Buying Out of State - Newbie

32 Replies

Hello all, I am a newbie here and would like to know what steps I should take when investing out of state. Thank you.

@Eric DeVito

First you need to define what you want to invest in.  I assume you are talking about landlording out of state.  Bear in mind there are many options involving notes, wholesaling, agency or lending money.

Then find people you trust with your money, time and energy.

There are several BPers investing in midwestern states.

@James Wise

 and @Steve Lawson

 are the two I'm familiar with.  Both have a variety of options.

If you want to be more hands on, find a place within reasonable driving distance.  For a Brooklyn person, I'd head north to college towns.  If you drive fast, the Albany area has TONS of stuff for sale in both residential areas and college areas.

@Aaron Montague

 Thank you for the heads up. I am really leaning towards the PA area. Looking at Harrisburg, and other areas near Philly metro area. It is not to far of a commute for me from NYC. Albany seems to be a bit to far up North for my liking. Also yes I am talking about landlording, I would like to get a multifamily unit, looking at 3/4 unit multifamily homes. I would probably go the Property Manager route since I work full time and I am new so things might get hectic.

@Eric DeVito

Philly is an aggravating distance from NYC :)  I thought the drive was quite a bit shorter than it actually was.  Plus the traffic is rather hectic.

Yeah, you'll almost definitely need to get a PM if you buy a MFH.

Albany is a hike.  Poughkeepsie (Vassar) was more of what I was thinking.  I had success in Troy (RPI) for several years.

Are there any areas in your backyard you could buy?  I don't know much about Brooklyn, but I do know there are several up and coming areas.  You could buy a triple decker, fix up the other 2 units, sell them and own a condo for free :)  Or rent them if it makes more sense.  Owner Occupied is a great way to go for your first place.

Welcome, Eric!

I am in California, and believe it or not, I invest in Harrisburg metro. I'd say it'a good but tricky market. Many little nuances that's not easy to figure out even for locals!

@David Krulac  is the local expert, wrote a book, and has done a podcast with BP.

There are several local property managers over there, but it's really tricky to deal with. Hersey area is always good because of the medical school. If you decide on investing in HBG, I don't mind sharing with you my short list.

@Aaron Montague

Aaron my plan is to invest in multi family, i sm still living at home and my job is really close to my house so i really have no intentions of leaving and brooklyn is so expensive. I could only afford Staten island but there are not many multi family homes listed within my budget of max price 250,000, financed of course.

@Ezra Nugroho

Thanks for the tip, how did you get into investing in harrisburg from cali? Harrisburg is a 3 hr drive from nyc to there. I wouldnt want to do that drive to often. Anyway i would like to hear any advice or info you have on yhe area and how you manage your out of state property. 

@Eric DeVito I lived in Central PA for 2 years before moving to Cali. Since I am far away, of course I have to work with a local PM. Buying a 3/4 unit financed for 250k is certainly doable. Make sure you set aside enough reserve to stabilize the property after you buy it. The properties in this market are quite likely rather old, and sellers often have to sell because they have some deferred maintenance that they couldn't pay for. 

Have you considered somewhere closer? Scranton? Wilkes-Bare?

@Eric DeVito I wouldn't rule out Pittsburgh.. Working in oil & gas, I can say that they have an amazing rental market.. I guess you'd have to contact an agent to know which specific areas.  I was always down in Washington.  I wouldn't look down there, but closer to downtown Pittsburgh the prices are crazy high right now!

Investing out of state as a newcomer is very challenging! Mostly because you don't have a way to access the property and physically check the condition, so you have to rely on property managers. That said, it can still be done if you are determined and do your proper research.

This post has been removed.

Consider owner financing your out of state properties so you are not a landlord. I only owner finance my houses in Texas and it's a great way to invest. I make 14-16% cap rates on all of my houses, and my buyers repair them. It's a great program. :)

@Ezra Nugroho

 Thanks, yea I would like to stay below 200k for a 3-5 unit property. I also want to put down 20-30% just so I have lower monthly payments. I will have enough cash in reserve. I will have to hire a property manager as well I assume.

@Jared Lichtin

 Thanks for the tip, I will check out there as well. PA seems to be a much more reasonable market for me to start investing in then NYC.

@Joshua Chen

 Thx for the tip, I know I wont be able to check on the property to often, but I think if I hire a PM and also drive down on my days off from work every couple of months or  something perhaps it will work out. NYC market is just to expensive for a beginner like myself.

Newbie Investing Out of State = Just Don't Do It

Get familiar with local real estate ... Do a couple deals locally and get your feet wet.  Too many people looking to take advantage of Newbie's that don't know any better.  

