Out of state investing

Buying & Selling Real Estate
10yFollow

Out of state investing

Mark Rauch
Commercial Real Estate Broker 路 Tarzana, CA 路 Member since 2015 路 8 posts 路 2 votes
If one were to invest out of state, what would be the proper way to oversee improvements and management. In other words what should your infrastructure look like and how can you protect against property managers, contractors, handymen and tenants from taking advantage of the fact that you are not local? Have heard horror stories but it seems that the deals to look at currently are not in Los Angeles where I live. Thanks, Mark
0Reply
130 views

Most Popular Reply

Richard Dunlop
Investor 路 Detroit, MI 路 Member since 2014 路 755 posts 路 462 votes
10y

@Jay Hinrichs is involved it a site called Turn Key Reviews

There are many horror stories about people not having the ability to exit TK purchases even after several years.

My opinion only is that TK companies seem to thrive in the markets that have a big disparity of prices.

Every time I appeal property taxes on houses I bought for $2000 the assessor has comps showing $40,000 within 1 or 2 blocks.

If your Turn Key provider is selling you a house for $45,000 will you have an ability to exit when I have bought 5 or 6 of the houses on your block for under $5000 each?

 
6Reply
See this reply in the discussion

40 Replies

Jump to latestLatest
  • Yasir Lillingston
    Investor 路 De Pere, WI 路 Member since 2015 路 16 posts 路 8 votes
    10y

    Thanks much @Douglas Skipworth.

    Good validation on what I've read/heard on them.

    I'm somehow wary of investing out of state and how important is to have  a great PM so it truly is passive income.  Thanks again.

    1Reply
  • Douglas SkipworthBusiness Member
    Rental Property Investor 路 Memphis, TN 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y
    Originally posted by @Yasir Lillingston:

    Thanks much @Douglas Skipworth.

    Good validation on what I've read/heard on them.

    I'm somehow wary of investing out of state and how important is to have  a great PM so it truly is passive income.  Thanks again.

    You're welcome.  Just mention "Memphis" in your post and you'll get a bunch of great responses for local experts.

    Investor's Guide to Memphis Real Estate
    View Page
    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional 路 Memphis, TN 路 Member since 2009 路 1k+ posts 路 1k+ votes
    10y

    @Yasir Lillingston  I lived here all my life and I can't recall a time where I have seen such an economic boom.  Check out this article.  

    https://www.memphisdailynews.com/news/2015/nov/5/a...

    901-848-9028
    1Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber 路 Memphis, TN 路 Member since 2008 路 5k+ posts 路 2k+ votes
    10y

    @Yasir Lillingston

    Whatever you end up doing, dont buy in 38127 ( Frayser ).  It is the worst zip code in Memphis and shows no signs of ever improving.  Rental collection rates are 50% at best here.  Most turnkey companies in our market ( with the exception of one ) dont sell anything up there, that should tell you something.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    1Reply
  • Douglas SkipworthBusiness Member
    Rental Property Investor 路 Memphis, TN 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y
    Originally posted by @Curt Davis:

    @Yasir Lillingston

    First decide what you are looking for regarding price range, ROI, cash flow, rtc....

    Regardless of how first class someone may be, if their product is not what your looking for then it doesnt make sense to do business with that company.  Understand that with lower priced homes ( under $65k ), no matter how nice of a rehab or how great the cash flow looks on paper, they tend to have higher issues in general.  In Memphis, I would suggest sticking with $75k or higher homes that have a monthly rent of $825/$850 or higher.  

    Good luck

    I agree with Curt that you definitely need to know what you're looking for.  Once you know that, vet your "partners" (e.g., agents, wholesalers, vendors, property managers, etc.) by asking the BP community.  You'll get honest and direct feedback.

    Investor's Guide to Memphis Real Estate
    View Page
    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional 路 Memphis, TN 路 Member since 2009 路 1k+ posts 路 1k+ votes
    10y

    A few times a year I catch myself considering trying out Frayser if I can be all in a 3 bed 2 bath house for $35,000 that is all brick and can rent for $750.  Then I recall the time someone gave me a house in Frayser with tenant in place.  They stayed their for 5 months, then moved out.  The next day I drove out to the house and the only thing was the house, everything else and I mean everything was gone.  Doors, carpet, cabinets, vanities, etc.  You name it, if it was not attached to the house, it was gone.  I sat on it for about 4 months trying to decide what to do.  I sold it for $750.  After taxes, closing cost, insurance, utility bills and a few other odds and ends expenses,  Iost money.  Lost money on a free house.

