Cali Resident Buying Out of State

21 Replies

Hello,

I'm a newbie to real estate investing, I've been doing research but this stuff can definitely be intimidating. I live in California and buying here is not an option for me right now which leads me to out of state investing. Can anyone provide me with tips or people to connect with to acquire my first property (hoping for at least a couple doors for my first purchase). As of right now Detroit, Baltimore, and Philly are cities I've been watching. I'm hoping to buy before the end of the year. Thanks!

Hi Briana,
I'm no expert but I'm in the same boat as you. I live in Southern California and am about to close on my first out-of-state property in a few days - I fly to Baltimore tomorrow. Let me know if you have any questions and best wishes on buying!

Tons of California people are buying in Baltimore and losing tons of money.  Baltimore is not a city you can invest in from afar.  You have to have amazingly good boots on the ground.  If not, your screwed.

@Briana Petry ,

Investing in Detroit can be a good investment because of the cash flow and long term possibilities Detroit brings. The price point is low here, I can help you out and refer you to anyone that can guide you on how to buy here. I have rentals here so I know I can help out any way you need. 

If you are newbie, you could try to buy a condo in Baltimore. They are easier to renovate, condo association can fix most of the problems, condo fee can hurt ( prop managers can eat your profits with repairs anyway), for the first investment you can see how it goes.

Hey! I live in Maryland, just one hour away from baltimore and I will not invest there. In fact, I went to baltimore today to talk to fellow investors and I still don't feel comfortable. As @Ian Barnes said "You have to have amazingly good boots on the ground. If not, your screwed". Instead I have been pouring my money in Richmond, VA and I have been doing really well. I would suggest looking into that market as well. If you have any questions please feel free to reach out (Im headed down to Richmond tomorrow to look a few deals)

@Ian Barnes

@Carlos Salazar Richmond is doing AWESOME.  Lots of good submarkets here, and you're right about boots on the ground, even in Richmond. Pays to have a good team.  I have 3 under contract right now closing next week, rehab/refi then scooping some more.  Happy to be a resource for you or @Ian Barnes as needed.  Always glad to connect.

@Briana Petry my tip would be to not buy our kf state, individual properties directly. (Note investing or syndications would be fine). You’ll pay what I call the “CA tax” which means you’ll pay more than just about everyone else for just about everything..

What are you wanting to invest in? Rental, flip, etc? Do you want to put work into something or buy more turnkey? The cities you mention are all cities I'd categorize as more advanced in terms of knowing how to work the market correctly so you don't get boned. And then of course how you invest makes a big difference too.

@Briana Petry welcome! I work in the Philly Market. The market over here is incredibly diverse with distressed properties ranging anywhere from a $10,000 all the way to $300,000. It all depends on your strategy! I'll follow up in PM

Originally posted by @Briana Petry :

Hello,

I'm a newbie to real estate investing, I've been doing research but this stuff can definitely be intimidating. I live in California and buying here is not an option for me right now which leads me to out of state investing. Can anyone provide me with tips or people to connect with to acquire my first property (hoping for at least a couple doors for my first purchase). As of right now Detroit, Baltimore, and Philly are cities I've been watching. I'm hoping to buy before the end of the year. Thanks!

Good news is that you aren't alone. Many people from California feel the same way and tend to target the Turnkey markets. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cleveland, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Birmingham, Alabama
  • Kansas City, Missouri
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. 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.
Originally posted by @Carlos Salazar :

Hey! I live in Maryland, just one hour away from baltimore and I will not invest there. In fact, I went to baltimore today to talk to fellow investors and I still don't feel comfortable. As @Ian Barnes said "You have to have amazingly good boots on the ground. If not, your screwed". Instead I have been pouring my money in Richmond, VA and I have been doing really well. I would suggest looking into that market as well. If you have any questions please feel free to reach out (Im headed down to Richmond tomorrow to look a few deals)

@Ian Barnes



@Carlos Salazar

The market in Richmond is good for rental properties? How many have you invested in so far out there? Turnkey or are you doing all the work yourself (rehab, etc.)? 

 

Originally posted by @James Wise :
Originally posted by @Briana Petry:

Hello,

I'm a newbie to real estate investing, I've been doing research but this stuff can definitely be intimidating. I live in California and buying here is not an option for me right now which leads me to out of state investing. Can anyone provide me with tips or people to connect with to acquire my first property (hoping for at least a couple doors for my first purchase). As of right now Detroit, Baltimore, and Philly are cities I've been watching. I'm hoping to buy before the end of the year. Thanks!

