Out of state investing for beginner

Starting Out
5yFollow

Out of state investing for beginner

Will Gebbie
New to Real Estate · Morristown, NJ · Member since 2020 · 17 posts · 26 votes

So I discovered Biggerpockets about 9 months ago, and because I live in nyc I read the out of state investing book by David greene. Now I feel like even though I understand using a team to help build your portfolio I still feel nervous about investing out of state because I have never done a local deal before or any deal period. Has anyone done a successful out of state deal as their first deal? Or should I try and find something a couple hours a way? In my opinion at that point I feel like I should just pick an out of state market because the New York area doesn’t seem the best place to invest right now for someone new.

14Reply
71 views

Most Popular Reply

Stephen Brown
Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
5y

Hello Will! I'd say look at your financial position and see what area makes sense based on what you have and how fast you want to go. AKA your buying power. You can do well anywhere in the country with any strategy. Everyone does this game a little differently, every investor is a little different. So if I were you I would find a price that doesn't make you cringe when you say it out loud (if it does then it's too expensive or is not worth pursuing) then I would search for a few markets at that price point, with good properties, and then talk to people who already have the teams in place to help you. Many agents have connections and are more than happy to assist. I hoped this helped!

8Reply
See this reply in the discussion

36 Replies

Jump to latestLatest
  • Michael Carbonare
    Investor · Fort Lauderdale, FL · Member since 2013 · 922 posts · 607 votes
    5y

    Hi, Will.  As an ex-NYer I feel your pain.  The prices, the taxes, the politics. . .is it any wonder why half the state has moved down here to Florida?
    I've been investing for about 28 years.  I found my footing back when I learned about different types of lease options.  Still use them to this day, especially when doing virtual deals, which are the backbone of my business currently.  Doesn't matter that I'm in FL and a property is in Arizona or Tennessee, or anywhere else.  If you know what you're doing a lease option assignment is risk free and cash out-of-pocket free.  Smart, safe real estate and an easy way to mitigate risk.

    5Reply
  • Tesho Akindele
    Rental Property Investor · Orlando, FL · Member since 2016 · 135 posts · 145 votes
    5y

    @Will Gebbie I started investing out of state before ever having an investment locally. So far I’ve had a good experience!

    One thing you could do if you’re nervous to jump in is fly to a city or two that you’re interested in and meet some people who are local. Property managers, realtors, other investors, etc.

    4Reply
  • Will Gebbie
    OP
    New to Real Estate · Morristown, NJ · Member since 2020 · 17 posts · 26 votes
    5y

    @Tesho Akindele glad to know it has been done before because I feel like people always say to do a few local deals first! Thanks for the encouragement.

    1Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Hello Will! I'd say look at your financial position and see what area makes sense based on what you have and how fast you want to go. AKA your buying power. You can do well anywhere in the country with any strategy. Everyone does this game a little differently, every investor is a little different. So if I were you I would find a price that doesn't make you cringe when you say it out loud (if it does then it's too expensive or is not worth pursuing) then I would search for a few markets at that price point, with good properties, and then talk to people who already have the teams in place to help you. Many agents have connections and are more than happy to assist. I hoped this helped!

    8Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Will Gebbie

    Our first deal was out of state. There are pros and cons to any style of investment and OOS suited us. The team is imperative and getting feedback from multiple sources is a must. Getting your team set up and being comfortable with it might take multiple trips to the market area, which is an added expense, but if you scale it is a much more tolerable expense. Picking somewhere you'd like to go occasionally can soften that blow as well.

    6Reply
  • Will Gebbie
    OP
    New to Real Estate · Morristown, NJ · Member since 2020 · 17 posts · 26 votes
    5y

    @Stephen Brown yes good idea. I think generally I’d be interested in using the brrrr method so finding properties where I can be all in with rehab at 100-125k and then hopefully with an arv of 150-180. That way I have enough for a down payment with a hard money loan.

    2Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y
    Originally posted by @Will Gebbie:

    @Stephen Brown yes good idea. I think generally I’d be interested in using the brrrr method so finding properties where I can be all in with rehab at 100-125k and then hopefully with an arv of 150-180. That way I have enough for a down payment with a hard money loan.

     You can find those in many markets across the midwest and south :)

    2Reply
  • Andrew C.
    Investor · Forest Hills, NY · Member since 2014 · 101 posts · 52 votes
    5y

    Yes, NYC area was too expensive for me so my first deal was in Kansas City, MO.  However, I'm now investing in Upstate NY (Buffalo/Niagara region) so it's a bit closer.  I also have a bit of familiarity with the area as my wife went to school there and my brother-in-law was living there when I first started investing there.  Others in the NYC region invest closer...I believe many in BP have mentioned Albany and Newburgh...others in Pennsylvania- Allentown area, and some in CT like Hartford.  

