First Time Buying - Out of State?

30 Replies

I'm looking to get into real estate investing but I live in Los Angeles. 

Finding cashflow opportunities is next to impossible at this time, and even when you find decent looking numbers the sale price gets bid up way over asking to where the numbers aren't so decent.

My hopes are that things are topping out here, because I'm tied to LA for my full time job and I would love to purchase and do a "house hack" situation.

Recently I've been looking at opportunities outside of CA and Toledo, OH is looking very attractive. My step brother is going to med school out there and renting a place so he would potentially partner with me. 

I guess I'm looking for any generic tips, suggestions or warnings for a first time investor out of state - 

I'm looking to purchase something between 50k-85k and it looks like I would be able to find something that would adhere to the 1% rule pretty easily. 

Anybody on here done something similar? Would love any feedback, tips or suggestions. This is my first post here. 

Hey @Cameron Nehrer

You are not along in this situation. I live in LA and invest in Florida for the same reasons. While the market where I invest (Tampa/Orlando) is a bit pricier than the midwest, it is definitely possible and worthwhile looking out of state.

Going in with your step brother sounds great because it is always nice to have someone on the ground even if you're not able to see it yourself. Once you determine your market, I would connect with local agents, lenders, etc on Bigger Pockets to help out.

Even from afar, I have been able to find quality partners just from the BP community. Plus, with Google Streets, smart phones with cameras, etc, investing out of state is not nearly as scary as it has been in the past. Hope that helps. 

All the best!

-Brad

@Cameron Nehrer - In state or OOS is a dimension to investment. All kind of the investments come with risk. Your decision to go to Toledo OH should not be solely based on your brother going to be local for quite some time.

There are few folks available on BP who can guide you in right direction and many others looking for newbies. Your first test is to connect to right ones and rest is assured. 

"Education is what you get by learning from others. Experience is what you get by not learning from others."

Read every line from this BP post, market does not matter.

https://www.biggerpockets.com/forums/311/topics/227602-difficulty-selling-rental-properties-at-loan-amount

Good Luck Investing

Vivek

Thanks a lot @Vivek Khoche  

Wow, I just spent about 30 minutes skimming, and will re visit later when I have more time. Lots of info out there and it looks like the main takeaway is: 

1) Be weary of predatory TK providers looking to exploit newbies

2) Property Management is a crucial component that must be addressed

3) Always understand the exit strategy 

To your comments: 

The decision isn't based solely on the fact that my brother will be there, it was more of the catalyst. When I saw how much he is paying for rent and how much houses were going for there it sparked the interest. Since I've looked more into it seems that there are pretty good opportunities in Toledo for student rentals.  

My plan for this investment would be to put down around 25% on 30 year fixed... 

I obviously need to do a lot more research to make sure I can find a good deal, I just thought I'd post here to get the ball rolling. Which so far has helped. 

Thanks for referencing that thread, there is a knowledge of info in there and things related to investing out of state. - I have bookmarked it and will return. 

Thanks 

Hey Cameron! I'm right next to you, in Venice. I've always invested out-of-state. It's definitely tough here, even for house-hacking.

Nice to meet you neighbor!

Hi Cameron,

Find a local investors club or meet ups. Go visit and organize your visit around the meetings. You'll find good local contacts that should be willing to help you. Research who you do business with!

As you can tell from BP investors love helping each other out. There's plenty of business to go around.

Tim

@Cameron Nehrer - I think you got the most of REI secrets to success. I am not discouraging you for combining this wonderful opportunity as your brother would need a place to stay.

You may further explore the possibilities as one of my friend has created LLC in the name of her daughter and loaned here to buy a house in Austin, she would be paying in state tuition, the saving in four years is projected to be $75K on a $145K house. Rental income and appreciation is bonus.

Good Luck 

Vivek

I don't go to any myself, so not totally sure what is out there. I know some people post on here about meetups, but not sure of any specific ones. 

Right now I'm working with Philly, Baltimore, Chicago, Indy, and Kansas City :)

Reach out anytime!

@Cameron Nehrer I don't know if this advice will be helpful or not but pick a market where you have some local knowledge or someone living there that can give you local knowledge.  A place you went to school, where a sibling lives, a city where you grew up, just anything that lets you understand a market better than you can sitting at a computer.  Everyone on BP has a rationale on why the city they invest in is the best:  cash-flow, appreciation, path-of-progress, something.  Realtors on BP are armed to the teeth as to why Nashville is better than Toledo or Toledo is better than Cleveland.  The challenge with all of that is that real estate (to a large extent) is a hyper-local game where there are right vs. wrong sides of the tracks.  If you have someone that can at least steer you away from the "wrong side" of the tracks you'll be miles ahead of anyone else that's just cruising around Zillow.  

