Opinion on first deal being long distance

Layton, UT · Member since 2018 · 20 posts · 6 votes

How does everyone feel about someone who is a first time investor investing in long distance SMF rentals due to the rental market in local area being dismal? (Northern Utah)

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Casey Christensen

Rental Property Investor · Lehi, UT · Member since 2016 · 105 posts · 96 votes

The Real Estate Guys always say "live where you want to live and invest where it makes sense" There is enough education out there with books like Long Distance Real Estate Investing written by David Green that it is very possible for your first investment to be out of state. The key with any investment is going to be the team you build, whether its close to home or thousands of miles away. I would get educated on any market find someone who knows and understands it, find a good property manager that you can trust and stay in contact with. I think you are more likely to succeed with an out of state investment and a good team than an investment close to home with a negligent team. Good luck with whatever direction you take.

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Michael Cox
Property Manager · St George, UT · Member since 2019 · 23 posts · 8 votes
6y
if I was doing my first deal I would do something close to home so that I can better understand the process and learn from it. I'm afraid that I would not learn as much if it was long distance.
4 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Michael Cox how do you feel about the Northern Utah market? I'm in Layton and I'm having a hard time finding anything that would be considered a deal. What would you recommend?
0 Reply
Pat Tobin
Investor · Salt Lake City · Member since 2019 · 12 posts · 11 votes
6y
Zayne, what style of investing are you considering (besides long distance)? House hacking or purely an investment property or a multifamily purchase? We need more info on your plan to give you more insight.
4 Reply
Casey Christensen
Rental Property Investor · Lehi, UT · Member since 2016 · 105 posts · 96 votes
6y
The Real Estate Guys always say "live where you want to live and invest where it makes sense" There is enough education out there with books like Long Distance Real Estate Investing written by David Green that it is very possible for your first investment to be out of state. The key with any investment is going to be the team you build, whether its close to home or thousands of miles away. I would get educated on any market find someone who knows and understands it, find a good property manager that you can trust and stay in contact with. I think you are more likely to succeed with an out of state investment and a good team than an investment close to home with a negligent team. Good luck with whatever direction you take.
11 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Pat Tobin house hacking to start with. Although I dont want to stop there. I want to get into the game with the house hack and continue on by buying SFH and SMF whenever I'm able to until I'm ready to scale upward. I'm primarily interested in rentals.
1 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Casey Christensen that was going to be the next book for me to read. How do I determine if the person I want to be on my team is trustworthy and reliable if I dont have anyone I'm familiar with in the area I want to invest? How do you suggest that I filter the bad ones from the good ones? Trial and error? Or is there a more efficient way?
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Zayne Ruth are you saying you would move to house hack in this property and live in it? If so, then it's not OOS investing and in that case you would just need to target where you want to live and start searching, but it seems like you might want to invest OOS and stay where you are for your first investment. In that case, my advice is never to do that. Some succeed, more turnkey options, but all first-timers going OOS aren't making as much as they could be for the last point you brought up. If you haven't spent any time there, met people face-to-face, built relationships, you will never know who you can trust and will overpay for things from afar. When you say the market is dismal where you are? Why? Prices too high, no options, prices too low and no renters?
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Casey Christensen
Rental Property Investor · Lehi, UT · Member since 2016 · 105 posts · 96 votes
6y
@Zayne Ruth - The book goes into pretty good detail on how to vet these people. A lot of it will come down to networking. Find people on BP in the market you are looking at and get referrals from the ones you connect with and trust. You can always google people to look for reviews as well. Ask for references when talking with people. I always have a checklist of questions to ask people I am vetting to stay on track and I record their responses. I then will often times ask some of the exact same questions only with different phrasing to see how they respond the second time to see if they are consistent. One thing David Green talks about in his book is that superstars hang out with other superstars. I would start with either a PM or agent/deal finder and take your time in finding and vetting this person, once you have a good PM or agent you ask them for references on the other people you need on your team. It would really be the same process if finding a team in your home market.
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Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Jonathan Greene ideally I would find a deal on SMF locally and house hack. I wouldn't want to move out of state as I've been rooted here in Northern Utah. If I'm unable to find a deal here I was curious if investing elsewhere for my first deal would be a not so great idea. Hope that clarifies things a little better. I do have a relatively close family member who invests OOS and seems to be doing well but the area that he invests in wasn't my first choice. Would you recommend mimicking him and try OOS investing close to his area and use him for guidance?
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Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Casey Christensen this is excellent information, thank you so much Casey. I'll definitely be reading that book here shortly.
0 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Zayne Ruth if he has solid contacts there and the numbers work it would definitely be an upgrade to just blind investing OOS, but I would still always stay closer to home for a first one, even if it takes longer to find. The main reason is so you can learn. Investing OOS as a newcomer doesn't help you learn anything in real life and most investors who do well over time don't just evaluate markets, they know how everything works in a house or multi and what to look for whether they are in UT or TX.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
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Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Jonathan Greene this helps me a lot, thank you. I wouldn't even be considering OOS for my first deal if my market wasn't so competitive with little deals to offer. I'm only feeling a little overwhelmed due to my lack of experience in comparison to the competition. Could you suggest anything I would be able to do to put me ahead in such a market?
1 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Zayne Ruth how are you finding your deals? If they are all on the MLS and you haven't done direct marketing or list-making, there are likely deals there, you just don't know about them. You can build a small list on ListSource that might help you target some properties with owners who maybe haven't thought about selling, but when someone tells them they want to buy, the light bulb goes off.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
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1 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Jonathan Greene they have all been on MLS. I haven't attempted anything off market. I'll have to give that a shot. Thank you for all of your help!
1 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Zayne Ruth I bet there are deals on MLS around there they're just not immediately recognizable. Take a look at the ones with long days on market take a look at the ones that have come back on market after a pending sale track the ones that seem incredibly overpriced because they tend to stay on market a long time and at some point the seller may run into difficult circumstances. If your county has public records look for people with multiple properties that are listing something. They may be moreFlexible open to owner financing etc. no your zoning laws and see if a large lot is actually sub dividable and so on
1 Reply
Harrison Sharp
Real Estate Broker · DFW · Member since 2015 · 350 posts · 271 votes
6y
@Zayne Ruth
I did a house hack to start and just recently bought my second in another state
0 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Jonathan R McLaughlin this is a lot of really good insight, thank you!
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
6y
Technically my first investment was in a different country, but that investment flopped. So my first real one was out-of-state because I'm in LA so no cash flow and prohibitive entry costs. It's worked fine for me. It's all in how you do it and what teams you have in place. But if it's a matter of doing that or investing locally where negative cash flow might bite you, out-of-state is where to go.
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David Ripplinger
Layton, UT · Member since 2019 · 85 posts · 49 votes
6y
Originally posted by @Zayne Ruth:
How does everyone feel about someone who is a first time investor investing in long distance SMF rentals due to the rental market in local area being dismal? (Northern Utah)
Duuuude, you just described what I did to a T!!!
I'm a first time investor, doing long distance, and my first property is a duplex rental! What's more, I'm from Layton UT too! Seriously, we should meet up sometime.
I'm partnering with my brother to invest in the greater Indianapolis area. That is one of several midwest cities that are well known on BP for having a lot of deals and great networks to tap into of investors, deal finders, rehabbers, and property managers. We actually just bought our first property today.
I will second what has already been said on this thread, that David Greene's book on Long Distance Real Estate Investing is a must-read. I also read his other book on the BRRRR method.
Regarding house hacking, it's doable in most markets, even in Utah. You just need to wait for the right deal. My brother is actually preparing to house hack right now. He is converting his basement into a mother-in-law apartment. House hacking can be beneficial even if you don't cash flow positive. Think of it this way. If you don't house hack, you still have to live somewhere, so you have to pay rent or a mortgage. But if you also rent out part of your house/property, you have now effectively lowered (and possibly zeroed out) your mortgage payment. In Utah, it's really hard to find something like a 3-plex or 4-plex that's worth house hacking in, but they might exist, especially if you use the 203k loan trick (I hear it's a huge headache, but if you have the stamina for it, it gets you into deals nobody else can get into). What may be a more common candidate for house hacking is a house that already is or could be turned into a mother-in-law apartment.
2 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@David Ripplinger whoa, that's crazy! Yes, we should definitely meet up and talk one day! You're a few steps ahead of me but I'm sure we could bounce ideas off each other and what not. You're absolutely right about house hacking and that's one question I had but had a hard time putting it into words so thank you for answering a question I hadn't asked yet! Haha
0 Reply
Michael Cox
Property Manager · St George, UT · Member since 2019 · 23 posts · 8 votes
6y
Originally posted by @Zayne Ruth:
@Michael Cox how do you feel about the Northern Utah market? I'm in Layton and I'm having a hard time finding anything that would be considered a deal. What would you recommend?