    2Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    5y

    @Will Gebbie 

    It definitely comes down to where you live and your income. Especially where you live in NYC prices are very high, also depending on your income it might take you a while to save money for a single deal that might not even give you the best returns compared to OOS investing where you could buy something in Columbus for example and cash flow at the 1% Rule. Out of all the markets to out-of-state invest I recommend you check out Columbus. My friend @Kyle Tom actually did exactly what I am talking about the first rental property he bought was out-of-state and he used to live in San Francisco California an expensive real estate market just like NYC and the prices there made no sense. So he invested in Columbus and now owns 11 units all in the last year. Feel free to reach out to him and ask about his experience.  

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    4Reply
  • Andreis Bergeron
    Member since 2021 · 134 posts · 46 votes
    5y

    @Will Gebbie Great questions and totally understand the nerves...if it helps at all most of the investors I work with are doing out of state deals.  I guess if you are worried about building your team/people you trust to manage and look after the property may want to find some markets that are affordable and easy to travel to and from NY so you can go visit the property need be.  Let me know what other questions you have!

    1Reply
  • Steve Kontos
    Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    5y

    @Will Gebbie

    I too live in NY and began investing out of state 13 years ago. Seeing the mess that's going on here, I am so happy I never really bought much in NY. I recommend you reach out to successful out of state investors and ask specific questions. It's about identifying what type of investing makes the most sense for you based on your financial situation. Also, yes having a team on the grounds is key. Feel free to reach out if you have any further questions.

    3Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    5y

    I've seen it done right, but I've also seen people lose a lot investing out-of-state. I would definitely approach it with caution. The ones who had success didn't see it as a passive investment. They reviewed the reports their manager sent them, got on the manager for things that weren't right, were willing to switch managers and contractors and visited on a fairly regular basis. Generally I would shy away from it, but living in Manhattan, I can definitely understand the desire to buy somewhere where casfhlow is at least possible.

    Podcast Guest on Show #121
    3Reply
  • Lane Aakhus
    Investor · Honolulu, HI · Member since 2019 · 47 posts · 25 votes
    5y
    Originally posted by @Michael Carbonare:

    Hi, Will.  As an ex-NYer I feel your pain.  The prices, the taxes, the politics. . .is it any wonder why half the state has moved down here to Florida?
    I've been investing for about 28 years.  I found my footing back when I learned about different types of lease options.  Still use them to this day, especially when doing virtual deals, which are the backbone of my business currently.  Doesn't matter that I'm in FL and a property is in Arizona or Tennessee, or anywhere else.  If you know what you're doing a lease option assignment is risk free and cash out-of-pocket free.  Smart, safe real estate and an easy way to mitigate risk.

    Great advice!  Do you or anyone on here know/recommend a good resource (book, etc.) for learning more about lease options? Mahalo in advance. 

    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    Im on the east coast and do out of state brrrr’s in Ohio. Sometimes a rehab isn’t even needed if you buy a good enough deal you just hold it for six months and collect rent and refinance out after a six month seasoning period. But obviously you need great boots on the ground to bring you deals and manage everything for it all to work out. But for someone just starting out, across the midwest there are great rentals to get into for a low as 15-25k down.

    5Reply
  • Stephen McKnew ColonnaPro Member
    Member since 2021 · 5 posts · 3 votes
    5y

    Will:  I am learning too.  One thing that occurred to me this morning, "I can't or won't pull the trigger if my pistol stays in the holster."  It really does not matter how shiny I've made my holster (studying, saving cash, etc.).  I'm doing the out of state (well out of country) thing too.  As the man behind the beard mentioned (and I ignored), financing is an early long pole.  I have a team in GA, but the lending piece is still in limbo. Need to find either a portfolio lender, hard lender, or owner/seller financer.  Conventional loans (in my limited experience) are not amenable to out of state investors.  My lender just informed me that my case requires a manual underwriting.  Can't house hack at a distance either.  Man my holster looks good!  Plenty of ammo (cash assets).  But, until I tried to move toward pulling the trigger, I did not know I had the wrong kind of ammo.  Not to worry.  Everything is figureoutable.  Steve C.