Good news is that you aren't alone. Many people from California feel the same way and tend to target the Turnkey markets. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cleveland, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Birmingham, Alabama
  • Kansas City, Missouri
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. 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.



@James Wise

Thanks for the info on your suggested cities for investing! I'm currently seeking a property in CA as this is my home state but I will be investing out of state in the future.  

@Jonathan Luna I'm currently working on my second one in 12 months. The first one that I purchased was pretty much turnkey. I did have to paint the entire interior of the house (the color was not renter friendly) and install a washer, dryer, and refrigerator. Within three weeks of purchasing it we had 38 applicants and 3 exceptional applicants that wanted to give us a deposit. With that luck we decided to start saving to buy our second (before finding BP and BRRRR) and recently put our second place in Richmond, VA under contract.This one will require a bit more work but I'm partnering up with a good friend. After running out numbers we have decided to not let the deal go and flip. The sensitive thing about Richmond is the average rent threshold. If your mortgage won't allow for you to rent it out for $1,110-$1,400 then its not worth keeping (in my super conservative option).

In my opinion Richmond is the perfect rental market. People are not interested in buying unless they are white collar workers, which most people there are not. Also, the scene is very transient and organic. There are always new restaurants, pubs, and hangout spots that people want to work at or live close to and don't really care to commit. Also, having the inside scoop (since my wife works for an international property management company) large companies are making concerted moves to Richmond (billions of dollars). I'm sure that their research is better than mine, so I'll go with it. 

I hope this helps

-Carlos Salazar

Originally posted by @Carlos Salazar :

@Jonathan Luna I'm currently working on my second one in 12 months. The first one that I purchased was pretty much turnkey. I did have to paint the entire interior of the house (the color was not renter friendly) and install a washer, dryer, and refrigerator. Within three weeks of purchasing it we had 38 applicants and 3 exceptional applicants that wanted to give us a deposit. With that luck we decided to start saving to buy our second (before finding BP and BRRRR) and recently put our second place in Richmond, VA under contract.This one will require a bit more work but I'm partnering up with a good friend. After running out numbers we have decided to not let the deal go and flip. The sensitive thing about Richmond is the average rent threshold. If your mortgage won't allow for you to rent it out for $1,110-$1,400 then its not worth keeping (in my super conservative option).

In my opinion Richmond is the perfect rental market. People are not interested in buying unless they are white collar workers, which most people there are not. Also, the scene is very transient and organic. There are always new restaurants, pubs, and hangout spots that people want to work at or live close to and don't really care to commit. Also, having the inside scoop (since my wife works for an international property management company) large companies are making concerted moves to Richmond (billions of dollars). I'm sure that their research is better than mine, so I'll go with it. 

I hope this helps

-Carlos Salazar



@Carlos Salazar

 Thank you for your insight! Wishing you continued success!

@Jonathan Luna

i would recommend waiting till 2020. lots of landlord have not kept pace with market rents and just lost tons of equity based on proforma rents which was fueling the multifamily craze in southern ca due to rent control laws statewide.

my two cents

Detroit is going gangbusters in certain neighbourhoods, have mentioned Bagley, Rosedale Park, Redford, Grandmont Rosedale to name a few.

Have a read of some of my posts I have shared lots of info on what's happening etc. I also recently posted a link where 98% of Detroit is now seeing appreciation, stats don't lie, good time to look closer at this market for appreciation and cash flow

I work in the insurance industry and specialize in working with out of state investors to help keep their portfolios consolidated.

A current client of mine reached out and said they are planning on selling off some of his properties in the Midwest.  I'm not certain the time-frame he is looking to sell, but I do know it's fairly soon.  

If anyone is interested in me connecting you with this investor, please send me a dm.  I'd be happy to.

Best of luck and let me know how I can be a resource for you!

Originally posted by @AJ Singh :

@Jonathan Luna

i would recommend waiting till 2020. lots of landlord have not kept pace with market rents and just lost tons of equity based on proforma rents which was fueling the multifamily craze in southern ca due to rent control laws statewide.

my two cents

@AJ Singh

Thank you! Being a california investor yourself where do you look for properties to invest in?