The investors I work with have been selling their properties in Northern Utah and been taking it to Southern Utah, mainly St George Area. Some in Cedar City, which is probably better priced at this point, but I think St George will have better appreciation for the foreseeable future. I don't know Layton very well.
1 Reply
Darrell Cropper
Lender · Saratoga Springs, UT · Member since 2016 · 11 posts · 9 votes
6y
@Zayne Ruth
My first rental property was from converting our primary residence to a rental. It has been a big success. We have had a property manager take care of the property locally. I have been wondering if out of state is best for the next move. My analysis of properties in Utah from the MLS hasn't shown acceptable cash on cash return. I think out of state investing for the first deal is reasonable if sufficient research, networking, and due diligence is done in order to manage risk.
0 Reply
Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Darrell Cropper I have been thinking about taking my search off market to find at least one deal to house hack somewhere close and then maybe take my investing OOS.
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Lyle Luckenbill
Member since 2019 · 1 post · 0 votes
6y
@Zayne Ruth if you are investing long distance I have two suggestions. 1. Find a place with a long term tenant and ask for proof of payments. Or 2, find a foot soldier, meet people in the area and get someone who is willing to help with references in the area and may be willing to help you manage the property if you help them with something else.
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Zayne Ruth
OP
Layton, UT · Member since 2018 · 20 posts · 6 votes
6y
@Lyle Luckenbill this is great info, thank you!
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