    2Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Will Gebbie

    You can make money in any market, but the Midwest definitely has less barriers to entry. Many out of state investors like Ohio and Indiana as their investment markets because you can buy homes starting at $50k

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
    WebsiteView Page
    3Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Will Gebbie:

    So I discovered Biggerpockets about 9 months ago, and because I live in nyc I read the out of state investing book by David greene. Now I feel like even though I understand using a team to help build your portfolio I still feel nervous about investing out of state because I have never done a local deal before or any deal period. Has anyone done a successful out of state deal as their first deal? Or should I try and find something a couple hours a way? In my opinion at that point I feel like I should just pick an out of state market because the New York area doesn’t seem the best place to invest right now for someone new.

    It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s strategy for long-distance and made up of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to confidently invest in any market.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    2Reply
  • Danielle Heisser
    Rental Property Investor · Los Angeles, CA · Member since 2019 · 8 posts · 9 votes
    5y

    @Will Gebbie

    I bought my 1st investment property in Atlanta and I live in California. I’ve had great success out of state.

    Follow Storm Management on IG. He gives lots of information on out of state investing.

    2Reply
  • Gloria N GearBusiness Member
    Realtor · Indianapolis IN · Member since 2018 · 464 posts · 339 votes
    5y

    New investors that seem to have the most success have been doing research for a while.  Most of them have their strategy narrowed down - IE - single family vs multi, basic price range, Hold vs Flip, how much renovation they are willing to do.  Then they research several cities to see if that fits.  By the time they get to an intro call with me, they tell me they have narrowed down to 3 or 4 cities and want to know if my city and neighborhoods that would fit for their strategy.  I then can help them discover areas of indianapolis, speak to the types of economics that are here, and network them with other people for their team (investors, property managers, contractors, etc).  So, my advice is - figure out your strategy first, research areas that will fit that strategy, then find good, honest people in those areas that will help you.

    7Reply
  • Agustin Jimenez
    Investor · TULARE, CA · Member since 2017 · 30 posts · 6 votes
    5y

    @Will Gebbie

    Hi Will. All of my deals have been out of state. The first one I did with the mentality that if I lose money that it would be an expensive learning experience. I suggest you build a relationship with a real estate agent and learn about the areas you’re looking into. If you have any more questions send me a DM.

    1Reply
  • Will Gebbie
    OP
    New to Real Estate · Morristown, NJ · Member since 2020 · 17 posts · 26 votes
    5y

    @Gloria N Gear Great advice thank you. I will definitely do that.

    0Reply
  • Corey Frank
    Gillette, WY · Member since 2017 · 149 posts · 68 votes
    5y

    @Michael Carbonare This is very interesting! What would you recommend for education on lease options? 

    0Reply
  • Corey Frank
    Gillette, WY · Member since 2017 · 149 posts · 68 votes
    5y

    @Stephen McKnew Colonna this is so true! I am in the exact same place. The early phase to education is all fun and games until you realize complacency and fear are kicking your butt 😬

    0Reply
  • Corey Frank
    Gillette, WY · Member since 2017 · 149 posts · 68 votes
    5y
    Originally posted by @Gloria N Gear:

    I am a realtor in Indianapolis that has been working with out of state investors for 5 years now -- The new investors that come to me that seem to have the most success have been doing research for a while.  Most of them have their strategy narrowed down - IE - single family vs multi, basic price range, Hold vs Flip, how much renovation they are willing to do.  Then they research several cities to see if that fits.  By the time they get to an intro call with me, they tell me they have narrowed down to 3 or 4 cities and want to know if my city and neighborhoods that would fit for their strategy.  I then can help them discover areas of indianapolis, speak to the types of economics that are here, and network them with other people for their team (investors, property managers, contractors, etc).  So, my advice is - figure out your strategy first, research areas that will fit that strategy, then find good, honest people in those areas that will help you.

    this is super solid advice! From my personal research (super newb here) a person can really get hammered by the things they do not know. On the flip side of that, I have seen a lot of people turn analysis into a job and never actually take the plunge. Great advice! 😁

    1Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    I'm going to echo what others have said. My best clients educate themselves enough to know what they're looking at. Ideally they can look at a property and guess the rent and their expenses and then have me help them verify it and look at the property for them. The key for a successful out of state investor is that they know how to run the numbers and how to befriend people in the market they want to invest in so that those friends will work for them. I say friends and not team because these people should have a great relationship with you and should want to work for you. There's often times many investors who come to me and just say something like "find me a deal" and that... well... doesn't make me want to work with them.

    Point is, introduce yourself, educate yourself (just enough not too much,) and develop relationships.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free