Rental Property Investor · Irvine, CA · Member since 2018 · 15 posts · 11 votes
Hi BP! I'm Gina, 30 years old, and live in San Diego, CA. My husband and I recently inherited a family home which we renovated and rented out, and are now looking to go deeper into real estate investing (mostly buy and holds). I work in the mortgage industry and my husband is an engineer and we are blessed to both have jobs that already allow us a comfortable lifestyle and high savings rate.
Currently looking to get into investing out of state (still looking to narrow down on a specific area - any suggestions and inputs are always appreciated) due to the high barriers to entry in Southern California. I wanted to see if anyone else could share their experiences with investing out of state and what steps they took to successfully land their first few deals? Due to the current economy, we'll probably be waiting until late summer/early fall to start writing offers, but in the meantime I'd like to spend my time networking, researching target areas, and analyzing deals for practice.
I understand that several investors will recommend buying locally first before expanding out of state, but I am of the mindset that (1) I do not wish to sink so much money into my first purchase, (2) I may be less risk averse than some other newbies, and (3) while no one wants to have a bad experience or investment, I'm willing to look at it as a learning experience instead of a total loss. We spent the last few years cohabiting with other people to save money so we are not interested in house hacking - that being said, if the numbers really makes sense to do this, then we would be open to looking into this again. We were initially considering ADU builds if we wanted to invest locally so that is an option that we may consider if we decide to go the local route.
I only just started connecting with more investors and researching more into this, so I'm welcome to any suggestions! Thanks for reading, and look forward to connecting with more of you :)
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Gina Kim
Hi Gina,
I invest locally and have investments OOS. Even though you see this comment coming from far away, here it goes anyway...invest in a house hack here in San Diego. If you are risk averse, you are better off starting here than going out of state initially.
House hacking doesn’t mean that you are necessarily sharing a house with other roommates. I myself still house hack and I plan on doing so forever. I live in one unit and have tenants in completely separate unit. You would not have even guessed that I owned both units next to one another when you see it.
Feel free to reach out if you’d like regarding locally investing, if you decide to go OOS, I’d be happy to give some pointers and some of the few dozen mistakes I initially made.
Hi Gina, Sent you a PM on some ideas. There are endless options for you when it comes to investing but like you said it will depend on your comfort levels and it will depend on how much you want to start with and how active/ involved you want to be in the entire process. Hopefully the message gives some ideas of options you can take on.
Rental Property Investor · Denver, CO · Member since 2018 · 46 posts · 48 votes
6y
@Gina Kim Welcome to BP. Love the enthusiasm and comfort with investing out of state. I live in Denver which is fairly expensive and definitely not a cash-flowing rental city. My first investment property was an out of state BRRRR in Fort Worth, TX. Luckily I had a great mentor which gave me the know-how and confidence to take down a deal out of state. The deal itself was a home run, so just know if you're confident and have build a solid team you'll be successful.
I learned a lot from that first deal. Mainly that it was a pretty big distraction from my W2 job and I quickly realized single family BRRRR wouldn't scale quick enough to meet my goals.
I switched to passive investments in large apartment complexes managed by experienced professionals, and after a few passive investments I started becoming more active and joining General Partnerships taking down deals with those experienced teams.
Depending on your family's goals, you should consider going straight into multifamily. Happy to discuss the benefits over single family that helped me make the transition if you reach out.
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Gina Kim
Hi Gina,
I invest locally and have investments OOS. Even though you see this comment coming from far away, here it goes anyway...invest in a house hack here in San Diego. If you are risk averse, you are better off starting here than going out of state initially.
House hacking doesn’t mean that you are necessarily sharing a house with other roommates. I myself still house hack and I plan on doing so forever. I live in one unit and have tenants in completely separate unit. You would not have even guessed that I owned both units next to one another when you see it.
