Out Of State Investing

Buying & Selling Real Estate
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Out Of State Investing

John Harris
Richmond , CA · Member since 2016 · 20 posts · 9 votes

Hello BP community
 

I Wanted to take the opportunity to see what advice anyone had to offer on investing in Out of state markets. I currently live in a hot market (the SF-Bay Area) , where finding property isn't an impossible task but just unlikely to meet ones goals just starting out  in today's market climate without High income or moving to an undesirable location.With this  also will be my First deal so I am just trying to do my Due Diligence and reach out to the masses and get an opinion . Also I have the book on Long-Distance Real Estate Investing (along with many other real estate books From referrals and Podcast mentions) which on shed light on the pros and cons of out of state investing and now would like to put it to the test, being that I have about 50k to invest and looking to starting obtaining my real estate goals. So with a brief overview, the bottom-line  to where I'd like to get input on is...

-what are your opinions about markets  such as Cleveland,OH and Memphis,TN?

-Pros and Cons on personal experiences?

2Reply
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Matt Stewart
Flipper/Rehabber · Pickerington, OH · Member since 2012 · 230 posts · 139 votes
8y

@John Harris

I'm looking at your post from the other side of things. I'm fortunate enough to live in an area where a lot of out of state investors are finding opportunity. And so I work with a few investors who are investing in the central Ohio (Columbus) area. It's vital that you put together a team(boots on the ground) local to the area. At the risk of ruffling some feathers, Realtors are a dime a dozen in this town. But a buyer's agent who truly understands the market and can recognize a good deal when they see it instead of just wanting to earn a commission is priceless. That being said the best deals aren't coming off the MLS, which means even an excellent Realtor isn't going to be much help. I'm finding deals at 25% of ARV off market. So then the next member of your team needs to be someone who can determine how much it's going to cost you to bring that property up to full ARV and can get it done on time and on budget. Because it's not unusual to find a property for $20k that needs $100k and 6 months or more worth of work.

Bottom line, surround yourself with good people who understand the market you want to invest in.

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  • Steve Kontos
    Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    8y

    @John Harris

    As someone who has been doing this for a decade I would highly recommend attending local REI meetings and trying to find someone who is a successful out of state investor. Talking and learning from that individual will benefit you greatly. Out of State investing is not black and white so doing this will be to your advantage. Also this could open up other options like partnering with others which could make your $50k spread a bit further.

    4Reply
  • Andrew Kerr
    Rental Property Investor · Everywhere, USA · Member since 2012 · 689 posts · 525 votes
    8y

    @John Harris - The Raleigh-Durham MSA is one of the areas I invest in. There is tons of growth, still very affordable prices compared to California, generally landlord friendly laws, and there are some solid property management companies in the area. It's why I still invest here even though I spend 3/4 of the year living elsewhere. 

    If you need a realtor to help you out on some items, reach out to @Tiffany Alexy - She is a member of the forums, a top real estate broker, and an investor herself. I used her for the last three properties I bought in NC.

    2Reply
  • Angela Yan
    Rental Property Investor · San Francisco, CA · Member since 2017 · 206 posts · 138 votes
    8y

    I am from SF and currently in Columbus checking out the area.  Contact me and I would be happy to talk off forum.  All in all so good and glad I came out.  First and for most before an y deals, one needs to build relationships.  I have formed one with a broker out here and working with an agent and also about to meet a PM tomorrow.  I feel like if the team building goes well then the rest should follow like the Out of State Investment book points out. 

    5Reply
  • John Harris
    OP
    Richmond , CA · Member since 2016 · 20 posts · 9 votes
    8y

    Thank you  @Steve Kontos for your input, looking from a mentor has been one thing i can say i have been open to but not actively seeking, knowing that the outside experience and insight would be very helpful.

    1Reply
  • John Harris
    OP
    Richmond , CA · Member since 2016 · 20 posts · 9 votes
    8y

    @Andrew Kerr yea the N. Carolina was another state i wanted to looked into Thanks for the referral !

