Living in California; investing out of state...

21 Replies

I currently live in Southern California but am looking to invest out of state.  The main reason is due to the housing market here, a lot of money only gets you a little and not much room for cash flow unless you are a cash buyer.  Are there any investors from California out there who have been investing out of state?  I was wondering how things have gone for you and the difficulty of managing a property located in another state.  I have done quite a bit of research and I am strongly considering Las Vegas, due to the market, cash flow opportunities on a rental property, and proximity.  Any thoughts on states near California in which other California investors have been successful?  Thanks for your feedback in advance. 

  1. I live in the Central Valley of California. We own 3 houses back east that we self manage from a distance. We buy class a properties. While the margins are much smaller we are able to do just as well since our vacancy rates are very small (we have not lost a day) and we self manage. I have started a blog/website about self managing from a distance. Personally if I could buy locally I would. There are a lot of hidden expense to managing long distance. We are military so "local" is relative. There are lots of people that have different niches. There are lots of people who write about their niche in their signature so that's another great resource. 

I live in SoCal as well and have only invested out of state. My properties are in Atlanta and I work with buyers who are buying in Texas, Philly, Indy, Chicago and some other places. It's all about the teams you have in place. If you have the good teams, out-of-state can be great! Definitely better for cash flow than here in SoCal. I'm not personally a fan of the Vegas market.

Medium hipsterinvestment logo black300dpiAli Boone, Hipster Investments | [email protected] | 310‑957‑2101 | https://goo.gl/x52ZKJ

I have long invested in Phoenix. I love the market. Very landlord friendly.

The biggest problem you will have with long distance landlording is going from rented to vacant to rented again.

You will need a team on the ground. But you can mostly manage it yourself if you get  good tradespeople and a good attorney. I have used realtors to find me tenants then I would take over the day to day to management once the property was filled. It worked out great. Of course full service property managers are also available although they are by and large VERY bad.

I would caution against the Vegas market. The whole city is more transient than others so your turnover will be higher.

HI @Justin Brophy   I own a rental in Vegas (well Henderson to be precise).  I purchased in 2010 as a homepath foreclosure so I got a decent deal on it.  As for turnover I lucked out the first time around and the couple stayed for 3 years.  Since then I have had two sets of tenants and each time it took 2-3 mos to get it rented which killed any cash flow for both of those years.  I took a trip out there a few weeks ago while it was vacant so I was able to get into the house without disturbing any tenants.  I was not happy with the effort my then PM was making to get it rented. I let that pm go and now @Phillip Dwyer   is my PM and found tenants in just a few weeks.  I think a big part of my vacancy issue was management related so I'm not convinced that Henderson is a high turnover city.  At least from my perspective.  

My goal was appreciation (which I will never recommend or bet on again) It took a few years and has definitely increased in value but it doesn't put money into my pocket every month.  Btw all of this was before I discovered BP as I probably would not have done the deal if I knew then what I've learned from this site.  Do your homework!

Medium srg vert blk gold  3 Brett Synicky, SRG Properties | [email protected] | 949‑329‑3617

HI @Justin Brophy  

I've lived in Los Angeles for 20 years, and have been investing out of state for about 6 years. I started looking in the LA for cash flowing single family, but soon found out it's nearly impossible to find! So quite a few CA investors I knew were 'speculating', and buying for appreciation  / capital gains. I know quite a few folks that were crushed in the downturn/subprime (many of us do as well). I focused on Dallas/Ft Worth, Memphis and now Atlanta, and it's been awesome. I looked at Vegas a few years back, and was worried about the vacancy rates, and 'ask me about one month free' rent signs everywhere.

Has that changed, as far as you know?

@Justin Brophy  Vegas has been doing okay as of late from what my associates on the ground tell me. How much are you looking to take down?

Originally posted by @Daniel Sanchez:

@Justin Brophy Vegas has been doing okay as of late from what my associates on the ground tell me. How much are you looking to take down?

I'm looking to stay in the 130k range on this one.  I have been doing my research and thought I had my target area narrowed down to Spring Valley; but from what I'm seeing I may be late to the party.  Looks like prices have gone up recently and cash flow is diminishing.  What do you think?

@Andrew Lanoie 

Thanks for the information.  From what I've seen lately, it looks like newer investors like myself may be late to the party in Las Vegas.  Sounds like it's very difficult to get into a property with decent cash flow opportunities due to the saturation of the market, causing prices to go up.  I'm interested in learning more about the areas you have enjoyed success.  I was considering Memphis awhile back but then I was stuck on this Las Vegas idea for awhile.  Let me know what you think.  Thanks again. 

