Out of state investments
La Puente, CA · Member since 2016 · 15 posts · 15 votes
Out of state investments
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Rental Property Investor · Cambridge, MA · Member since 2020 · 32 posts · 45 votes
5yI invest in Ohio, primarily Columbus. If I read your thread right, 15K isn't going to get you much if anything multifamily in Columbus either. You might get into the Linden or Hiltop area, but you will need to make sure you have the right property manager that can support that type of tenant base. I know of one if you're curious.
With that money, I'd look into Dayton/Toledo. They aren't big cities and the population is declining but rental market is fairly solid. You can get into an "ok" property with good cashflow that could set you up.
Alternatively, you can partner with people dealing out of state that is in on the right deal. It could enable you to leverage and build more equity faster with better appreciation while also delivering a solid cashflow.
Finally, I would recommend you see TONS of houses locally. Know what to look for an be sure to ask your agent to take pictures and videos of the things you want to see. If they miss something send them back. Familiarize your self with the tenant laws in the state and some of the building code.
Happy hunting
72 Replies
- Rental Property Investor · Colorado Springs, CO · Member since 2016 · 61 posts · 37 votes5y
Originally posted by @Brock Mogensen:
@Gabriel Almendariz There are lots of things to look for in a PM. You can find some good boiler plate questions to ask through a quick Google search. One thing that gets over looked though is making sure the PM uses a good management software and allows you to access the data whenever you like.
I agree! This makes things so much easier when you have a property manager that has a set schedule of depositing funds and a site that you can login to and check numbers on your property whenever you want!
- Real Estate Agent · NJ · Member since 2020 · 40 posts · 26 votes5y
Awesome thread, such great information! California is tough, I live outside NYC and also feel your pain. A lot of people by me look in the Philly market. The properties are much more affordable for investors just starting off. Best of luck!
- Rental Property Investor · Hampton Roads, VA · Member since 2017 · 15 posts · 10 votes5y
@Mike Reynolds
Congratulations on your smart thinking!!
Bigger Pockets has done a few Out of State Investing podcasts and so are How to Choose Your Markets ones...
You can also get the Long Distance Investing book from David Green (I have not read it but he is very thorough in his podcasts so would also believe his book is as well)!
Hope this can guide you a bit!! I have two properties (SFH) out of state and YES, having the wrong Property Manager can make any deal go south..! Dealing with that personally right now but would I do it again? Probably once I have more where a mistake will not affect me as much...
One last recommendation, look into using your self-directed IRA or 401K to use that "down payment"... in a retirement account you put a lot more down but it is also a non recourse loan so the money coming in/out stays in there and build your retirement accounts... you can't touch it now but later will bring it's load of value... just a different way to invest...
- New York, NY · Member since 2016 · 53 posts · 33 votes5y
@Gabriel Almendariz
Property manager has been by far the most important part of my remote investments. He happen to be a realtor too.
I was lucky to find him through a friend. I then found a lender through a local Facebook group and finally decided to consistently look for and connect with Wholesalers.
- La Puente, CA · Member since 2016 · 15 posts · 15 votes5y
I want to thank everyone who has replied in this forum. The amount of support here on BP is amazing. I cant reply to everyone as my inbox is overflowing but I want to let everyone know that I appreciate your response, insight and opinions. Although there are some that think OOS investing is not the right way to go, I believe with the research, dedication and some luck I can be successful in my journey.
Thank you all very much, I look forward to getting started.
- Rental Property Investor · Los Angeles, CA · Member since 2020 · 27 posts · 9 votes5y
@Gabriel Almendariz
Hola! I’m from Downey CA, I just bought my first property out of state last month. Feel free to reach out if you want to connect.
- Member since 2019 · 182 posts · 45 votes5y
@Gabriel Almendariz yes, definitely need a pm. I purchased a fourplex in McAllen, Texas and and pm provided me invaluable information that helped analyze the deal.
I was actually going to purchase two fourplexes and decided to only purchase one mainly due to input from pm
- Investor · Lake Elsinore, CA · Member since 2020 · 14 posts · 6 votes5y
@Luis Torrico
I’m also from Downey, CA! Would love to talk a little bit more about your first deal since I’m getting ready to pull the trigger as well.
- Specialist · Northeast Ohio · Member since 2018 · 12 posts · 11 votes5y
@Gabriel Almendariz Home inspector in Cleveland here to answer any questions I can for you.
- Accountant · Ashburn, VA · Member since 2017 · 9 posts · 2 votes5y
I joined BP sometime back but haven't been active due to work and other commitments. Looking to get into OOS investment myself as Northern VA/DC metro is pretty expensive. I was thinking Dallas as I might consider moving there down the road.
Anyone have any experience investing in Dallas from OOS? Any suggestions?
Sorry, really liked this thread so jump in with my questions.
- 5yAntonio CuccinielloPro MemberInvestor · Austin, TX · Member since 2016 · 531 posts · 310 votes
@Gabriel Almendariz So, here's the way I pick a market. I use data.
I first make a list of all the cities I might have heard of, cities that I heard others were investing, etc.
