Looking to buy out of state with minimal knowledge

Buying & Selling Real Estate
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Looking to buy out of state with minimal knowledge

Natalie Onacki
AZ · Member since 2022 · 12 posts · 11 votes

Hi! I was wondering how people go about buying out of state without knowing too much about the area? I am currently in AZ and want to buy in Texas, I know very minimal about the state, I know I would like to buy around the Dallas, Houston or Austina area but when you open up a map there are so many possibilities of surrounding towns. Has anyone ever ran into this? What do you do to narrow down your search, are there specific things to look at within areas? 

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Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
4y

@Jorge Siverio

Thank you for the kind words & positive feedback Sir!  SWFL is an excellent market to come into immediate equity, high cash flow & appreciation in new construction.  There is a tremendous amount of rental demand in this area.

We look forward to working with you!

[email protected]800-311-6781Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
Rent To Retirement5334 Reviews
WebsiteView Page
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @Natalie Onacki one way people mitigate this is by having friends or family in an area, or by assembling David Greene's "Core 4."  Or, by visiting the area and setting their Core 4 up themselves in person.  Nothing stops you from visiting an area on the weekends and meeting a realtor, property manager, etc.

    Where in AZ are you located?  And what do you like about the markets you mentioned?

    0Reply
  • Natalie Onacki
    OP
    AZ · Member since 2022 · 12 posts · 11 votes
    4y

    @Nicholas L.Thank you for this!! I will look into the Core 4.  I definitely want to take a trip there to see the area a bit before I make any huge decisions. I am located in Yuma AZ, and in those areas that I mentioned in Texas I like that they are cities so easily accessible for people to fly in especially for the businesses I want to do on the property its important to me for it to be easily accessible, I like the weather in those areas, there is a lot to do around those areas it seems. I honestly have to really research it more, there is really just something calling me to that state. 

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    @Natalie Onacki Why go so far? Look up in the central and northern areas of your own state. They might be even better than TX...?

    0Reply
  • Jabran Khan
    Member since 2020 · 9 posts · 17 votes
    4y

    Welcome to the remote investing club! I am in the same boat, recently started looking. I live in NC, trying to find good locations to invest myself. So far I have been looking into the usual suspects: Mid-western states > Growing cities with rising populations & wage growth like Memphis, Indianapolis. Everywhere I look it's a seller's market and the numbers are not making sense. I have signed up for the BP Rookie investor bootcamp, starts in about 10 days. Only way I have kinda gotten close to good rental markets is by following where Turnkey investment companies have been flipping properties? Been looking at Memphis, Indianapolis, Columbus, Birmingham, Cape Coral recently. I have to say it seems to be a seller's market everywhere, not just the coastal states! Even in the suburbs, outrageous asking prices make cashflow quite elusive. It's a tough job...like finding a needle in a haystack. More I think about it, the more I feel Turnkey will probably end up fetching my first deal. Been looking into multiple Turnkey providers from Roofstock.com to  "FS Houses" to one called "Rent to Retire". Will let you know if anything pans out, would appreciate the same from you. Good luck with your search! 

    6Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @Natalie Onacki OK - good luck.  As @Bruce Woodruff said I'd look in Arizona too.  Austin is a very, very expensive market and is going to be tough to invest in from out of state.  I've heard good things about Dallas - Ft. Worth.

    0Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    4y

    @Jabran Khan

    Thanks for the mention.  Plenty of good markets still where you can cash flow, have strong appreciation & come into immediate equity.  SWFL would be one of these.  There is no doubt this is a seller's market, but there is always opportunity to invest when you know where to look, or the right people to guide you.  We invest across the country, and there are different market dynamics in different locations.  We are happy to answer any questions you have at any point in time.

    https://www.biggerpockets.com/users/ZacharyCole/references

    [email protected]800-311-6781Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
    Rent To Retirement5334 Reviews
    WebsiteView Page
    11Reply
  • Jabran Khan
    Member since 2020 · 9 posts · 17 votes
    4y

    Looking forward to our intro call tomorrow @Zach Lemaster! :)

    5Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    Do you know people in the area who have  a better idea about the neighbourhoods?  Talk to property managers as well as a realtor to find out good areas that match your budget and criteria.  You are investing a lot of money in the home, make sure you go there to view the properties and drive by at different times of the day.

    1Reply
  • Jorge Siverio
    Investor · Miami, FL · Member since 2021 · 38 posts · 29 votes
    4y

    Wanted to jump in and mention that I am spinning up a deal in Cape Coral right now with Zach and team after much research on here and many conversations with them. So far they have been extremely helpful and have demonstrated that they are running a good operation. Gave me lots of appraisals and data to play around with. Looking forward to securing a lot soon and moving to the permitting phase. 

    1Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
    4y

    @Jorge Siverio

    Thank you for the kind words & positive feedback Sir!  SWFL is an excellent market to come into immediate equity, high cash flow & appreciation in new construction.  There is a tremendous amount of rental demand in this area.

