Looking to Invest Out of State

8 Replies

Hello!

New to these forums but have been following real estate investing for a couple months now since buying my first multi-family property in Southern California. Since the market in CA is ridiculously expensive, I am looking towards investing in multi-family properties out of state. I've been reading David Greene's Long-Distance Real Estate Investing to build some knowledge but I don't want to get stuck in the analysis paralysis phase and would like to take action as soon as possible.

I'm mainly looking for small multi-family properties (duplex, triplex, fourplex) to start with and eventually expand towards commercial properties. So far, I've narrowed it down to a couple cities that I have done some research on but ultimately, I would like to build a team first and have boots on the ground to follow. I still have a lot to learn and hopefully the BiggerPockets community can provide some good insight. Open to networking with like-minded people and possibly connecting for future opportunities!

@Jeff J. welcome to the forums! Hopefully the community here provides the support you need to get your investing career going strong. Like you mentioned, out of state investing is all about your team. I normally tell folks to focus first on their property management relationship. The PM is probably the most important part of the equation. The agent, lender, insurance agent and contractor are also important, but are (in many ways) much easier to come by. 

Which markets were you hoping to invest in? 

Hi Jeff I've literally done this exact process in Cincinnati

One thing I would suggest is look for the agent first, go onto Zillow and check for highest rated, and then check for who has done the highest volume of sales. Then call the top 3 and explain your investment strategy and find out how they get their properties on to see which agent will best fit your strategy

Then the other parts come next (inc property management, lenders etc)

Shoot me a message if you need any advice or have any questions

@John Warren Thank you for the warm welcoming! Agreed, the PM is definitely one of the most important parts of the equation. I'm currently looking into the Kansas City market and have scoured the forums for local PM recommendations and came across several good ones but I'm always open to more. I'm also looking for local agents that could guide me in the right direction. Research can only bring me so far before I would need a local to help me navigate through unfamiliar territory.

@Deep Johal Good advice! I'll try that out since I'm also looking for a local agent. Sent you a connect request!

@Jeff J. Focus on find people who have bought these things and add value to them. Then cross your fingers that they will you to good providers. The folks have changed a bit and it no longer really make sense to make turnkey rentals. Instead it makes more sense to flip to silly retail buyers.

Originally posted by @Jeff J. :

Hello!

New to these forums but have been following real estate investing for a couple months now since buying my first multi-family property in Southern California. Since the market in CA is ridiculously expensive, I am looking towards investing in multi-family properties out of state. I've been reading David Greene's Long-Distance Real Estate Investing to build some knowledge but I don't want to get stuck in the analysis paralysis phase and would like to take action as soon as possible.

I'm mainly looking for small multi-family properties (duplex, triplex, fourplex) to start with and eventually expand towards commercial properties. So far, I've narrowed it down to a couple cities that I have done some research on but ultimately, I would like to build a team first and have boots on the ground to follow. I still have a lot to learn and hopefully the BiggerPockets community can provide some good insight. Open to networking with like-minded people and possibly connecting for future opportunities!

Hi Jeff,

Investing outside of your home market can be a great idea when your market is too expensive. Have you considered looking at markets in the Midwest? I know Cleveland has some amazing ROI's right now. Feel free to reach out with any questions. Due your diligence and good luck growing your portfolio.

Best regards, 

Renee

@Jeff J.

Best of Luck in your search.

The multifamily cap rates look very attractive in Midwest and Midsouth. One criteria for me will be the quality of tenant and the turnovers. 

I also live in southern ca and invest in memphis and consistently have been advised to look for single family rentals in b plus neighborhoods. 

just my two cents..

Originally posted by @Jeff J. :

Hello!

New to these forums but have been following real estate investing for a couple months now since buying my first multi-family property in Southern California. Since the market in CA is ridiculously expensive, I am looking towards investing in multi-family properties out of state. I've been reading David Greene's Long-Distance Real Estate Investing to build some knowledge but I don't want to get stuck in the analysis paralysis phase and would like to take action as soon as possible.

I'm mainly looking for small multi-family properties (duplex, triplex, fourplex) to start with and eventually expand towards commercial properties. So far, I've narrowed it down to a couple cities that I have done some research on but ultimately, I would like to build a team first and have boots on the ground to follow. I still have a lot to learn and hopefully the BiggerPockets community can provide some good insight. Open to networking with like-minded people and possibly connecting for future opportunities!

 Welcome to the site Jeff.

It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

@Jeff J. You might check out Oklahoma! I've seen so many investors from SoCal take the leap here. Cash flow is great and the purchase prices are right. Off market there are consistently C class properties for 60-80k and that have an 8% rate of return. Multi is often overpriced here though. Are you finding good deals on multi in other markets?