Also, don't discount having to visit during the sales/vetting process and going out there from time-to-time.  Toledo may be a slightly better market than Tucson (just making things up) but Tucson is a cheap Southwest flight away.  Side note, I own nothing in Toledo or Tuscon.

You did hit on the biggest challenge with low-dollar OOS investing:  exit strategy.  Who will buy that turnkey home purchased for $10K, rehabbed, and bought by you for $50K if you have to sell it tomorrow?  Not a turnkey company, likely not an owner-occupant, maybe another investor...who will also wants a "deal"... 

@Andrew Johnson - I agree with you 200%, why only low dollar OOS, I talk to my investor  friends on daily basis and none has exit strategy me included. In a investor group meeting of one of the cash flow market number of people were offering me once in life time type of deals, when I said I am here to sell my deals I was left alone for the rest of the evening. 

REI is street by street block by block. Also like any other investment I believe in a complete cycle i.e. cash leaving your account to cash back in your account.

Thanks
Vivek

I'd love to connect if you decide to invest here in Ohio! I do turnkey properties in Toledo, Dayton, Cincinnati and Middletown.

Originally posted by @Cameron Nehrer :

I'm looking to get into real estate investing but I live in Los Angeles. 

Finding cashflow opportunities is next to impossible at this time, and even when you find decent looking numbers the sale price gets bid up way over asking to where the numbers aren't so decent.

My hopes are that things are topping out here, because I'm tied to LA for my full time job and I would love to purchase and do a "house hack" situation.

Recently I've been looking at opportunities outside of CA and Toledo, OH is looking very attractive. My step brother is going to med school out there and renting a place so he would potentially partner with me. 

I guess I'm looking for any generic tips, suggestions or warnings for a first time investor out of state - 

I'm looking to purchase something between 50k-85k and it looks like I would be able to find something that would adhere to the 1% rule pretty easily. 

Anybody on here done something similar? Would love any feedback, tips or suggestions. This is my first post here. 

 Investing out of state when you live in CA is a great idea! Have you been looking much into turnkeys? That might be a great idea for you. Ideally the provider will own, renovate and manage the property all in house! This way it is 100% passive for you!

@Cameron Nehrer

It is important to shadow someone who has successfully done the type of investing your looking to do.  As someone who has been doing out of state investing for close to a decade, I realized over the years that having a good system and team in place will ultimately keep your portfolio going.  Best of luck!

Originally posted by @Cameron Nehrer :

I'm looking to get into real estate investing but I live in Los Angeles. 

Finding cashflow opportunities is next to impossible at this time, and even when you find decent looking numbers the sale price gets bid up way over asking to where the numbers aren't so decent.

My hopes are that things are topping out here, because I'm tied to LA for my full time job and I would love to purchase and do a "house hack" situation.

Recently I've been looking at opportunities outside of CA and Toledo, OH is looking very attractive. My step brother is going to med school out there and renting a place so he would potentially partner with me. 

I guess I'm looking for any generic tips, suggestions or warnings for a first time investor out of state - 

I'm looking to purchase something between 50k-85k and it looks like I would be able to find something that would adhere to the 1% rule pretty easily. 

Anybody on here done something similar? Would love any feedback, tips or suggestions. This is my first post here. 

Ohio is a great place to find some good ROI. Look for professionals in the market you like and reach out to them. See what they have to say about it!

@Cameron Nehrer Welcome! Lots of good advice here (some bad too). Central Ohio (Columbus) is the strongest RE market in the state... hands down...actually #12 in the country right now. Going nowhere but up. Let me know if you want to chat about the local area. I work with a couple other California investors that have been able to find some solid opportunity here.

Cheers!

I live and invest in Dayton Ohio as well as Cleveland. We just contracted today another SFR that I'm doing a JV partnership with someone from Las Vegas. We are doing a flip using his money for the down payment and my PM Lender for the rest with me doing the GC work. I also made a few other offers today on properties to do the same exact model with an investor out of Texas. They both work full time jobs and live in high dollar markets so it's a perfect fit. This is what I specialize in and they both found me and asked how we could work together. After about a week of emails and phone calls we came up with a plan and BOOM we are off and running. I'm meeting with the contractor tomorrow to get a scope of work, closing in 30 days, and should be ready to sell in about 2 months after that.

If you find someone to work with like that, out of state investing is easy... you just need a partner that knows the deal inside and out with connections.  

@Mike F. I do know of a great property management company in Ohio but I must disclose I am affiliated with the owner @Engelo Rumora   He does property management heavily in Toledo, OH as well as southern Ohio around Dayton and Cincinnati. I do not have contacts with inspectors in southern Ohio as I live, work and invest in Toledo but I can PM you a great contact down south who may be able to assist.