Under contract: My first out of state buy-hold!

44 Replies

I am excited to be under contract with my first out of state but-hold property. I would be lying if I said my excitement isn't coming with some nerves.

The property is a duplex in Kansas City, MO. I'm planning on using property management and will need an inspector quickly.

Feel free to send any advice or positive vibes my way!
Cheers to many more to come!

I'd like to know how it goes each step of the way. Asking price? Income?

I'm happy to share my experience Susan. List price was $99k and i went in strong at $105k. I most likely could have gone list price, but there have been a number of other properties i was interested in that i got beat out on, so it was easiest to just go over and lock it up. Monthly net income will be $606 with a 7% cap rate at 25% down (This is after I factor in Property Management at 10%, Vacancy at 5%, and maintenance at 5% of estimated lease). I am told rents are currently low so i might be able to increase rent a bit and those numbers will look better.

Congrats Jeremy - KC is a great cash flow rental market. Do you have a property management company lined up for the duplex? PM be if you want a solid recommendation on a KC inspector. Good luck with everything - 

Thank you @Christian Ritter ! I am actually looking still. I might have the inspector, but i'll PM you just in case.

Jeremy, 

I'm not sure if that's a good enough deal. Numbers look very tight. If you're okay with the risk, and you have enough cushion for it, then hold for equity.

congrats @Jeremy Clarke ! that's very exciting :) make sure you have a great property management company lined up, especially since you are looking to increase rents. have you been out to see the property? sounds like you are inheriting tenants - what is your strategy for that? asking because while I have invested in two properties out of state, they have all been sfh which were vacant. best of luck to you!

Congrats on taking the leap of out-of-state investing. Goodluck and way to go !!

@Susan Vanderburgh I'm curious why 600+ in cash flow is considered risky, assuming that all other costs have already been calculated?

Hey @Vickie Yang , I'll be working on getting PM this week. I'm not sure at what point I will go out and visit, perhaps this week, if time permits. I'd like to potentially be there for the inspection. Good point on placing tenants, one side is long term and the other is vacant. I was planning on having the PM place the other unit, but try to be involved in the process if possible.

Go to Kathe Fetke's website.  She has property management teams for out of state investors that have been vetted (sp?) and recommended.  Congrats!

Hey Taylor, I am using a guy here in Colorado that I've used a couple times before personally. 5% interest fixed conventional over 30 years.

@Taylor Loht I actually just spoke with my lender and he seems to think that PITI will come out around $423 so numbers are already looking better.

Congrats!  Hope everything goes smoothly!

@Jeremy Clarke   First, Congrats.  Based on what your saying your numbers are looks like a fantastic deal.  

I do have a question for you.  How exactly did you find the place?  National listing, BP, friends in area?  

I'm also curious on what prompted your motivations to go out of state rather than within your living radius.  

Again congrats!!!

Hey @Jonathan Jewell , I appreciate it! Through a lot of research and being passed around I found a RE agent in KC that i feel like i can trust. He has a search set up for me to receive notifications as soon as new listings pop up so i can move quickly on deals.

In regards to going out of state...buy-hold is basically a thing of the past where i live. I live in Fort Collins, CO where the median SFH right now is $390k and MFH are nearly impossible to find. Without putting up very steep down payments, my returns would be net-negative and i'd only afford to have the money for a down payment maybe every few years.

With this approach, it allows me to get a great monthly dividend with less money that i would have otherwise spent. I am not counting on appreciation, the properties i own here are SFM and have appreciated well. This helps diversity for RE portfolio, which i feel is important.

@Jeremy Clarke .  Wow Good for you.  A well thought out plan and you acted on it.  Yeah CO is through the roof like many other places across the US.  I envy investors going out of state such as yourself, which is why I'm so curious as to what your thinking was.  For me, I need to be close by to all my places.  I have had a few bad experiences in the past where something went very wrong in some of my places, and the people I entrusted to fix and followup didn't.  Its why I'm so hands on and don't stray too far.  But it's something I'm working on to build that trust up again and go out of my comfort zone once more.

Thank you for sharing that Jeremy.  You gave me a lot to think about.  Much appreciated.

I think I'm doing these @ signs correctly. If not, please tell me. 

@Jeremy Clarke and @Maia Garcia

Perhaps, I am mistaken, but I was hoping to see a monthly gross of $1,050. If you have that and your net is $606, then you are expending $444? Something did not seem right to me. I was also objecting to 25% dp, which is fine, but running out of cash fast if on this path.

@Jeremy Clarke

I've been looking outside of California, but I am not giving up on California. Also looking at notes (performing and non-performing) because I am familiar with the risks of NPN and how to solve the string of headaches NPNs bring. I seek owner-seller or seller financing, very conservative on down payments and monthly outflow.

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