    901-848-9028
    2Reply
  • James Martin
    Property Management 路 Memphis, TN 路 Member since 2009 路 668 posts 路 362 votes
    10y

    dId sOmEoNe sAy 38127?馃憖

    0Reply
  • Steve Kiser
    Investor 路 West Hills, CA 路 Member since 2011 路 11 posts 路 4 votes
    10y

    I may be a little late on this thread but here goes... I live in LA as well (West Hills - in case you wanted to get a coffee and discuss any of this).  I own investment property in 3 different states - none of which are California.  I do own in Memphis and I can state that it has probably been the most challenging and rewarding.  I do have local property managers for all my locations and I would state that Memphis probably needs it more than other areas.  During my site visits, I can state that a street, a single street, can make a HUGE difference.  I have been on property tours where the street we were on was the correct street however the next street over was a cul-de-sac and you would not want to be on that street... ever.  Memphis is a fairly blue collar city with some great areas (such as Germantown and Collier).  There are some great prices in Frayser, but similar to other folks, I do not know if I would call them 'deals'.  We have a great property manager in Memphis who understands what we are looking for and when a property which fits our investment criteria comes along, he shoots us an email.  We purchased a 6 unit last year which needed some rehab.  The manager knew this is what we were looking for and it is performing nicely for us now.  We have used the same manager for the first building we purchased and that required much more extensive rehab. 

    Turn key is certainly a good way to go, however as someone else had mentioned, due diligence is still important.  I have a couple of friends who purchased TK's from same vendor.  One was satisfied while the other was not.  I was tempted as well, but chose to go independent.  I am happy that I did as I feel the education about the market and my objectives are more clearly defined.  I am not a pro member so I do not know if you send me a PM.  I would however be happy to share my knowledge and contacts with you at your convenience. 

    1Reply
  • Derrick Craig
    Memphis, TN 路 Member since 2013 路 969 posts 路 524 votes
    10y

    @Yasir Lillingston

    Have you ever heard of different strokes for different folks!!! This is a perfect example of that when speaking of dealing with TK property providers. You have a choice to go visit each and every TK provider, the areas the city they work in, the systems they have in place and especially the professionals working for the companies.

    Yasir just an Fyi there are plenty out of state investors invested in Frayser and 38127... It's all about the property manager that will make or break your deal... and Mid-South Homebuyers along with a few others on this post including myself have proven track records in these areas. 

    1Reply
  • Yasir Lillingston
    Investor 路 De Pere, WI 路 Member since 2015 路 16 posts 路 8 votes
    10y

    @Douglas Skipworth @Alex Craig @Steve Kiser @Derrick Craig @Curt Davis

    Thanks everyone for their great feedback. It validates the course of action that I've taken of investing in TK. Also some of the research I've don in Memphis.

    Definitely want to stay on the $75K and above range to try to obtain a better quality home/tenant.

    I'll keep moving with this as I'd like to get my first home in Memphis no later than Q1 while start looking in to the Dallas market as well.

    I'll provide updates in case they are useful for someone one else.  

    THANKS. Yasir Lillingston

    2Reply
  • Douglas SkipworthBusiness Member
    Rental Property Investor 路 Memphis, TN 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y

    @Yasir Lillingston,

    Sounds great!  Please keep all of us posted.

    Best of luck to you!

    Investor's Guide to Memphis Real Estate
    View Page
    1Reply
  • Lane Kawaoka
    Rental Property Investor 路 Honolulu, HAWAII (HI) 路 Member since 2011 路 4k+ posts 路 2k+ votes
    10y
    If there are any experience TK buyers out there (non vendors) who would like to swap best practices PM me.
    0Reply
  • Jonathan Azevedo
    Investor 路 Pleasanton, CA 路 Member since 2016 路 11 posts 路 5 votes
    10y
    Originally posted by @Larry Fried:

    @Mark RauchHi and welcome to BP! I see you hail from the San Fernando Valley.  I spent a good portion of my growing up there, but that is ancient history.  I've been in the NW for decades now.  Anyway I have only invested out of state, and primarily used turnkey companies.  It can work very nicely with the right company, but as others have said there can be a trade off in terms of returns and equity.  Still for a relatively passive investor busy with a day job or running a business, the option is well worth exploring.

     Larry,

    What are some of the good TK companies you have worked with?  Any good companies in Colorado or Oregon/Washington?

    0Reply
  • Larry Fried
    Investor/RE Broker 路 Eugene, OR 路 Member since 2014 路 3k+ posts 路 968 votes
    10y
    Originally posted by @Jonathan Azevedo:
    Originally posted by @Larry Fried:

    @Mark RauchHi and welcome to BP! I see you hail from the San Fernando Valley.  I spent a good portion of my growing up there, but that is ancient history.  I've been in the NW for decades now.  Anyway I have only invested out of state, and primarily used turnkey companies.  It can work very nicely with the right company, but as others have said there can be a trade off in terms of returns and equity.  Still for a relatively passive investor busy with a day job or running a business, the option is well worth exploring.

     Larry,

    What are some of the good TK companies you have worked with?  Any good companies in Colorado or Oregon/Washington?

     None I know of in any of those 3 states.  Prices are too high to make it work for turnkey.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free