Out of state investing. CA resident.

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Out of state investing. CA resident.

Anthony Pascual
Los Angeles, CA · Member since 2019 · 3 posts · 4 votes

Hi everyone. I'm a new member here. I've been heavily considering investing out of state. I currently work in real estate sales here in CA but I also do some personal flips in the Inland Empire (San Bernardino County). I currently have about $500,000 to invest and originally I was looking to flip then buy and hold here in CA. I have had a couple of colleagues who invested in units out of state which is what got me interested in out of state investing. Prices here in CA are ridiculous! 

I have been looking into Texas but I would like to get opinions/suggestions from those of you who are investing out of state. What states/cities should I look into? Are you starting LLC or other corporations in that state? For those that invest in Texas, are the property taxes really that bad? Any pointers on what to prepare for those out of state investments?

I'm open to any and all suggestions/help.

Thank you.

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Amy KendallBusiness Member
Real Estate Broker · Lehi, UT · Member since 2016 · 397 posts · 318 votes
7y

My husband and I are just about to close on our first out of state property in Arizona and we are under contract on a fourplex in Florida as well.  I would say to invest wherever you are comfortable with the numbers, and where you can find a team that will help you out.  I found comfort in calling property management companies in the areas I was considering to verify the rents were realistic and the area was good.  They were very helpful and have a lot of information to share.  A good realtor can be a great help as well.  For example, I often take walk through videos for clients of potential long distance investments, and even help them place tenants.  A realtor could also help answer your questions about property taxes as well.  For reference, I looked at a duplex in Houston and the taxes were $5689.42/year.  The tax rate was 2.53%.  Good luck!

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  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y

    @Anthony Pascual As a fellow Californian, I understand your predicament. It's become virtually impossible for anything to cash flow anywhere here in CA. If cash flow is your goal and it sounds like it is, I would recommend looking in to some of the midwest markets. Personally, I like Kansas City and Indianapolis which is where my company is active and has been for almost 10 years. The problem with Texas is that not only are the property taxes high as asked about, they have some of the highest insurance rates in the nation. Here is a matrix comparison of the demographics of some of the most popular investment markets which I do quarterly. The think to keep in mind is that strong economic and demographic trends alone to not make a good cash flow market. The other important factors which drive cash flow and ROI are:

    Price/rent ratios
    Local property taxes
    Insurance
    Landlord'tenant statutes

    I'd be happy to chat with about the Indy and KC markets if you're interested in taking a look at them.

    1Reply
  • Javonte Hardiman
    Real Estate Investor · Milwaukee, WI · Member since 2015 · 39 posts · 68 votes
    7y

    Hey @Anthony Pascual , 

    consider checking out a book called Long Distance Real Estate Investing. That book has been recommended by a few rental property investors I work with.

    I have relatives who are also real estate investors from California. They moved from Cali to Wisconsin a half-decade ago due to the overpriced market, which limited their investing opportunities. I personally work with investors from Mountain View and San Bernardino. They're attracted to the unique prices, locations and returns our market provides.  Even outside of my local market, the midwest, in general, is known for providing some of the best returns in the country.  If you're interested in checking out some of the cash flowing deals we often come across, simply pm me and we can connect. Currently, I have a turnkey duplex under contract with long-term tenants in a great location. Already cash flowing!  If you're interested in taking a look at the numbers on this property, shoot me a message. 

    Thanks. 

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Anthony Pascual:

    Hi everyone. I'm a new member here. I've been heavily considering investing out of state. I currently work in real estate sales here in CA but I also do some personal flips in the Inland Empire (San Bernardino County). I currently have about $500,000 to invest and originally I was looking to flip then buy and hold here in CA. I have had a couple of colleagues who invested in units out of state which is what got me interested in out of state investing. Prices here in CA are ridiculous! 

    I have been looking into Texas but I would like to get opinions/suggestions from those of you who are investing out of state. What states/cities should I look into? Are you starting LLC or other corporations in that state? For those that invest in Texas, are the property taxes really that bad? Any pointers on what to prepare for those out of state investments?

    I'm open to any and all suggestions/help.

    Thank you.

    If you are going to invest out of state you can do so buying properties in your own name as well as with an LLC in that state or an LLC based in your state of California. One thing to note is that the California based LLC has the most expensive annual renewal fee in the country. It's about $800 for each LLC that you have. Many other states like Ohio for example are completely free.

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    7y

    @Anthony Pascual I have been investing out of state since 2012. Midwest is where there are currently the best cash flowing opportunities. If you are looking for different passive REI possibilities, check out my BP article Three Key Routes for Passive Real Estate Investing

    0Reply
  • Holly Sarria
    Mission Hills, CA · Member since 2019 · 36 posts · 10 votes
    7y

    Hello @Anthony Pascual,

    My husband and I are newbie investors from Los Angeles currently in the educational phase. We are looking to pull the trigger on a deal by the end of this year. We have about $20,000 saved up and have access to private money.

    We have been studying the BRRRR method and plan to implement that strategy. We are interested in a SFH for buy and hold and are looking into investing OOS in a FL market. We are still trying to determine which FL market would be right for us. Interested in Jacksonville, Tampa Bay and Orlando. We would like to narrow this decision down in the near future because we are planning to make a trip to the market of our choice late September to check it out.

    We are in the same boat as you (minus all the cash :)) Is FL not a good cash flowing market? I've read quite a bit about NC. 

    We wish you lots of luck in your investing Anthony!

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