Tell me about your real estate journey

14 Replies

Hey guys, so my husband and I are interested in investing out of state soon. We live in the Bay Area and as a young couple, homes here are way out of our budget. We’ve done some research but I wanted to hear some real life experiences.

How did you get started? How’d you choose your strategy? Do you own turn keys or do you flip? If your home is in California, how much investing have you done to purchase in an expensive market? Really anything would be great to hear about.

Thanks in advance!

Hey Melody! We're househacking a home here in CA, the #1 thing we've been looking at is OOS investing. We've identified two markets that we're looking to build a team in. I highly recommend you take action massive action and execute on your goals. CA for real estate investing is not the business. 

Side note with turnkey companies, hire your own inspector. 

@Julio Garcia oh that’s great you’re househacking! We were looking to do that as well but multi family properties in Silicon Valley are very expensive. Until we find something here we like and can afford, OOS is our best option.

Thanks on the turnkey advice, I’ll keep that in mind!

Hi @Melany Longoria !

I actually recently (October) closed on my first investment property! It was an OOS, turnkey rental. The link below shares my experience obtaining that property! Feel free to reach out to me if you have any specific questions about my experience or if you have any other questions I may be able to answer!

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

Best of luck on your journey!

Joe

Hi @Melany Longoria , and OOS investing can be a great way to get in the RE market when you live in an expensive market such as most of CA. I lived outside of Sacramento in my past which was affordable compared to Silicon Valley!

I have a few OOS rentals with a Canadian company that is expanding into Cleveland, if that's a market you're considering. Their properties are typically $100k with a $25k down payment but you need to qualify for the 1st mortgage. They provide a 15% cash-on-cash return with guaranteed rentals and property management. It works for us because we like to cruise (when this COVID thing is over) and it's true passive investing. 

If you want more info, just message me and we can talk via zoom. Good luck on your RE investing.

I respectfully disagree that OOS investing is superior to investing in CA.   You can find cash flow deals with upside very easily in Sacramento.  You can find better cash flow deals with less upside in Yuba City.  There are niches that can get you close to the 1% rule... .88 or so.   The investors I know making money out of state are the turnkey companies and wholesalers.  As Aaron Mazzrillo (and I am sure others) have said... you can't make 6 figure profits on 5 figure houses.   Those midwestern $75K pigs are cheap and abundant because people don't want to live there.  They reach the 1% rule or higher with little effort because the kind of tenants you get cant get financed for a $75K house or don't want to commit to owning there... they want to leave.  I had relative buy a house in Greenwood, Indiana for $52K and 14 years later sell it for $59K.  There is basically no barrier to entry in new home construction.  Your "team on the ground" OOS has their interest in mind and not yours,  because when you get frustrated and give up they get to sell the house to some other newbie from CA or NY.  Win/win for them. I know "you can't count on appreciation" but CA has averaged 5% for 100 years and 6.77% over the past 39 years,  crash included.  Our population continues to grow.  Inventory is nowhere near keeping pace.  There are still desirable areas where you can get reasonable cash flow. There are a dozen reasons why CA real estate is attractive and only really one reason why OOS investing is attractive... its cheaper.  A used Chrysler 200 costs less than a Lexus... that doesn't mean its a better buy.     

My exception to that option would be if you could afford to get a large enough apartment complex where it could support in house, on site management and maintenance.  

To answer my journey... started with some class D/C- rentals in Oak Park because they looked good on paper.  Thankfully timing allowed me to double my money and escape those deals.  Cash flow looked great until an AC unit was torn apart and a few midnight move outs.  Have done flips with mixed results and am currently doing infill development projects in Folsom and Foresthill CA and some lot splits in Downtown Sac.  When those projects hit I will move into buy and hold in the nicer suburbs or 2-4 units in the Class A neighborhoods (Land Park, East Sac, Arden Park, etc).       

Hi Melany!