For each city in the list I get deeper information, like the price to rent ratios, the crime rates, the school ratings, property tax information, insurance rates, population growth, unemployment rate, transportation options and businesses in the area.
Then I take this information and start comparing city to city.
Which ever one is the best and I know the most about, I select.
- 5yAxel MeierhoeferPro MemberRental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
@Gabriel Almendariz I live in San Diego County myself and when you review my profile here on BP you see the portfolio of properties I have so far accumulated. They are all out of state. I agree with @Angel G. as far as the importance of these professionals to help you have a long term good deal.
I faced the same scenario you are describing and decided, after a lot of research here on BP, listening to a lot of podcasts, getting David Green's book as well as Chris Clothier's book "Turnkey Revolution" that the turnkey approach is best for me.
I don't know about you but living and working in California means, at least to me and most people I know, that you have to work hard and long hours to make enough money to cover all expenses and have some money left for investments.
If that sounds somewhat like your situation, I suggest to consider Turnkey Investing. A lot of people on BP have a lot of reservations, often stating that it is too expensive, not always successful, etc. There is some truth to the argument when people don't spend enough time on setting the right turnkey provider.
As a concept I recommend it and I have all my properties in that system because I put a lot of value on my time. As soon as you do that you really don't just want to get cash flow but you really want to make passive income with minimal work and time spent on your part (or mine).
My providers meet the criteria I have developed, they find tenants that meet very strict criteria, they manage the properties the originally renovated and then sold to me and we have really deep relationships. We send X-as cards to each other, and exchange gifts. All our tenants received gift certificates because they paid their rent even during all the months of COVID.
I only have a handful of providers (literally) and I have no doubt that I will reach my economic independence goals with this approach. most important I have high-value well-performing properties and spend maybe 1 hour/week managing the portfolio.
My investments are in some of the markets others on this thread have mentioned and because they are so well managed I never have to worry about them and can focus on accumulating more savings to keep buying.
Maybe that could be an approach for you as well.
- Wholesaler · Independence, MO · Member since 2015 · 53 posts · 24 votes5y
I'm in the Kansas City Missouri market and am actively investing. If you decide on here just let me know and I'd be happy to help you out.
- 5yKyle MccawBusiness MemberProperty Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
@Gabriel Almendariz the property manager will make it or break it for you. I have experience in both Dallas-Fort Worth and Columbus. Ohio is your only option for $15k as an OOS investor. The areas you are looking at may cashflow...appreciation is nice but don't bet on it with low end housing. You will need to make sure you have cash reserves in addition to the $15k for down times and maintenance.
McCaw Property Management4.4909 Reviews - Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes5yTOP 25 QUESTIONS TO ASK A PROPERTY MANAGEMENT COMPANY DURING INTERVIEWS
For passive investors the property manager is the most important person on your team. That said it is very underpaid and extremely difficult to find one and keep them. From a property manager’s standpoint, its not a really good business to be in because you get to see the worse side of owners and tenants, there are low margins, and turnover is high.
What do Property Managers Do?
- Advertising for tenants
- Screening tenants
- Inspections and maintenance
- Collecting rent
- Evictions or working with judges
- Reports
- Takes trouble tickets from tenants and source out contractors
- Takes trouble tickets from owners
Dummy waring: don’t be a jerk when asking these questions. Let it guide a conversation instead of playing stump the chump. You need a good property manager more than a good property manager needs you… make sense?!?
Remember: There must be a personal level of connection. Can they carry on an intelligent conversation than give you the text book answer?
- How long have you been a property management company?
- What types of properties do you manage?
- What type of insurance do you carry? What happens if someone sues me?
- How many units are you currently managing?
- How many property managers and assistant property managers does your company have?
- What associations do you belong to?
- How many vacancies do you have right now?
- Avg. Time to fill a vacancy Lease Structure?
- Do you have a sample lease? Do you do a 1 year or 2 year initial lease?
- What is your late-rent policy?
- Do you keep late fees or owner?
- Perform regular property inspections? How often?
- What % of tenants do you evict?
- What is legal charge of eviction and process?
- What are management fees?
- Any other fees? (Cancelation, eviction, lease renewal ($200-500, or nothing), marketing, account set up)
- What do you charge for finding new tenant & leasing?
- Do you charge a fee when my units are vacant?
- If I decide to sell my property, do I have to list it with you?
- How do you market your properties?
- What is your repair process? And at what dollar amount am I notified for approval? How do you handle communication with me. Via a portal? Phone calls? Do I have a “point person” in case of larger stuff?
- How do you screen prospects?
- When will I receive my net income monthly?
- Do you do direct deposits? Can tenants pay rent electronically?