    0Reply
  • John Harris
    OP
    Richmond , CA · Member since 2016 · 20 posts · 9 votes
    8y

    @Angela Yan Ill be sending you a PM now, and most definitely Relationships are key to building a successful property investment business, reason i wanted to reach out and see who may be in these areas or investing in these areas to help start some type of introduction 

    0Reply
  • Pat Clancy
    Boston, MA · Member since 2017 · 10 posts · 4 votes
    8y
    I would like to piggy back on this as it's also a question I have. Once you find an affordable area, how do you determine which neighborhoods are viable?
    1Reply
  • Vivek Shah
    Cary, NC · Member since 2017 · 36 posts · 25 votes
    8y

    @John Harris I am also trying to do out of state investing. I've looked into Memphis and the top turnkey companies there are Memphis Turnkey and Memphis Invest in my opinion. I would give them both a call and see what they have to offer. 

    2Reply
  • John Harris
    OP
    Richmond , CA · Member since 2016 · 20 posts · 9 votes
    8y

    thanks @Vivek Shah appreciate the input i will check them out now 

    0Reply
  • Matt Stewart
    Flipper/Rehabber · Pickerington, OH · Member since 2012 · 230 posts · 139 votes
    8y

    @John Harris

    I'm looking at your post from the other side of things. I'm fortunate enough to live in an area where a lot of out of state investors are finding opportunity. And so I work with a few investors who are investing in the central Ohio (Columbus) area. It's vital that you put together a team(boots on the ground) local to the area. At the risk of ruffling some feathers, Realtors are a dime a dozen in this town. But a buyer's agent who truly understands the market and can recognize a good deal when they see it instead of just wanting to earn a commission is priceless. That being said the best deals aren't coming off the MLS, which means even an excellent Realtor isn't going to be much help. I'm finding deals at 25% of ARV off market. So then the next member of your team needs to be someone who can determine how much it's going to cost you to bring that property up to full ARV and can get it done on time and on budget. Because it's not unusual to find a property for $20k that needs $100k and 6 months or more worth of work.

    Bottom line, surround yourself with good people who understand the market you want to invest in.

    8Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
    John Harris Angela Yan Memphis and Ohio are sorta of past in terms of sfhs. Just beware that a lot of the turnkey stuff is cheap 60k properties that have little to no exit strategy. It’s been 3 years since I bought turnkey but from my mfh prospective those markets are just a little rough from the other markets. I’m helping a friend with a 17 unit Cleveland property and there is little to know upside in rents says the PM. Don’t get me wrong sfhs are a great way to start just keep the exit strategy in mind to actually be able to sell to a retail buyer.
    2Reply
  • John Harris
    OP
    Richmond , CA · Member since 2016 · 20 posts · 9 votes
    8y

    @Lane Kawaoka I can see your point but I’m strictly interested in MFH 4+ units and more so looking for Value add, cash flow and buy and hold. Not necessarily trying to fix and flip 

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    John Harris I’ve invested in both Memphis and Cleveland in the last year. Both markets are good and viable for rentals, but I think the fundamentals of Memphis are better. That being said Cleveland Suburbs are doing well too. Barrier to entry in Cleveland will be lower. There’s also better multifamily there. Memphis multifamily can be in tougher areas. If you have more questions on either, I can provide some insight. Just PM me. Good luck!
    3Reply
  • Federico Gutierrez
    Realtor · Cleveland, OH · Member since 2015 · 2k+ posts · 857 votes
    8y

    Take a weekend trip to both cities? Spend $600 before you spend $60000-80000. Probably that itself is a great investment

    I can only speak of Cleveland. Hot Market, Limited supply of MF in the market. Plenty of SF thou. I like SF for starting because you get less turn over, tenants feel more pride in the house. To exit it's much easier than a MF. 