Feel free to reach out if you’d like regarding locally investing, if you decide to go OOS, I’d be happy to give some pointers and some of the few dozen mistakes I initially made.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
6y
@Gina Kim I invested out of state to start. I still invest out of state (Kansas City) and now I also invest locally in LA. I think both the midwest and CA are great for RE investing for different reasons. My standard advice to someone who wants to invest out of state in Kansas City (but it probably works in other areas as well) is to buy a duplex that meets at least the 1% rule with upside in rents for 150-175k. You can buy it with 25% down at 4-4.5% and renovate through time to up the cash flow. You'll use the duplex to build up a local team of trusted folks and find a great PM. Once you have that you can buy more. Why a duplex over a SFH? A duplex just generates more cash flow and is almost the same as a SFH. I bet my advice works in other markets besides KC, KC is just the one I know!
Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
6y
@Gina Kim Marshall Reddick is a California brokerage that helps people invest out of state. They can walk you through all the markets. I know they really like Texas, for good reason. In full disclosure, my firm manages many of their clients' properties in Dallas Fort Worth, TX.
Real Estate Agent · Phoenix, AZ · Member since 2019 · 80 posts · 30 votes
6y
Hi @Gina Kim I also PMed you. I'm a big fan of Phoenix, AZ. Even though prices aren't as low as some other markets, especially midwest, I find the rental market to be consistently strong and growing...
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
6y
@Gina Kim first step is to connect with real investors (not brokers) like @Lee Ripma
I started with out of state turnkey in 2012 and I still think for those under 500k net worth that it is a great way to get started without getting super active. Let me know if there is any specific questions you have.
Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
6y
I'll second what Chris said about Phoenix - we've had healthy appreciation, limited effects from COVID, and job growth projections are still very healthy in the coming years. Best of all, we are just a short drive or flight from San Diego, so it's not too burdensome to come out when you need to. Happy to answer any questions I can about the area!
Real Estate Agent · San Diego, CA · Member since 2018 · 144 posts · 145 votes
6y
Hey Gina,
To keep it short and sweet since you've been given so much info already.
-San Diego - House Hacking and Value add are really your only two options *Typically if you're looking to for a cashflow positive investment here. San Diego is also very good if not one of the best for buy and holds. Dead horse has been kicked again.
-OOS investing markets - Phoenix has been a good market for a while now. I personally like the Kansas City, Mo rental market. 90% of the larger investors I talk to or work with have or have had a portion of their portfolio there. I invested in Springfield, Mo and that was a pretty good market as well.
Love your mindset about the OOS investing. If you're in a position for the risk and can manage it well if it goes south, I say go for it.
Hi BP! I'm Gina, 30 years old, and live in San Diego, CA. My husband and I recently inherited a family home which we renovated and rented out, and are now looking to go deeper into real estate investing (mostly buy and holds). I work in the mortgage industry and my husband is an engineer and we are blessed to both have jobs that already allow us a comfortable lifestyle and high savings rate.
Currently looking to get into investing out of state (still looking to narrow down on a specific area - any suggestions and inputs are always appreciated) due to the high barriers to entry in Southern California. I wanted to see if anyone else could share their experiences with investing out of state and what steps they took to successfully land their first few deals? Due to the current economy, we'll probably be waiting until late summer/early fall to start writing offers, but in the meantime I'd like to spend my time networking, researching target areas, and analyzing deals for practice.
I understand that several investors will recommend buying locally first before expanding out of state, but I am of the mindset that (1) I do not wish to sink so much money into my first purchase, (2) I may be less risk averse than some other newbies, and (3) while no one wants to have a bad experience or investment, I'm willing to look at it as a learning experience instead of a total loss. We spent the last few years cohabiting with other people to save money so we are not interested in house hacking - that being said, if the numbers really makes sense to do this, then we would be open to looking into this again. We were initially considering ADU builds if we wanted to invest locally so that is an option that we may consider if we decide to go the local route.
