Looking to Invest Out Of State

56 Replies

After running a lot of numbers, I realized it’s not feasible to invest in my backyard. I’m looking to invest out of state now, but I have no clue where to start looking for a location. How is everyone who is investing out of state doing their due diligence?

Hi Dannielle!

Im currently going through the  same process and I had the same questions as you do now. I started by getting in contact with a Bigger Pockets member. He was kind enough to have a 35 min phone call with me and answer some of my questions and guide me into how he does his investing.

I live in California and I wanted to invest in Phoenix Arizona. The market there is pretty hot. Houses don't last long on the market and rentals aren't as profitable for a buy and hold. 

So here is what I've learned so far, ( keep in mind I am still in search for my first deal) you find your market by educating your self on that specific market. You can hear somebody talk about it or you can take your finger and click somewhere on the map on Zillow. Learn about the population growth, Job growth, Job Oportunities, Universities, Constructions, and crime of the area. Then you will formulate your own opinion on that specific market and decide if that is somewhere youd like to invest in.

The Midwest is great for cash flow not so much for appreciation but your money can go along way over there. Im personally looking into buy and holds in Wisconsin. Im also trying to decide if I want to buy a Turn Key property as my first out of state purchase just to get my feet wet. But I still haven't decided because that will stall me from BRRRR ing. Im also interested in Las Vegas for better appreciation but the market there is pretty hot as well.

Also, once you find a market you might be interested in, calling realtors and property managers and asking them questions will help you get more educated faster.

I hope this helps a little. 


For me finding the market to invest in is the most, if not only, tedious and boring part of this all. 

@Dannielle O'Buckley Tons of research and questions! It's really difficult to invest in another state without having someone on the ground that you can trust and rely on. Reviews and referrals can help, but I generally have a very good intuition about people and can decide whether or not I want to take the risk with them just from speaking with them for a bit. I encourage everyone to dig deep and ask ALL the questions! If someone won't take the time to answer them, then why do you think they'll be any more responsive two months or a year from now when you need answers about your investment with them? If they won't answer them at all, well, that also shows you a lot. :)

We get a lot of people that elect to come tour the area and grill us over lunch before deciding to invest, and I think that has worked really well for them. Seeing things with your own eyes, hearing them with your own ears, and feeling them with your own hands is so very different from seeing something on a computer monitor. I hope that helps!

Get a great local team together! Local Realtors will know the area inside and out. Having a local handyman means you have someone on call for repairs, etc. Property management will protect your financial interests. With a team in place, the idea of out of state investing doesn't have to be overwhelming!

Originally posted by @Dannielle O'Buckley :

After running a lot of numbers, I realized it’s not feasible to invest in my backyard. I’m looking to invest out of state now, but I have no clue where to start looking for a location. How is everyone who is investing out of state doing their due diligence?

 Many investors tend to stick to the Midwest where prices are low. I would look into a mid-sized market and purchase a Turnkey so everything is done for you by the Turnkey Provider. 

HI all I live in Ontario so everything I do has to be remote..the secret is to have a team on the ground that you can trust I work in Memphis and Ohio where the prices are great ... more then willing to share what i have learnt

@Dannielle O'Buckley Pick your market by choosing a city you believe in, maybe look for job indicators or neighborhoods that are transforming, or the "path of progress". Use crime maps or appreciation maps to help you refine it. Get some boots on the ground to walk the street, and start with a realtor you can trust. Build your team and be careful with wholesalers and property managers. Always helps to have people check in for you. Regards, Dolce

@Dannielle O'Buckley

A good filter system that worked well for me is investing in landlord friendly states.  The added risk is already there because of the obvious distance issue so I like to mitigate my risks by having the law back us up.  Next you need to have a good system and team in place.  Those are key components. 

When starting from scratch I'm always going to advise that you speak to someone who has done this type of investing successfully.  Pick their brain and get a firm grasp before proceeding.  At the end of the day its YOUR hard earned money that's on the line. 

Best of luck!

@Brandon R. Thanks for the response! I actually just finished the book. It was a great read and it really made a lot of sense. It’s just I feel like when it came to location you really have no starting point. I felt like it was saying look at neighborhoods until one meets certain criteria so you really have no starting point to even remotely know general areas

@Steve Kontos thanks for he response! That’s actually a really good place to start. I knew that New York wasn’t very landlord friendly so I didn’t want to invest in my own backyard, but I also didn’t think, maybe I should look for landlord friendly states! Thanks!

Originally posted by @Dannielle O'Buckley :

After running a lot of numbers, I realized it’s not feasible to invest in my backyard. I’m looking to invest out of state now, but I have no clue where to start looking for a location. How is everyone who is investing out of state doing their due diligence?

Dannielle - I'm surprised that Dutchess county doesn't have anything worth checking out? How about further north?..Going out of state is not easy. You will need a PM that you can wholeheartedly trust because you are not there.  What about Wappinger Falls?  