    4Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @John Harris:

    Hello BP community
     

    I Wanted to take the opportunity to see what advice anyone had to offer on investing in Out of state markets. I currently live in a hot market (the SF-Bay Area) , where finding property isn't an impossible task but just unlikely to meet ones goals just starting out  in today's market climate without High income or moving to an undesirable location.With this  also will be my First deal so I am just trying to do my Due Diligence and reach out to the masses and get an opinion . Also I have the book on Long-Distance Real Estate Investing (along with many other real estate books From referrals and Podcast mentions) which on shed light on the pros and cons of out of state investing and now would like to put it to the test, being that I have about 50k to invest and looking to starting obtaining my real estate goals. So with a brief overview, the bottom-line  to where I'd like to get input on is...

    -what are your opinions about markets  such as Cleveland,OH and Memphis,TN?

    -Any Good Reputable Real Estate Brokers that can be referred in these areas?

    -Pros and Cons on personal experiences?

    -Any referrals?

    John,  consider starting here: 

    A Simple Guide for Buying Out of State Turnkey Investment Property

    @Tom Ott can be a good CLE resource for you - 

    0Reply
  • Ken D.
    San Jose, CA · Member since 2017 · 69 posts · 25 votes
    8y

    @John Harris I am also from the SF Bay area looking to get into OOS RE investing. How did you settle on Cleveland, OH and Memphis, TN?

    1Reply
  • Elizabeth Wilson
    Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
    8y

    @John Harris - Great advice already in this thread.  I agree with @Federico Gutierrez said about visiting.  It will also give you a chance to figure out how easy/cheap it is to get back and forth from your investments (critical to do).

    We are Memphis-based investors. Let me know if you decide to come visit. or if you need any specific opinions on the area.

    Keep us posted! :)

    0Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    8y

    @John Harris I've got 3 words for you man.  TEAM! TEAM! TEAM!!  If your not local to your market you have to vet and build a team.  I've done this over an 18 months period and I've visited the market once per quarter during that time.  At this point the team is rock solid and I no longer have to be in the market to close any of my deals.  All the best to you.  Always remember to persist and you will WIN!!!

    5Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    8y
    Originally posted by @John Harris:

    Hello BP community
     

    I Wanted to take the opportunity to see what advice anyone had to offer on investing in Out of state markets. I currently live in a hot market (the SF-Bay Area) , where finding property isn't an impossible task but just unlikely to meet ones goals just starting out  in today's market climate without High income or moving to an undesirable location.With this  also will be my First deal so I am just trying to do my Due Diligence and reach out to the masses and get an opinion . Also I have the book on Long-Distance Real Estate Investing (along with many other real estate books From referrals and Podcast mentions) which on shed light on the pros and cons of out of state investing and now would like to put it to the test, being that I have about 50k to invest and looking to starting obtaining my real estate goals. So with a brief overview, the bottom-line  to where I'd like to get input on is...

    -what are your opinions about markets  such as Cleveland,OH and Memphis,TN?

    -Any Good Reputable Real Estate Brokers that can be referred in these areas?

    -Pros and Cons on personal experiences?

    -Any referrals?

    Memphis might be a little tapped by now, it has been flooded with investors for a few years now. Cleveland is still pretty fresh and has been booming right now for investors.

    I would suggest looking at:

    The Best Types of Markets for Profitable Turnkey Properties

    and

    What to Ask When Working With a Turnkey Provider

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Matt Stewart:

    @John Harris

    I'm looking at your post from the other side of things. I'm fortunate enough to live in an area where a lot of out of state investors are finding opportunity. And so I work with a few investors who are investing in the central Ohio (Columbus) area. It's vital that you put together a team(boots on the ground) local to the area. At the risk of ruffling some feathers, Realtors are a dime a dozen in this town. But a buyer's agent who truly understands the market and can recognize a good deal when they see it instead of just wanting to earn a commission is priceless. That being said the best deals aren't coming off the MLS, which means even an excellent Realtor isn't going to be much help. I'm finding deals at 25% of ARV off market. So then the next member of your team needs to be someone who can determine how much it's going to cost you to bring that property up to full ARV and can get it done on time and on budget. Because it's not unusual to find a property for $20k that needs $100k and 6 months or more worth of work.

    Bottom line, surround yourself with good people who understand the market you want to invest in.

