Buying a property out of state?

Question

Bryan O. · Answer

@Yvans Cator Jr I agree that flipping out of state is not a very good idea for a beginner. Flipping is a regular old self-employed job... would you start a company with only remote employees that you have never worked with in the past? I wouldn't. I would recommend for flipping to build your history and systems and then expand as necessary.

For investing, you can go wherever you want if you keep in mind your management will make or break you. I would not recommend full rehab homes unless it is from a provider for the same reason I would not recommend flipping out of state.

Best of luck.

Andrew Johnson · Answer

@Yvans Cator Jr For what it's worth, I'd go with a recent build with the plan of a buy-and-hold.  At least do what you can to slow down the major cap-ex expenses like plumbing, roofs, HVAC, etc.  That should give you a cushion to learns the ups and downs.  I think what you'll find is that a lot of "repairs" can be covered with cash-flow but anything major yields out-of-pocket expenses.  Plus, if it's your first experience with a property manager (and out of state investing) you might want to see how they perform on something that's more cut-and-dry and letting your first experience with them be managing a rehab project.  Odds are you ROI won't be as high but I think a lot of people underestimate the value of stability when you're an absentee owner (personally, I don't think it matters if you're out of state or two-hours away, if you're not there...well...you're not there).  Anyway, just some food for thought.

Tom Ott · Answer

Investing out of state can be difficult if you are going to do the work. Turnkeys might be easier for out of state. If you go with a TRUE provider than the property will be completely redone and have a tenant in place. The provider will have owned the property and do all of the PM for you. That will keep this VERY passive for you.

Please see:

How to Find the Right Turnkey Real Estate Investment Company for You

and

The Best Types of Markets for Profitable Turnkey Properties

Nicholas Covington · Answer

@Yvans Cator Jr Hello!

If you are looking to read other's answers to this specific question I would just give a quick search as there have been TONS of people that have given great answers to this.

In regards to your specific circumstances IE first time and full time work, many people would probably say stay away from a fix and flip situation. Unless you have solid people in your corner that would be able to assist you in doing the work for you (property manager) I don't see that being a viable option for  you. Can it be done? Yes. Should you put yourself in this situation? No.

A buy and hold (rental) situation is MUCH more manageable if you are able to find the right deal and something that needs little work done (refer back to fix and flip statement), think turnkey or a property with a tenant already there. Again a good PM would make this much easier to deal with while you focus on other things, like your current job.

You can do anything you put your mind too, with the right amount of due diligence and some good 'ol luck!

My advice would be to soak up some more knowledge and search for that great deal locally. You will learn more from it because you can be a little more "hands on" with it, rather than checking in from a distance from another state.

Best of Luck,

Nick