@Bryan Blankenship . I agree. I am just learning in this industry. I have been driving for dollars and finding what looks to be good deals only to have a person take the leads and move on. I am now looking to be boots on the ground for someone instead of wholesaling. Let me know if you are interested in Indianapolis market. I have lived here 30yrs

Hi Dannielle,

I'm in the same boat. Fortunately I am part of a large investor group that invests outside of their home areas and they have passed down some useful due diligence research to me. 

Here are a few of the things they look at, start with areas your interested in first then you can get statistics from Realtor.com. Realtor keeps a TON of statistics. Take your time and don't get frustrated because its overwhelming at first. Got to Insights then "Research" then "Data" then scroll down to "Historical Data". Here is where you want to be looking!

For each of the areas you might be interested in look up "unemployment rate, appreciation and inventory. year over year"

Appreciation (%)(H) Median List Price Y/Y

Inventory (%)(K) Active Listing Count Y/Y

Unemployment (%)

I plot these numbers each month in a spreadsheet and look at the trend.

How did I pick some areas first you might ask?? Well I cruised around BP and wrote down areas others were talking about and started my research. Once I found a few areas I liked I then ran the numbers. Then I called Property Managers in thoes cities and found managers whom I liked and their business aligned with mine. Eventually I found a PM in the city I like and we talk often. He knows he will get any house I buy to manage and he looks at new properties for me, sets up any maintenance that it needs after I buy it and makes sure it meets the qualifications of his PM business. He is my trusted partner on the ground with my interests at hand. Win-Win!

I don't use real estate agents to buy because I look and market for distressed homes. More money in my pocket and my PM in town is the one who looks at the houses, sends me pictures and even has his maintenance guy inspect for me. It took me about 6 months to find the perfect PM, so take the time to get this step right.

I am always open to help in any way I can. Someone below or above in a thread mentioned they were lucky enough to get on a call from a seasoned investor. I am open to that as well, I believe in helping whenever I can, we all start somewhere. The fact is at the end of the day this is all about relationships. 

@Dannielle O'Buckley

Out of state would be ideal for class A, or NNN lease for commercial, if you can't go out there. Don't expect too high returns though, value add will be hard out of state, but def doable if you can go and stay there for a bit.

I am also in NY let's connect!

@Dannielle O'Buckley

Another easy thing you can do is pick a couple markets that you have heard of either on forums or podcasts or wherever and go on to Facebook and join all the rea groups you can find for those locations. You will be surprised at how much you learn and the contacts you pick up. Then the rest will fall into place.

@Dannielle O'Buckley I’m in the same boat looking to invest elsewhere due to California being crazy expensive. Yet to buy my first property but getting the skids greased by learning to analyze properties in other markets. From there I found out my wife has a friend in Pittsburgh who is an agent and that has took some of the scary out of it. My advice would be to look into your own network of friends and family to find either someone who is an agent or PM in an affordable market and start talking with them. It has taken a lot of pressure off moving forward knowing that I’m using someone that is recommended or related to my existing network of associates/friends. Just my 2 cents

@Dannielle O'Buckley being just across the border in CT, I definitely feel your pain. I am also looking to get my 1st deal done and in doing my research over the past year, there are deals to be had. From what I can tell, you can find deals on heavily distressed properties. The problem is that they tend to be all cash and you will need to have free time available to rehab or manage the rehab. So, if you can buy at the right price, there are opportunities in our neck of the woods, especially considering the higher rental prices in the area.

@Luis Cortazar what type of properties are you looking to invest in for the Phoenix area? I live here in Phoenix and am a realtor and investor and I too am looking to invest out of state at this time.

So I'm curious what asset class you are specifically looking for in Phoenix?

Thanks,

Greg

@Dannielle O'Buckley

Daily action is all it takes. Make sure to take an hour or two out of your day to start learning / researching.

Educate yourself - Read, read, read. I recommend Long Distance Real Estate Investing by David Greene

Research - Pick a few markets that you are comfortable with, then do your own due diligence - look at things like, population growth, unemployment rates and economic outlook. Compare your market to the state and national levels?

Find boots on the ground - Once you are set on a market start calling local RE agents and property managers. Spend a couple weeks identifying investor friendly agents and property managers. Your goal is to find agents and property managers who currently work with investors.

Use your new, local, contacts to help you further research the market. If you think the market is ripe for investment, then use those contacts to help you search for deals.

Shift your mindset from “which market can I invest in?” to “how do I analyze a market area?” If your goal is to learn, then you will wind up analyzing several markets and find a winner.

Best part is you will be adding a valuable skill to your “RE investing” tool-belt.

“Give a man a fish and you feed him for a day. Teach a man to fish, and you feed him for a life time.”

@Dannielle O'Buckley I feel your pain. I live in NYC and have a place in Ulster County as well. People like me are why God made multifamily syndications. Truly passive, much less risky than single family, and all the tax write-offs. Done properly, I’ve not found a better real estate investment for where I am in my life. Lots of info here on BP and reach out if you think J can help.