    We look forward to working with you!

    [email protected]800-311-6781Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
    Rent To Retirement5334 Reviews
    WebsiteView Page
    12Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Natalie Onacki my name is Shiloh Lundahl and I am a fellow investor from Arizona. I also host meet ups in Mesa and we have one coming up next Monday the 24th. That might be a good networking group to go to. As far as investing in Texas, one of the best ways to invest out of state is to start networking and build a team in the state that you want to invest in. You’ve chosen three large markets, I would encourage you to whittle it down to one. Then I would encourage you to start strategically connecting with people in that market. Let me know if I can be of help.

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Natalie Onacki
    OP
    AZ · Member since 2022 · 12 posts · 11 votes
    4y

    @Jorge Siverio wow thank you, this is super helpful I will reach out to them! @Theresa Harris really good advice, I am going to check my network! @Bruce Woodruff @Nicholas L. very good points, it would be smart to start with what I know, sometimes I do need ot take a step back, thank you!  @Jabran Khan thanks for sharing you journey with this, super helpful I will look into the boot camp would probably be a good idea for me. it really is such a sellers market right now and its hard for a first time home buyer to like make a fast decision, but thank you for this advice! @Shiloh Lundahl oooo no way, I am in Yuma I dont think I can make it this week but I would absolutely love to connect with you! a local network would be really helpful 

    2Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    4y

    Buying out of state is a really bad idea. Especially if you have no experience and dont know anyone in your target area.  It is much much better to buy where you know.  Also, be cautious BP is full of sharks that will eat you alive....   so be cautious in offers to "help" 

    On a positive note, RE is a long game and if you are looking to buy and hold time is in your favor. Try networking with local folks and see if you can find something closer to home. 

    1Reply
  • Jabran Khan
    Member since 2020 · 9 posts · 17 votes
    4y

    @Natalie Onacki just FYI, my understanding is that the BP Rookie bootcamp has limited spots. If you are unable to secure a spot, there is another BiggerPockets Rookie investor bootcamp grad (his name is Bo Kim) who put together a series of webcasts to go over what he learned in this program. Would strongly recommend giving the series a listen. Very informative! 

    Buying Your First Rental Property 7 part series

    1. Part 1 of 7 - Goal Setting
    2. Part 2 of 7 - Market Analysis
    3. Part 3 of 7 - How to find a Contractor and PM
    4. Part 4 of 7 - Financing Your First Rental
    5. Part 5 of 7 - Property Underwriting & Analysis
    6. Part 6 of 7 - Due Diligence Process
    7. Part 7 of 7 - Managing and Scaling Your Portfolio
    1Reply
  • Account Closed
    Member since 2022 · 26 posts · 12 votes
    4y

    When you invest out of your area you inherit huge risks and you take on additional expenses that are extreme. While properties look cheaper in other areas the rents are usually lower, the potential to increase rents is usually low and there are many other factors that inhibit you from earning a good profit. The risks, additional expenses and inability to be hand-on make it difficult to earn good profits out of your area. it is much better to pay a higher price for properties and negate all the risks, additional expenses and losses.

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Natalie Onacki why not invest closer to you? I always prefer to invest close to home if possible

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    1Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    4y

    @Natalie Onacki congrats on taking the first steps to OOS investing! It’s definitely a scary feeling, but I can assure you there is very little difference in owning a house 5 minutes away or 500 miles away so long as you put the right systems into place. I second @Jorge Siverio comments about rent to retirement. Currently utilizing them for the same Cape Coral deal that Jorge referenced. This was actually my first out of market purchase. Some of the numbers were 10% down, total all in cost of $265k and 3.5% locked in rate. This is also a 4/3 new build. Rents are around $2300/mo and post construction appraisals averaging about $377k for this model. They are out there! You just have to find them. Good luck!

    6Reply
  • Alicia ProkosPro Member
    Developer · Powell, OH · Member since 2016 · 59 posts · 44 votes
    4y

    Hi, I think there are both pros and cons to investing out of state vs. close to home. What type of property you are investing in can make a big difference. If you are buying SFR rentals and plan on managing the properties yourself, you practically have to buy local. If you are buying vacant land, however, buying out of state in less expensive but growing markets can make a lot of sense. No matter what kind of investment you are making, though, I would never invest somewhere where I have not made at least a few trips to get the feel of the place and become familiar with local real estate trends, in addition to doing some significant online research and reaching out to people who know the market. Good luck!

    0Reply
  • Elizabeth Pruett
    Real Estate Agent · Yuma, AZ · Member since 2020 · 24 posts · 20 votes
    4y

    @Natalie Onacki Not sure if you get the BP notifications for keywords or cities like Yuma, but we have meetups that have been going on for a bit over a year now.  We just had one on Friday.  Lots of great folks wanting to help each other out! I invite you to join the next.  Details to come in the next week or so.

