Out of state investing for beginner
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.
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!
I asked a similar question to this last week so I think we're in the same boat. I'm here in Phoenix and if a house is listed for a certain price, you'll likely be in a bidding war and pay $20K - $50K over market value. It will be my first investment property as well and I really want it to be here, but the prices are too high for my taste. I might have to settle for a small Townhouse but I prefer SFH.
I have the same fear and nervousness as you about my first investment property being OOS. I do however, take solace in the fact that some of the people that responded to you have been successful.
With both of us as beginners, I think we should both start to at least look at out of state deals just to see what’s available. If one of us finally decides the Market we want to invest in, we should reach out to realtors in that area and maybe build a relationship with them.
Relators aren’t that hard to find, but you’re going to have to do your due diligence to find a good one. Pay attention to things such as organization, attitude and how quickly they return your calls. If they seem too busy or dismissive and you’re constantly looking for them, move on, they obviously don’t want your money and don’t care about your time.
Realtors know a lot of people, so if you find a good one, they should be able to least connect you to a reputable property manger who knows contractors who can fix up your property if need be.
Lenders aren’t that hard to find at all and one of the previous mentions might have a recommendation.
Just make sure the loan office let’s you get the point across of what you’re trying to do. There was one lender I wanted to go with but decided against it because he spoke for 30 minutes straight before I interrupted him and told him what I was trying to do.
Nice guy, but he should probably focus on listening to his customers before talking so much in my opinion, didn’t even ask me if I had the time to speak to him, just rambled on.
Anyway, should be easy enough to get those four key players.
I know I’m also new to this but one thing I always hear about why landlords fail is that they didn’t have enough capital to account for vacancies and other expenses. Make sure to have at least 6 month of mortgage ready to pay if necessary.
The main thing is to make sure the house will be profitable BEFORE you buy it! Just because a house is $25K - $50K does not necessarily mean it will cash flow.
KNOW WHEN TO WALK AWAY BUT DON’T BE AFRAID TO PULL THE TRIGGER!
-Ibrahim
Living here in Texas, I've done deals in Alabama, Georgia, and Ohio 6 SFHs in total since 2016, with the exception of my residential house (and a couple of deals that fell through) here in the Austin market I've never done a deal in my local area.
No cash flow here, only appreciation (which can be good), so I looked elsewhere.
@Will Gebbie most of the mistakes an investor makes or anything that can go wrong with a rental property can happen whether the property is local or out of state. You can get a bad tenant anywhere. A furnace can break regardless of where the property is located. Although it might be costly, you can recover and stabilize. The biggest mistake to be careful of is buying in the wrong neighborhoods. That's the one mistake that you can't recover from. You can't move the house, so make sure you really understand the neighborhoods and where you are buying, Don't buy cheap properties in the hood. I have yet to see them work out for out of state investors.
@Will Gebbie
Follow the schools. You never go wrong when your property has good schools. They cost you more money but taxes and insurance will be the same and sometimes cheaper than areas that have shooting and stealing.
I have bought in C valued at 100k and B+ valued at 180k and the taxes and insurance are within $100 of each other.
Good luck. 😎
Great advice on here so far. I've done my first deal, and many more, all out of state. If you have a few locations in mind, look for a realtor here on BIGGER POCKETS. Many of them are investors or work with investors and can help you with finding a reputable property management group, contractor, and a good property suitable for an investor. I just did this for a deal in FL, and LOVED the realtor I found on here. Good luck!!
@Esther Garcia you need a realtor who deals with investment properties, a loan officer, a contractor who can take care of the property. You may opt to self-manage if doable like I do.
@Maria Guevara Thank you Maria. I will start investigating in the area that I am looking for.
Corey, Will, Agustine, Gloria, Danielle, and the list goes on... Thanks for your support, experience, and insight. My out of state/country and out of mind (lol) adventures continue. The hurdle I working through now is that despite the fact that I have enough saved to buy a house outright (not necessarily the best avenue), I have not been able to meet standard lender's gates. I own no property in USA, and most of my legal/financial moorings are based on my location overseas: residence in Korea; bank is US but address of account is based on an Armed Forces Post Office; tax address is my Dad's home in Kansas; precious metal holdings in Florida; no US-based drivers license (lived and worked in Korea since 2008. The suggestion from another real estate investor who has seemed to crack the same nut is to move all addresses to where my tax address is (Kansas), have dad either add US phone in his home for me under my name or change his phone account name to my name; get utilities put in my name... Basically, establish a US residence in my name. That is doable. I guess I'd be adding value to Dad's life by assuming some of his bills, but is this the best (or even logical) way to break the code? I have not yet pursued avenues through Bigger Pocket syndicates. BREAK: David G's last solo podcast hit the nail on the head for me. I am financially better off than I have ever been. So, the pain level of good is not great enough. David suggested finding a pain in the bouquet and using it as the motivator. Good idea.