I only just started connecting with more investors and researching more into this, so I'm welcome to any suggestions! Thanks for reading, and look forward to connecting with more of you :)
Best Regards,
Gina
If you want to talk more about the KC market as others have talked about let me know. I am a MF agent here and an investor. Happy to help!
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
@Gina Kim If your goal is cash flow, you really have no choice but to go out of state regardless of what others might tell you. The reality is that most of the risks of real estate investment are the same regardless of where you're investing. You can get a bad tenant out of state just as easily as in your own back yard. Things break no matter where the property is located. The biggest challenge unique to investing out of state is not knowing the neighborhoods and buying in the wrong area. Any other problem or mistake can be corrected. You can evict a bad tenant or replace a broken AC. These are set backs but aren't fatal. You can't fix buying in a bad neighborhood though. Fortunately this can be overcome with good due diligence and working with the right people on the ground.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 154 posts · 24 votes
6y
Hi @Gina Kim, these days I'm always so happy to see other W2 employees expanding their economic horizons. Like @Collin Placke, I eventually started going down the passive investment multifamily lane. My first deal (very recently) was out of state. Happy to chat over PM and share any relevant experience. PS - @Collin Placke - I wouldn't mind hearing how you made the switch from passive to active and balanced that with a W2 gig. My W2 gig keeps me hopping, so that is why I started on the passive route.
Rental Property Investor · Denver, CO · Member since 2018 · 46 posts · 48 votes
6y
@Bruce P. Once you get to the 100+ unit apartment complex space everything becomes a team sport. I started networking and surrounded myself with other experienced multifamily investors and started partnering with them. The key is to partner with people who have similar values and goals, but different skill sets than your own. Now I only add value to deals in areas I truly enjoy doing the work, and since I enjoy doing my small part it doesn't feel like a distraction from my job!
Investor · Los Angeles, CA · Member since 2019 · 127 posts · 63 votes
6y
There are sometimes good deals to be had in certain areas of the IE, if you decide to stay fairly local. My one (and only - so far - hoping to change that soon :-)) real estate investment was an REO in the San Bernardino mountains in 2011. I realize that was a different time, but I still keep an eye on the market. It might be an easier place to cut your teeth than SD, OC or LA (in terms of initial outlay) or out of state (in terms of access).
Rental Property Investor · Irvine, CA · Member since 2018 · 15 posts · 11 votes
6y
Hello everyone! Thank you so much for replying. My day job has been keeping me insanely busy the last week and a half and with some personal things preoccupying my time, I'm quite late to all of your very helpful posts and insights. Thank you all very much for your time.
@Lee Ripma I've seen you mention that to other newbies as well and it makes sense. I've actually been interested in focusing on 2-4 unit properties with 20-25% down like you have mentioned, but haven't looked much into KC (despite hearing so much about it on BP). I'll put it on my list of things to research and will likely be sending you a DM with some more questions if that's okay.
@Kyle Mccaw Thanks for the referral to the company. Dallas is another area that I am interested in taking a dive into and I did briefly browse their site and may reach out to see if I could get an intro call going. Do you think that your clients that you manage properties for (the ones that went through Marshall Reddick) are overall happy with their investments? It would streamline the process of having one company do the research and going through them, but also have some healthy skepticism with putting all my eggs in one basket.
@Lane Kawaoka Who have you used to purchase your turnkey properties? I reached out to one company, and I believe that they have the bells and whistles and service that help to ease the fears of OOS investors, but seems like the investors do pay a premium for that service. Since I feel like we're mostly at the top of the market, I have some reservations about paying for that premium. In 2012 I'd have happily paid for it since it'd have been minimal work for all the upside and appreciation up til now, but I clearly missed the boat on that one, haha. I will send you a DM - curious to see which markets you've invested in OOS.