Hi I lived in Los Angeles/ Hawthorne area for years I had no Idea how many Deals were here in Dallas Fortworth area I work with out of state buyers who have various exit strategies from flipping to buy and hold here is my site.

cashbuyersqwick.com

Estimated After Repair Value:

$105,000

Investment Property Details

$73,500 Asking Price

Property Type:Single Family Houseminus Estimated Cost of Repairs:

$5,700

Location:Dallas, TX 75233equals Profit Potential of:

$25,800

@Brett Synicky  Thanks for the mention!

@Justin Brophy  If you decide to move forward with Vegas, I recommend taking a trip out here to do some driving of the neighborhoods.  You'll want to do some street level research.  Find out why rents are trending differently in different parts of the valley.  

There are definitely higher cash flowing markets than Vegas right now.  $150,000 will gross about $1100 +/- $100 in monthly rent on average.  One advantage Vegas has over many cities of similar size, is the age of the housing stock.  

Good luck!!

Phillip Dwyer, Windermere Anthem Hills | 702‑212‑1912 | http://www.vegasdigs.com | Podcast Guest on Show #62

I continue to tout the virtues of the Dallas/Ft Worth area and Texas in general. You can get a nice property for that amount is a school district that makes people want to stay. Plus, we have a stable market with consistent appreciation.

@Hattie D. 

@Account Closed  

I have been hearing great things about the Dallas/Fort Worth Area and Texas in general as well.  I was wondering about your thoughts on the fact that Texas has the 3rd highest property tax percentage?  Is that a concern to the investors?  Thanks again.

@Justin Brophy  

I stopped buying in Dallas because the margins got so tight. I'm sure there are some deals out there, just not as many as 4-5 years ago:)

Yes, very high property taxes, but you simply factor it into your proforma, and see if the numbers make sense.

Andrew

I guess growing up here the property taxes don't seem that high to me.  I will tell you that even within the DFW area taxes can vary wildly from one city to the next.  It is dependent on the commercial tax base of the city.  I live in Grapevine, where property taxes are low (for the area).  Southlake is next to Grapevine and taxes are almost 3x's more, because it is entirely residential and retail.  It's all relative. 

I have been investing in Kansas City.  I am very happy so far.  My property manager is also a realtor and runs the rehab projects.  The appreciation will not compare to Texas but the cash flow is better.  It is real scary buying the first one, be prepared for friends and family to call you crazy.

@Justin Brophy  Welcome to BP!

You have done yourself a great favor by posting your thoughts and questions here. Then wealth of knowledge and willingness to share is simply amazing.

Best of luck on your endeavors.

Pyrrha

Hey Justin, congrats on making the commitment to get into real estate. It's been good to me and a lot of other investors. Here's my take on Vegas - been investing there for the last 3 yrs. I live in Socal as well and have been doing the long distance managing. It hasn't been too dificult, but I got lucky enough to get a handyman referred to me, which without, would have made it a pain. Having someone - a handyman in particular that you can trust is key. Finding tenants is not too dificult. Craigslist is pretty much all you need, but I almost always do an open house and haven't had issues finding someone. Prices have gone up and for a lot of investors, just don't make much sense anymore. Most are looking elsewhere for higher returns, but sacrificing appreciation for it. I still think Vegas will continue appreciating around 5% for the next 3 years atleast. It's still about 40% below its peak. The market there is coming back, just slower than CA. 130k is a good price point to look at, it's about the bottom for something under 15 yrs old. Work with a good agent. Beware of HOA's that don't allow rentals. Due your homework during your due dilligence period on this. I know someone that was forced to sell due to issues with the HOA on this. Luckily, the home appreciated and they walked away with a good profit. As far as your capital being safe, I'd say Vegas is really a good investment. Cash flow-wise, it's not - basically a trade off, though you should still be cash flow positive at that price range. Stick to the southeast, southwest and west. Don't go east or into North Las Vegas as it starts to get rough. Good luck.

@Mohammed W.  

Thank you for the information, I am definitely doing as much homework as I can before I "jump in".  I am looking at some other areas besides Las Vegas because I have definitely noticed the trends you have mentioned.  Lots of investors most likely paying all cash and probably multiple offers on properties, causing prices to go up and making it difficult on a newer investor like myself.  I do have some other states in mind and have been doing research on those as well.  This site has been a wealth of knowledge thus far and it's good to see people sharing ideas and helping each other out.  Thanks again.

@Justin Brophy  congratulations on moving towards getting out of the rat race!

I know many out of State/Country investors doing very well in the Midwest.

Of course I am a little partial to the Indianapolis market but it's worth looking into the region.

We have easy buy in pricing, strong rents and landlord friendly [Indiana at least] laws.

I'd have to agree with @Shawn Holsapple Midwest has been good for myself and some other BP members as well (NE Indiana specifically).  

Justin, there are a lot of people posting on BP selling properties.  They may be all fine.  But definitely get some non biased advice from a experienced investor (that won't be compensated if you buy) before you buy.

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