My First Foray in Out-of-State Investing
About 7 months ago I posted my intention to invest out of state on BiggerPockets, and today I'm pleased to announce that I have purchased two properties in Florida in September 2017 and November 2017. I found both properties on the MLS, and they will be managed by a property manager.
Overall Goal:
As a buy and hold residential real estate investor, my goal is to acquire 5 rental properties within 10 years (2014-2024). Then I will turn my attention to buying performing mortgage notes. I already own a rental (a condo) in Washington state, so these two Florida rentals bring me more than halfway to meeting my goal of buying 5 rentals. The reason that I gave myself 10 years to achieve my goal is because I have a day job that limits the number of hours that I can dedicate to real estate; because I have a low -to-moderate tolerance for debt and planned to save for most of my down payments; and because I’m naturally cautious and wanted to give myself the time to weather any setbacks that should arise.
How I Did It:
Among other things, I ___.
- posted my intention on BP.
- listened to BP podcasts and followed the local forums.
- asked for colleague requests and I followed up on the advice of these colleagues.
- used savings and HELOCs for down payments, closing costs and repairs.
- interviewed Florida realtors, property managers and contractors by phone.
- visited the two rental markets, attended REIA meetings and met with property managers and contractors.
Lessons Learned:
- When buying an older house in Florida, get wind mitigation and 4-point inspections. They are required by many local insurers.
- Don’t be afraid to invest where it makes sense. A $40,000-$50,000 down payment can buy you two houses in some parts of Florida. The opportunity to cash flow was also a big incentive for me. That kind of money might get you one house in Seattle. Emphasis on might! My money goes a lot further in Jacksonville.
- Don’t be too afraid to take on a little debt when building your portfolio. I had huge reservations about using HELOCs for down payments, and I still do. However, I would not have been able to purchase two properties in the same year without those HELOCs.
Thank you BP and special thanks to Marco Santarelli and @Maxwell Lee whose contributions pointed me in the right direction. I am now confident that I can buy the two remaining properties before the 10-year mark!
Property 1: Fort Lauderdale, FL - closing September 2017
2/2 condo, 1,002 square feet, short sale, no mortgage, paid all expenses with HELOC
Purchase price: $48,000
Repairs and closing costs: $15,000
Total monthly expenses including HOA: $700
Monthly rent: $875
Before Picture
After Picture
Property 2: Jacksonville, FL - closing November 2017
3/1.5 house, 910 square feet, REO
Purchase price: $75,000
Downpayment and closing costs: $21,000
Estimated repairs: $5,000
Mortgage: $60,000 over 30 years @ 5.25 fixed interest
Total monthly expenses: $732
Estimated monthly rent: $850