Best Places to Invest outside of CA for Buy and Hold

14 Replies

Hello Everyone!

My wife and I have been quietly absorbing all the knowledge we can get from bigger pockets over the past few months and are looking to make our first investment property investment.  We are in San Diego Ca, and are looking for a place with a better rent to price ratio for a buy and hold strategy.

Currently we are looking into getting either one or two single family homes, or anything from a duplex to a quadplex. I've been thinking a lot about Amarillo Texas as I have some connections there, and the rent to price seems to be favorable, and the CAP rate is decent. Does anyone have any advice about investing in Amarillo? Or is there another area you might recommend we look into investing in?

We will probably need to get a property manager as we are investing out of state and we both work full time jobs currently. Thanks for taking a look at my question and helping us get started investing!

If you’re already interested in investing out of state, I’d consider Oklahoma City more than Amarillo. I live in Amarillo area but I’m from Oklahoma. 

Okc offers a lot of the perks of investing in Amarillo (solid cap rates, cheap prices etc) but it is bigger and has a more stable economy. Just a thought if I were in your shoes 

what kind of connections in Amarillo?

Amarillo market has gotten a lot more competative recently, and prices have gone up while rent hasn't much. Amarillo is not a place you invest in for appreciation, as its just doesn't happen. Being out of state is going to kill most good deals as they go too fast, replied to a deal today in an hour and it was gone. 

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Don't forget about the high property tax rates in TX as well. 

I seldom post my exact city of concentration but it is on my profile and where you live.  I can find cash flow properties there (just purchased another in Oct).

@Trudy Pachon also invests where you live.  They purchased a triplex many months ago (maybe a year ago) and were close to having the rehab complete when I visited the duplex part of the triplex shortly after their purchase (I never saw the inside of the detached unit).   It was a nice rehab.

It is hard to go wrong with long term buy n hold RE investing in San Diego County.  We do not need more competition in San Diego but if you want me to attempt to convince you to invest local then PM me.  I can even include the numbers from my Oct purchase.

Also if you invest local, house hacking is an option. The city you live there are many detached duplex to quads. Many times they look like SFR except for they typically have a single water meter. The duplex I purchased in Oct each has a front yard and a backyard/side yard. I recommend house hackers to try to get detached units. In addition, house hacking can qualify for owner occupied loans and maybe FHA loan which means less money down and a lower interest rate. So you can purchase a more expensive property than you finances would allow you to purchase out of state.

If you are adamant that out of state is the way you want pursue your RE investments, I wish you the best.  We have invested out of state and we no longer are pursuing out of state investments (but our out of state investing was different than what you are pursuing).

Good luck

Thanks @John Allen , that is good advise. I'll look into Oklahoma City some more.

@Scott R. Thanks for sharing that too! I have family in Amarillo, and one of them is a Realtor, so I thought it might it might be a good place to start. But those are definitely good points about the deals going quickly.

Thanks @Dan Heuschele and @Trudy Pachon . Those are really good points about investing local instead of out of state. Investing locally definitely sounds a lot nicer to me, as I know the area, and can physically visit the properties. 

I probably just need to work on how to find cash flowing properties so I can make investing locally cash flow, with a down-payment that is within our means. So far I've just been looking at MLS sources for deals, that's probably the main problem.

If you don't mind, I'd definitely like to hear more about from you about the benefits of investing locally. I'll private message you.

Hi @Steven Wade , I'm glad I came across your post and fully understand your concern about return on investment when talking about California pricing compared to rental rates. I agree with @John Allen 's recommendation of about Oklahoma City. We have a great rental market here and our prices are low compared to larger cities. I could help you find some properties if you would like. I work with multiple investors here in Oklahoma City. 

Hi Steven. I'm very well invested in ohio, and the ohio market has really been a great market for buy and holds. I sold my properties in Winnipeg and purchased in cuyahoga county in Ohio. I have numerous rentals from duplexes to single families there. NET cap rate of mine are all between 10-18%. It is a great return if you have the right people in place. Amazon is building a huge distribution warehouse in the area and the medical industry is expanding. A lot of industry in cuyahoga . Just to give you an idea, I purchased a duplex for 57k and the gross rent is $1200. Property tax and insurance costs are very low. I am willing to assist and setup some properties if you would like and or feel the need. Shoot me a pm if you would like to take this offline.

Hi @ Kevin Swart, what were your cap rates for Winnipeg properties ? What was your strategy when you were investing in winnipeg (your target cap rate, per door cash flow target etc). Did you buy properties in US using cash or if it was financing what kind of financing option you used ? Thanks

Welcome aboard @Steven Wade

Getting a PM is paramount if you are investing out of state. Attempting to do it on your own would be penny smart & pound foolish. It will be well worth the money to have a local team in place to handle what happens with your properties. When investing out of state I also recommend that you do the following.

  • Hire a 3rd party home inspector.
  • Use a bank loan. OPM is the best part of the biz. On top of stretching your cash the bank will perform an appraisal. Bank isn't going to let you loose their money.
  • Buy the nicest property in the nicest area you can afford.
  • Hire a Realtor to represent you in the sale.
  • Make sure your Property Manager is a state licensed Brokerage.
  • Accept that you can not eliminate all risk. You can only limit it by doing things like the above tips.

Hi @Kevin Swart, what were your cap rates for Winnipeg properties ? What was your strategy when you were investing in winnipeg (your target cap rate, per door cash flow target etc). Did you buy properties in US using cash or if it was financing what kind of financing option you used ? Thanks

Thanks to you both @Kevin Swart and @Wougi Heap of Birds for the great advise about your markets and offer for assistance! I really appreciate your kind offers and information on your markets. I definitely will reach out if I decide to invest there!

Thank you very much @James Wise for the great advise about investing out of state.  I didn't realize that Property Managers even had licensing, so thank you very much for that!

I definitely plan on getting a property manager if I end up investing out of state. I had always hoped to manage my first few properties myself, so I could understand how that part of the business is done. The points @Dan Heuschele brought up definitely make me wonder if I can make local investing work, but I am not sure if I'm creative enough currently to compete in the local market. I guess I just need to analyze some deals!

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