     20k purchase and 100k rehab is inverse to what most out of state people should be even considering.. far to risky.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    With the amount of money you are starting with, you need to either travel to the city and find properties to buy that are in decent shape, with some light remodel or go with a turn-key provider. It's tough to invest out of state with $50k - that's only 1 or 2 properties. If you can be more active and spend time there or find the right team then you can employ the BRRR strategy and spread your money out to 5+ properties.

    1Reply
  • Matt Stewart
    Flipper/Rehabber · Pickerington, OH · Member since 2012 · 230 posts · 139 votes
    8y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Matt Stewart:

    @John Harris

    I'm looking at your post from the other side of things. I'm fortunate enough to live in an area where a lot of out of state investors are finding opportunity. And so I work with a few investors who are investing in the central Ohio (Columbus) area. It's vital that you put together a team(boots on the ground) local to the area. At the risk of ruffling some feathers, Realtors are a dime a dozen in this town. But a buyer's agent who truly understands the market and can recognize a good deal when they see it instead of just wanting to earn a commission is priceless. That being said the best deals aren't coming off the MLS, which means even an excellent Realtor isn't going to be much help. I'm finding deals at 25% of ARV off market. So then the next member of your team needs to be someone who can determine how much it's going to cost you to bring that property up to full ARV and can get it done on time and on budget. Because it's not unusual to find a property for $20k that needs $100k and 6 months or more worth of work.

    Bottom line, surround yourself with good people who understand the market you want to invest in.

     20k purchase and 100k rehab is inverse to what most out of state people should be even considering.. far to risky.

    Of course you're right, that's not something most investors would take on, out of state or local. But when the ARV is $200k+ the numbers make sense. But only if you've got the right team in place.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Matt Stewart  AGREED  that's the full on flipping business or remodel business.. its fraught with massive risks that are very difficult to manage from afar.. great team or no great team..

    you open up the walls in those old houses and you never know where that is going to take you the 100k becomes 130k in a blink of an eye 6 months turns into 9 months or a year.. Subcontractor walked off with your deposit.. all sorts of opportunity for a miss in this scenario..

    Its hard enough when you live there and watch it everyday.   Kind of the reason for me personally I have moved from that model and now pretty much only do ground up new construction.. the sub trades are such that you can pay them monthly with no up front costs.. you can follow line items and build costs much better.. especially if your building the same plan numerous times..

    Granted I fully understand most cant do it because they cant get the financing to do it.. and in most of these markets we talk about new construction does not pencil because you can buy existing for far cheaper than you can build new..

    So this is just me talking that's all..  Carry ON ...

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    3Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y

    Is there any reason you aren't looking locally?

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    8y
    Originally posted by @John Harris:

    Hello BP community
     

    I Wanted to take the opportunity to see what advice anyone had to offer on investing in Out of state markets. I currently live in a hot market (the SF-Bay Area) , where finding property isn't an impossible task but just unlikely to meet ones goals just starting out  in today's market climate without High income or moving to an undesirable location.With this  also will be my First deal so I am just trying to do my Due Diligence and reach out to the masses and get an opinion . Also I have the book on Long-Distance Real Estate Investing (along with many other real estate books From referrals and Podcast mentions) which on shed light on the pros and cons of out of state investing and now would like to put it to the test, being that I have about 50k to invest and looking to starting obtaining my real estate goals. So with a brief overview, the bottom-line  to where I'd like to get input on is...

    -what are your opinions about markets  such as Cleveland,OH and Memphis,TN?

    -Pros and Cons on personal experiences?

     Hi John, 

    Investing from out of state is challenging but if set up correctly, it can be a great way to reach areas that can give you a better return. First thing to consider is the team: lender, agent, property manager, attorney etc... Build a local team that is familiar not only with the area but also with the type of property you are purchasing - location, unit count/mix, rents etc...These folks will be your boots on the ground. If you can come to the city to visit that helps but often, as a majority of properties are "curb offers only", buyers will come out for inspections after the offer is made and then go home and complete the rest of deal form there. It's critical as an out of state investor to build a team that you trust to advise you. Good luck with everything!

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    0Reply
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