money and dealing with blue state politics  

    2Reply
  • Tyler Jahnke
    Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
    8y

    @Kayla M. You're not crazy. I feel like investing out of state while living in California is the hot thing to do right now :)

    There are plenty of good markets out there. I happen to invest in Indianapolis and Louisville.

    Wherever you decide to buy, really put in the effort to understand that market. Hop on a plane. Shake peoples hands. Talk to locals. That'll put you ahead of the pack that just want to invest, make money, and put little work into it. Real estate is a relationship business and takes effort.

    Let me know if you have any questions!

    -Tyler

    4Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y

    @Matthew John Thanks for the advice! I’ll start doing more research on Detroit and see if it looks like a good fit for me. In your experience has crime been an issue that have affected your properties?

    1Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y
    @Cody L. I was actually looking at Houston yesterday after posting this. What was your experience with the hurricane? A lot of the ones I’m seeing in that budget of 100k are because they were severely damaged by the hurricane. They were too close to the ocean in my opinion.
    0Reply
  • Kayla M.
    OP
    Member since 2018 · 19 posts · 13 votes
    8y
    @Tyler Jahnke Thanks for the advice! It’s greatly appreciated and I will take a look at those areas. I know whatever area I decide to invest in I will fly out there and meet people to add to my team.
    0Reply
  • Jon Stewart
    Real Estate Agent · Member since 2018 · 1 post · 0 votes
    8y
    @Kayla M. Check out some of the properties in my market area (Jackson, Ms) We have major industry in the area and adding more all the time. This has created increased demand for rentals in that price.
    0Reply
  • Mike Doyle
    Real Estate Agent · Huntington Beach, CA · Member since 2016 · 15 posts · 3 votes
    8y

    I'm in the same boat as Kayla. Does anyone have an good websites that will give you demographic trends, employment figures, crime stats, etc? 

    0Reply
  • John Bledsoe
    Flipper/Rehabber · Member since 2018 · 15 posts · 3 votes
    8y

    I know there is a lot of people investing in Missouri. My cousin does this and got people from Texas and in Michigan looking at property's here.

    1Reply
  • Paul B.
    Rental Property Investor · Dallas, TX · Member since 2015 · 503 posts · 504 votes
    8y

    Why does it need to be under $100K? Are you planning on paying cash? If all you have is $75K, you could probably buy two $150K houses each (*) with a down payment of $25K, and then having $25K left over for reserves. 

    Without speaking specifically for any particular market, in general the demographic that rents a $150K house will be less risky than the folks who rent $75K houses. It's especially important when you're out of state and will be relying on 3rd party property management. 

    (*) I wouldn't recommend actually buying two houses at once as a beginner. Start with one, and when you get your feet wet, buy your second when you decided you are ready. Could be six months later, could be a year....

    0Reply
  • Matthew John
    Rental Property Investor · Metro Detroit, MI · Member since 2016 · 277 posts · 269 votes
    8y

    @Kayla M. Detroit is much different than the suburbs. I invest in Metro Detroit. Low crime, large population, growing economy, and downtown development in the works. We're the home of GM,Chrysler, and Cadillac HQ.

    Downtown has areas that can offer high returns, but the suburbs are a different game. 

    1Reply
  • Andrew Lawhorn
    Rental Property Investor · Sonora, CA · Member since 2017 · 78 posts · 25 votes
    8y

    @Kayla M.

    A valuable advice I got from BP member, invest in OOS where you either went to school (I currently invest in Alabama & Tennessee), traveled and have connections in that area, or would eventually like to visit on a regular. Plan ahead and take action immediately! 

    0Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Mike Doyle:

    I'm in the same boat as Kayla. Does anyone have an good websites that will give you demographic trends, employment figures, crime stats, etc? 

     Census, city data, crime maps (I think on that one) neighborhood scout(costs $)

    0Reply
  • Purvee K.
    Real Estate Broker · Palo Alto, CA · Member since 2018 · 10 posts · 6 votes
    8y
    @Kayla M. We live in CA and invest both in and outside of CA personally. Since your question is pertaining to outside of California, I would say the key is to really understand the area. The phraae that “real estate is local” tends to be true be it for investment or personal use. Despite being a CA licensed broker, I prefer to utilize the services of local brokers and property managers to scout and manage properties once the property seems to be meetIng out established criteria. Each area can be so unique and why you may want to invest there so I would recommend for anyone considering a purchase to establish their own criteria of what they are looking for. With property costs being lower outside of California, sometimes people end up overpaying as well, not doing the right due-diligence, end up with headaches. While we have many develped list of criteria, the first one is we must know the market well enough and have visited the area. I would highly recommend starting with areas you know a lIttle more about aa well, using local experts to supplement your knowledge of the area. The 2nd we have learned (if you don’t have a local team to help), is to buy close enough so that in an emergency, you can get yourself there quickly. While we always hope nothing major goes wrong, when it does, there is no substitute for being able to make it there. Another interesting thing I would say is to look at California market stIll (outsIde major metro) as there are still places that are worthy of investment for commercial real estate, dependIng on your objectives and crIterIa. So, fIrst and foremost, develop a criteria. Hope this is helpful. Thanks.
    2Reply
  • Scott Sklare
    Real Estate Broker · Beloit, WI · Member since 2015 · 234 posts · 60 votes
    8y
    @Kayla M. Please call me I can show you incredible ROI. You invest. We do the rest. I work with many Biggerpockets members.
    0Reply
  • Stanley Bronstein
    Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    8y

    @Purvee K. gives some good advice.

    1Reply
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