I agree with Steve.  There are a A LOT of things that you will want to learn how to deal with or have systems in place to deal with in your local market before I would recommend venturing out.  There are plenty of deals within 30-60 minutes of anyone's home.  Look at Brandon Turner.  He lives in a very small town and is finding deals :)

Medium dowd logoMichael Dowd, Dowd Properties | [email protected] | 309‑807‑3355 | http://www.dowdpro.com | IL Agent # 471.018854

@Eric DeVito

I like Harrisburg area, low unemployment. lots of government jobs, transposition hub for entire east coast.  Properties are reasonably priced and rents allow for positive cash flow.

@eric 

@Eric DeVito undefined

Hi Eric welcome to the site. If you need assistance in the Albany County area dont hesitate to inbox me. Albany has some very good investment opportunities that you may be interested in. I also work for the City of Albany building department so I can guide you through any permitting and or construction process.

Hi @Eric DeVito ,

   I'm currently in the sames shoes as you! The way over came this obstacle was to connect with others that do the same as you, I joined a team and we all invest in commercial properties they currently have 2 in P.A 23 unit and a 36 and 2  more in NC which are 44 unit and 15 unit  I'm actually planning on investing on a deal I'm currently considering in NC its an 11 unit mix of 2/1 3/1 for 189k not sure whether to invest as a note of just do a mortgage. 

It's certainly possible if you have a good team with you of course real estate becomes so much easier when your working with others oppose to doing things yourself! Not only don't you close the learning curve you can buy something way more bigger, any question shoot me a message to explain in details Note I'm still new though. 

Originally posted by @Eric DeVito :

Hello all, I am a newbie here and would like to know what steps I should take when investing out of state. Thank you.

Hi Eric, I would be very, very careful when buying out-of-state, especially as a newbie. I wrote an article on the subject a while ago that may help: http://www.biggerpockets.com/renewsblog/2014/12/23/investing-out-of-state-essential-items-to-vet/. But the long and short of it is that I would generally advise against it.

Medium apartment logoAndrew Syrios, Stewardship Investments | http://www.StewardshipProperties.com | Podcast Guest on Show #121

@Steve M. @Michael Dowd

Thank you for the advice. The only issue with that is I live in NYC where it is very expensive. Now PA, Philly area is only about 90 mins away which is not too bad. Of course deeper you go the further it is away from me. There just is not really that much out right here in NYC. I have been looking into Staten Island Multifamily, but everything over my price range, and I do not have really any options in my price at the moment here.

Originally posted by @Account Closed :

Consider owner financing your out of state properties so you are not a landlord. I only owner finance my houses in Texas and it's a great way to invest. I make 14-16% cap rates on all of my houses, and my buyers repair them. It's a great program. :)

 Hello Joe,

Could you lead me in the right direction to learn the owner finance process?  I see you talk a lot about it and should very interesting to me as a newbie for out of state..

Thanks 

Eric 

I am in the Poughkeepsie area, if you want to take a drive up I can show you around. There are hospitals, colleges and ibm in the area. Some places I wouldn't want to live, but doesn't mean it's not a good investment. I have a couple rentals in the Arlington school district. $200k can buy up here . It takes me 2hr to get to li stony brook area so city is probably 1 hr drive, 1:45 train. 

Best of luck Eric 

Originally posted by @Eric DeVito :

Hello all, I am a newbie here and would like to know what steps I should take when investing out of state. Thank you.

 Eric,

You say you are still living at home.  I would recommend buying your own home first so that you can go through the process at least once before you start investing.  It is far safer way to learn the business and you can use that property as an investment to see if you can make money.  You will have lower interest rates and down payments.  

I strongly encourage you to shoot for your dreams and I wish I had started when I was a lot younger.   

Stay as close as you can to where you live when you are investing with rentals.  Not to upset any property managers, but they have no skin in the game.   They have to manage a lot of properties to make a living meaning that your property won't necessarily get the attention it needs.  

If your property is sitting vacant YOU are the one that is still making the payments, they are not going to pay you for the vacancies.  If there is a higher paying property, that is the one that will get the tenants first.  If something breaks, YOU are the one that pays to have it fixed and at twice the costs.  You pay the contractor fees and double that so the property manager can make money too. A $4000 furnace costs $8000 to be replaced through a property manager especially when you are out of state.  

You can do better without a property manager in the beginning and you will be learning the property manager side of the business and your properties will be close enough that you can handle them.  

Once you are making enough money to handle all the costs, and you get tired of the tenant complaints then hire a property manager and move to a bigger house further away.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you