- References if available to talk
- Referrals are the best way: BiggerPockets forums if you don’t have any network already but be careful with “Cheap Easy Free” options – make a simple request for property managers in that area or private message a few investors local to that area
- Yelp.com
- Google Reviews
- See who are the property managers on listing sites like Facebook Marketplace or Craigslist
- 5yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Gabriel Almendariz the first place to start is by clearly defining your investment objectives and criteria. Based on the 2 markets that you have identified, I would have to guess that you haven't done that. Dallas and Cleveland are clearly two very different markets where I would not expect to see them in the same sentence. There is just nothing similar about these two, so my suggestion is to go back and define your objectives and quantify them. Once you've done that, you can then evaluate markets against your criteria. If you're goal is cash flow, I recommend looking at markets that have the best combination of cash flow and strong economic and demographic fundamentals such as population growth, job growth, modern, diverse economies and industries, favorable landlord/tenant laws and reasonable property taxes. Personally, I like Indianapolis and Kansas City. If you'd like some insight on either of those two, I'd be happy to share my expeerience.
Originally posted by @Mike D'Arrigo:
@Gabriel Almendariz the first place to start is by clearly defining your investment objectives and criteria. Based on the 2 markets that you have identified, I would have to guess that you haven't done that. Dallas and Cleveland are clearly two very different markets where I would not expect to see them in the same sentence. There is just nothing similar about these two, so my suggestion is to go back and define your objectives and quantify them. Once you've done that, you can then evaluate markets against your criteria. If you're goal is cash flow, I recommend looking at markets that have the best combination of cash flow and strong economic and demographic fundamentals such as population growth, job growth, modern, diverse economies and industries, favorable landlord/tenant laws and reasonable property taxes. Personally, I like Indianapolis and Kansas City. If you'd like some insight on either of those two, I'd be happy to share my expeerience.
You mentioned indianapolice and kensas cityvas CF with growth... What about greater Cleveland?
- 5yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
Originally posted by @Ari Hadar:
Originally posted by @Mike D'Arrigo:
@Gabriel Almendariz the first place to start is by clearly defining your investment objectives and criteria. Based on the 2 markets that you have identified, I would have to guess that you haven't done that. Dallas and Cleveland are clearly two very different markets where I would not expect to see them in the same sentence. There is just nothing similar about these two, so my suggestion is to go back and define your objectives and quantify them. Once you've done that, you can then evaluate markets against your criteria. If you're goal is cash flow, I recommend looking at markets that have the best combination of cash flow and strong economic and demographic fundamentals such as population growth, job growth, modern, diverse economies and industries, favorable landlord/tenant laws and reasonable property taxes. Personally, I like Indianapolis and Kansas City. If you'd like some insight on either of those two, I'd be happy to share my expeerience.
You mentioned indianapolice and kensas cityvas CF with growth... What about greater Cleveland?
It depends on where, but Cleveland has a declining population.
Originally posted by @Mike D'Arrigo:
Originally posted by @Ari Hadar:
Originally posted by @Mike D'Arrigo:
@Gabriel Almendariz the first place to start is by clearly defining your investment objectives and criteria. Based on the 2 markets that you have identified, I would have to guess that you haven't done that. Dallas and Cleveland are clearly two very different markets where I would not expect to see them in the same sentence. There is just nothing similar about these two, so my suggestion is to go back and define your objectives and quantify them. Once you've done that, you can then evaluate markets against your criteria. If you're goal is cash flow, I recommend looking at markets that have the best combination of cash flow and strong economic and demographic fundamentals such as population growth, job growth, modern, diverse economies and industries, favorable landlord/tenant laws and reasonable property taxes. Personally, I like Indianapolis and Kansas City. If you'd like some insight on either of those two, I'd be happy to share my expeerience.
You mentioned indianapolice and kensas cityvas CF with growth... What about greater Cleveland?
It depends on where, but Cleveland has a declining population.
I mean the suburbs. The decline in population in Greater Cleveland is stopped and there is a growth in the corrona time...
- 5yAxel MeierhoeferPro MemberRental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
@Lane Kawaoka I totally second what you are stating. Even though my strategy is OOS TK SFH, I used to own OOS that I didn't buy from a TK and PM was always the most important issue. Even with TK, if they don't do a good job it will either kill your deal due to constant turnover and repairs.
One of my most important criteria for TK selection (and I only have 5 I work with due to this criterium) is what I call the "virtuous triangle"
That means you want to have the corner that represents the finding of property and renovating it, the corner that represents the sale of the fully renovated property, and the corner that represents the Property Management with all the things you listed in your post, all under one roof in one company.
It can work without that triangle working but for TK investments I have learned (the hard way) that this triangle is the big difference in a good, really passive deal and one I call "headache deals".
Avoid the headaches and thanks for taking the time to list all those aspects for a PM that investors should consider. I will keep that list for myself and people who ask me for input.
- Rental Property Investor · Dallas, TX · Member since 2017 · 60 posts · 20 votes5y
Hi @Gabriel Almendariz. That is how I started, I agree, Cali was too expensive for investing unless you could go back to 2011 with buckets of cash ( some of us were too young for that haha!)
I looked at the following categories/ criteria-
1) property type
2) diverse local economics
3) landlord friendly policies
4) affordability (rent vs avg income)
5) population growth trends
6) would I want to visit there? (this is my biggest one - if you don't want to visit, why invest there).
Just some criteria to get your list going and understand your focus. PM comes later, once you narrow down you search. They are useful in providing insights, even connecting you with good brokers, contractors, etc. They also know other investors, therefore, will know if a property might be available for sale =)
Good luck!
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