    1Reply
  • Account Closed
    Member since 2022 · 26 posts · 12 votes
    4y

    I need to elaborate a little more about the cons for out of your area investing.

    CLOSE TO HOME - When you invest close to home you get have the opportunity to screen and your tenants, the opportunity to do personal inspections to see whether or you 10 times the number of people are living in your unit and you have the opportunity to inspect your units to make sure your tenants are not destroying your property.

    OUT OF YOUR AREA - When you rely on someone like a property manager or friend to manage your out of area property you should try to understand that property managers have many irons in the fire and if they do bad things to keep your books in the green. The bad things they do is they don't do as good a job as you would when screening and choosing tenants because to keep your books in the green they need to rent your unit fast.

    Property management companies don't get paid enough to drive by and check on your property like you can. So, you will find that tenants are destroying your property long before your property manager knows.

    Property managers don't always have the best maintenance crews and contractors. I had a few property management companies and I got a call from one in Idaho at 8 pm when a furnace broke down and the temperature was 5 degrees. The property manager told me the house needed a furnace for $6500. I told the property manager I would drive to Idaho in the morning and install a furnace myself. A few minutes later, I received a call saying the furnace was repaired for $350 and working fine. I had the exact same problem with plumbing problems several times.

    I purchased 28 homes in Las Vegas in 2008 when $550,000 homes were selling for less than $100,000. I paid cash for the homes and every home was less than 15-years old and move-in ready. I managed the homes from Los Angeles (280 miles away) and did very well until I hired a property management company. That is when my monthly cashflow (profit) decreased by about 40% when I was paying the property management company 8% to1 10%. I had more vacancies, vacancies for longer periods and started to have to evict tenants through the court and I never had to evict a tenant in Las Vegas until I had a property management company. Then, I decided to sell every home and when I went into some of the homes I had tears in my eyes when I saw the damages and filth.

    1Reply
  • Luciano A.
    Developer · Houston TX · Member since 2018 · 423 posts · 400 votes
    4y

    @Natalie Onacki

    Sometimes buying close to home can be a great teaching moment. However, if you do decided to buy in Texas I'd say be careful. In Houston one thing many out of state investors dont realize is that if you buy a property that say has tax assessment of $100k but you buy for $200k the taxes will be reassessed to the new purchase price for following year. This will reduce your cashflow. When crunching your numbers always calculate the new tax amount so that you are not surprised as many agents will not tell you that. I have been getting many out of state investors reaching out to me since I build a lot of duplexes and they want new construction thus reducing their CapX and maintenance issues. Whatever you do make sure you spend the $300-$500 to fly out to that city and spend a few days. 

    What looks good on paper doesnt always pan out in real life. 

    Best of Luck 

    0Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    4y

    My best advice to you would be to visit the city first and see all the beautiful Amenities!

    Get to know the neighborhoods and different pockets in which you and then make your pick.

    248-979-8119
    0Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    4y

    My best advice to you would be to visit the city first and see all the beautiful Amenities!

    Get to know the neighborhoods and different pockets in which you and then make your pick.

    248-979-8119
    0Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    4y
    Originally posted by @Jabran Khan:

    Welcome to the remote investing club! I am in the same boat, recently started looking. I live in NC, trying to find good locations to invest myself. So far I have been looking into the usual suspects: Mid-western states > Growing cities with rising populations & wage growth like Memphis, Indianapolis. Everywhere I look it's a seller's market and the numbers are not making sense. I have signed up for the BP Rookie investor bootcamp, starts in about 10 days. Only way I have kinda gotten close to good rental markets is by following where Turnkey investment companies have been flipping properties? Been looking at Memphis, Indianapolis, Columbus, Birmingham, Cape Coral recently. I have to say it seems to be a seller's market everywhere, not just the coastal states! Even in the suburbs, outrageous asking prices make cashflow quite elusive. It's a tough job...like finding a needle in a haystack. More I think about it, the more I feel Turnkey will probably end up fetching my first deal. Been looking into multiple Turnkey providers from Roofstock.com to  "FS Houses" to one called "Rent to Retire". Will let you know if anything pans out, would appreciate the same from you. Good luck with your search! 

    Let me know how it goes buddy! 

    248-979-8119
    0Reply
  • Wesley I.
    Investor · San Diego, CA · Member since 2019 · 286 posts · 135 votes
    4y

    @Natalie Onacki

    I bought my first OOS rental last yr in Houston.

    Here are some deets on how I narrowed down my search area:

    I religiously read online forums to search where people are moving, good school districts, low crime areas, out of flood zones. I used city data forums to narrow it down to a few zip codes.

    I talked to people i trust about my intentions/plans. I discovered co workers who used to live in Houston, they advised me on which areas to avoid and which areas are good, confirming my research.

    Looked in areas near groceries, Hardware stores, hospitals, police stations, and Starbucks.

    I know some investors who use judgmental maps to avoid crime areas.

    Hope this helps!

    1Reply
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