Developer · Orange County, CA · Member since 2019 · 80 posts · 53 votes
Hello Everyone,
I am a new investor who lives in southern California, which we all know is not an ideal market to purchase rentals for cash flow. I am looking to buy my first property this year. Would love to receive any advice on purchasing out of state?
Would you all recommend going with a turnkey provider?
It depends on what your goals are. Majority of turnkey buyers are investors who are mostly looking for a place to put their cash. These are usually busy professionals who already have a great career and has no interest in spending the necessary time to build teams, analyze deals, manage rehabs, etc. Expect to pay at or above market price with turnkeys. You won't have much equity day 1, but you will have cashflow. If you're limited on cash and want to expand quickly, turnkey is probably not the right vehicle. If that is the case, get educated, practice analyzing deals, and build your networks. Research different markets and zone in on one. Expect to make a ton of calls to agents, lenders, and property managers in that market. Get familiar with the neighborhoods, look at the macros, and connect with other investors in the area and see what they are doing. I am sure you'll here this over and over, but the most important thing you need is a great team. Hope this helps.
It depends on what your goals are. Majority of turnkey buyers are investors who are mostly looking for a place to put their cash. These are usually busy professionals who already have a great career and has no interest in spending the necessary time to build teams, analyze deals, manage rehabs, etc. Expect to pay at or above market price with turnkeys. You won't have much equity day 1, but you will have cashflow. If you're limited on cash and want to expand quickly, turnkey is probably not the right vehicle. If that is the case, get educated, practice analyzing deals, and build your networks. Research different markets and zone in on one. Expect to make a ton of calls to agents, lenders, and property managers in that market. Get familiar with the neighborhoods, look at the macros, and connect with other investors in the area and see what they are doing. I am sure you'll here this over and over, but the most important thing you need is a great team. Hope this helps.
@Shane Elias-Calles Welcome Shane. Have you picked an area to invest in and done your market research of the area? If not that would be a good place to start.
Thank you @Jonathan Oh, for the feedback it was great help for me. I think the next step for me is to really dial in on a market and get some contacts within that market. Do you you reccomend simply doing research on agents through google or do you have a system in which you can nail down some of the top agents/ property managers in a particular area?
Thanks ! @Christopher Hunter. Do either of you know of a good real estate meet up group in our area?
@Shane Elias-Calles What area are you in? Joe Homs has a meeting down in South OC, Steve Love has a meeting up in LA area along with a couple other groups. Fortune Weavers has a meeting in Seal Beach.
I've almost primarily gone the turnkey route (I also live in SoCal) and I definitely prefer it over other methods. It's not a perfect strategy, but no strategy is perfect. And I get to stress a lot less than I would with other strategies.
If you want any turnkey help, feel free to hit me up anytime.
I am a new investor who lives in southern California, which we all know is not an ideal market to purchase rentals for cash flow. I am looking to buy my first property this year. Would love to receive any advice on purchasing out of state?
Would you all recommend going with a turnkey provider?
Thanks,
Shane
As for markets the most popular turnkey markets are as follows.
Cleveland, Ohio
Toledo, Ohio
Memphis, Tennessee
Birmingham, Alabama
Kansas City, Missouri
Indianapolis, Indiana
Detroit, Michigan
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
Everyone here has summarized it perfectly. Decide what your goals are and what steps are going to get you along that path. Good luck! If you ever want to chat - reach out. I was in the same boat a couple years ago.