@Pamela Sandberg Thank you - I had previously spoken with @Chris Risi about Phoenix and it was actually a place that I had initially considered when I first started daydreaming about Phoenix many moons ago, but I think I'd like to look into other markets for the time being. Who knows, maybe I will circle back to Phoenix at some point and I will be happy to reach out to you for more insights then. Out of curiosity, what kind of law do you practice?
@Donald E Appleberry Thanks for connecting. I agree with you there. When I was looking more locally for deals, I was definitely looking into SFR's in the normal/north park/university heights area with alley access to build an ADU. The thought was that we could live in the front unit (or the back), and house hack with the second unit on the property. Down the road, if I ever got to that point, I could consider developing row homes if the numbers made sense. Issue is that we decided that we'd be happier living in spaces with more space and greenery, so it's more likely that we'll settle down where we currently are in the Tierrasanta area rather than making the move to more congested areas. For OOS, I'll definitely be taking a harder look into KC since I've seen it mentioned so many times on BP now. Have you been focusing more on local or OOS investing?
@Alex Olson I will be doing some research into the KC market and if it seems like it would be a good fit for myself, then I'd be happy to reach out to you for some more insight. Thank you!
@Bruce P. where have you been investing OOS? I connected with @Collin Placke earlier and had picked his brain on what he does with his MF investing. It definitely seems like something I'd like to dive into at some point, but seems like most large-scale MFs require all of their investors to be accredited. We're around 350K in net worth and since I get paid through my S Corp, we're not quite at the annual income requirements either. Seems like it may be something that I could look into down the line. For now, I'd like to focus on 2-4 unit properties and see where it takes me. In the long run, passive investments seem like it'll definitely factor into the plan, but I'm presently more interested in learning and gaining experience with individual investments - assuming that having some more experience now may help to ascertain the quality of a MF investment down the road.
@Rachel S. I've also considered looking into the IE as well, but for other reasons than cash-flow. My parents will likely retire back to the states within the next decade and I've been considering purchasing property to hold for them until they are ready to make their move back home. Probably a completely different analysis since the objective is very different, but it'll be something to keep an out for.
Investor · Los Angeles, CA · Member since 2019 · 127 posts · 63 votes
6y
@GinaKim - Absolutely, you will probably be looking for something completely different as a "buy and hold" for your parents. I love Temecula. I think it would be a great place for a retiree.
I am looking for a duplex or triplex in the LA area next time, if I can pull it off. If not, I will look in the IE again. With my first property, it hadn't even really occurred to me to invest in real estate outside my primary residence. Then the market crashed. I was young and didn't have much extra money lying around, but was seeing all the potential deals. I ended up finding a bank owned SFR for 89k, so I jumped on it. The next time the process will be more deliberate and planned out. :-)
DM'd you - for passive I find 50 to 75K to be the minimum norm - at least for the reputable investors I've found. Agree with @Alex Olson which is why I'm doing what you're doing - researching and saving - although I've gone down the passive route first.
"Thanks for the referral to the company. Dallas is another area that I am interested in taking a dive into and I did briefly browse their site and may reach out to see if I could get an intro call going. Do you think that your clients that you manage properties for (the ones that went through Marshall Reddick) are overall happy with their investments? It would streamline the process of having one company do the research and going through them, but also have some healthy skepticism with putting all my eggs in one basket."
Yes all of my management clients are very happy with Marshall Reddick. Reach out to Tanya Lorimore. She is one of their agents that really knows her stuff. You are not placing all your eggs in one basket with MR. They help you spread your eggs in different markets all over.
Real Estate Agent · Phoenix, AZ · Member since 2019 · 80 posts · 30 votes
6y
@Gina Kim there was an interesting Bigger Pockets episode recently where the investors talked about why they like Phoenix. But they are in large scale deals, but some of their reasoning still would apply to longer term buy and holds at any scale i would think
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
6y
Also you don't always want PM with the TKP. I always thought it was a bit of a conflict of interest and preferred to buy my turnkey and put a third party PM in there myself.