My name is Magnus and i am Swedish citizen. I started a tyres company in Sweden 2006 and worked pretty hard on it and was mentally burned out 2011. I am the person that is to nice to employers and customers and they have been eating me alive and thats the reason why i was burned out. I had the most successful tyrecompany in the whole country in 10 years in a row. But 2011 it went really bad and i through my phone with all my customers in the ocean. Couldnt meet people and could not manage my company, when it was the worst my daughter 6 year old get Diabetes Typ 1 and i decided to sell the company. I was very close to sell it to a franchise dealer, but another franchise dealer stopped me and had another plan, to put a Manager in the company and i was not working there for 3 years. My brother gave me a book which was rich dad poor dad, Cash Flow Quadrant, and i was lightened up of it. Passive income without employers and without customers sounded great to me. I bought 3 apartments in Spain and tried to rent them out. I did not make any money in 2 years, and wasnt sure this was worth it. In the same time i decided to go to my dream and go to Las Vegas and watch Boxer Floyd Mayweather live VS Marcos Maidana in 2015. I connected a Real Estate agent in Las Vegas just to get my trip dedactable from my company in Sweden. It ended up i trusted this agent like i never trusted anoyone i ever met before. It ended up i bought 6 condos of her under a 2 years period between 2015-2017. Then i sold my Apartments in Spain and bought in Detroit under 2017. The condos in Las Vegas doubled (almost) in value in 2 years. Then i did 1031 Exchange 2018 and bought 8 more properties in Detroit which i collected double rent income compare to the Las Vegas market.

At the same time Detroit was on fire and all my properties went up in value as well and so did the rents.

Then i started to experince the bad stuff in Detroit, floodings without Flood insurance, 2 sqautters, in the same house. No rent income since 2018. He is hopefully out in december. Covid has helped him. I get 1 lawsuit from Detroit landbank, and a lot of violenciens from the city, for ex i had a tenant growing mariuana plants in my basement, and a lot of other stuff.

Now i finded a new PM that has everything under control, and its working fine.

So a lot of headeache, but it was worth it, and i also bought 3 houses in Missouri and now the first in Chicago.

I only read 1 book, and did not find out anything, just bougt and hoped for the best, which is kind of stupid and i payed the price, mentally and economic. I do not recommend it.

Taking action is the most important thing !!!

Goodluck!

I got started in real estate investing after my daughter's sickness and hospitalization gave me a wake-up call to secure the family's finances.  With a busy job and three kids, I have focused on turn key rental houses in good conditions in an excellent school area.  I use leverage to increase the rate of return and use cash-out refi to pull cash out to buy more properties.  Good luck to you.

@Joe Bertolino wow thank you so much for all the great info. My husband and I actually thought about moving to Sacramento/Folsom area to buy our first home but we decided our first step should probably be OOS investing and then hopefully not have to move. We’re in Silicon Valley and my current job pays well, I haven’t seen many job options in Sacramento hence why we haven’t jumped the gun but we’re not opposed to it in the future. Anyways, thank you for sharing. I will look into other markets in California and see what’s out there for us.

@Melany Longoria

I would not start in Las Vegas. But Las Vegas is a good market.

If i were you, i would start for ex in Michigan. Get in contact with a solid PM. You can have the one i use.

They can recommend you a good agent.

And when the agent finds a deal for you,, you can just verfy with the PM about the street if its good or bad.

Then send an inspector that the agent does not work with and if it feels ok, you can close your first deal.

Its not harder then that!

Hey @Melany Longoria I am here in Sac myself, purchased my house three years ago and have been housing hacking since the day I got keys, just cracked 80% LTV on my loan so will be dropping my PMI as well as refinancing from my existing 4.25% interest rate, I am thinking once I do this me and my gfs expenses will come out to be about 250$ + utilities :)

From a professional standpoint I am a realtor here in Sac, helping 18 clients this year as well as a full time flipper (2 flips completed this year, 1 more in escrow and another offer pending as we speak) I unfortunately went through the school of hard knocks on my first flip in March 2019 and that was a......lesson learned (LOL) but i bounced back and wouldn't let that sh*t hold me down! My goal for 2021 is to continue to build my portfolio and assets to be able to make a move into long term buy and holds out of state in 2022!

Hi @Melany Longoria , Happy to share my experience getting started and investing out of state over the past couple of years. Its hard to type it out but if you ever want to discuss over the phone or Zoom I'd be happy to explain my personal experience both with "turnkey" and actually going out and checking out the property myself and working with a local realtor/PM.

In a nutshell, its never as good as it seems and I'm really starting the believe the returns you might see on paper or calculate are hard to actually achieve in the real world for the lower priced properties at least. UNless you have a really good PM or trustworthy team on the ground. I think you can be successful remotely and OOS but its not as easy at it might appear and my best investment has actually been the one locally here in CA, even though the numbers on paper didn't appear to meet any good rules!

Feel free to send me a direct message if you want to discuss details or ask any specific questions!