Out of State Investing For A Newbie

26 Replies

I'm getting mixed messages on out of state rental property investing. Purchasing an investment in my own state is totally out of the question, I am out-priced. 

Who has experience investing out of state (good or bad)? Specifically how did you decide which state to buy in? Yes, I understand it must cash flow and make sense financially, but my assumption is it would make sense to continue purchasing in that same state? What resources were helpful to you (or not) during the initial process? What would you have done differently? 

Read "Long Distance Real Estate Investing" by David Greene if you haven't already. It will give you a better idea of the whole concept including do's and don'ts.

You can invest wherever you want. It doesn't have to be the same state and for many like you investing in the same state doesn't make a whole lot of sense. CA being a good example. Essentially it is up to you to do your due diligence and look for new markets to invest in that make sense to you. You can try neighboring states first, but I wouldn't get to hung up on proximity since the goal is to have a good team established first that will be your boots on the ground, starting with a property management company. Websites like CityData are helpful in looking at employment stats, poverty stats, and rental stats in a city. Narrow down a market and start analyzing some deals. If the numbers make sense, go from there.

Investing OOS can be done! Especially when you primarily live in a high-cost of living state, such as CA - you'll want to head towards the midwest markets to make your dollars stretch further. I'm originally from North County, San Diego myself and found the Indianapolis market feasible to hit my REI goals.

The easiest way to get started OOS is by networking - join groups on Facebook or otherwise, even Reddit, that are specific to the location you're researching; see what the locals are saying about certain neighborhoods, vendors, lenders, etc. are saying. Your next step would be to get in-touch with an REI realtor in the area and utilize their knowledge to start checking out off-market properties - additionally, they may also have contacts to boots-on-the-ground teams.

Best of luck to you while you decide what best route to take!

@Paige Hill I live in OC as well and understand where you're coming from. I decided to invest OOS using turnkeys. My experience has been great. Even with the turnovers, repairs, etc. I am still getting solid returns. For me, I focused more on B properties. My mentors always stressed the importance of "location, location, location". If you do this, you'll get a higher chance of stability in your rentals and less chance of nightmare tenants. In terms of markets, it really depends on what you like. Many markets have similar macro trends. I have teams in KC, Indianapolis, and Jacksonville so feel free to message me if you'd like to learn more about opportunities here!

Originally posted by @Shain Ismailovski :

Read "Long Distance Real Estate Investing" by David Greene if you haven't already. It will give you a better idea of the whole concept including do's and don'ts.

You can invest wherever you want. It doesn't have to be the same state and for many like you investing in the same state doesn't make a whole lot of sense. CA being a good example. Essentially it is up to you to do your due diligence and look for new markets to invest in that make sense to you. You can try neighboring states first, but I wouldn't get to hung up on proximity since the goal is to have a good team established first that will be your boots on the ground, starting with a property management company. Websites like CityData are helpful in looking at employment stats, poverty stats, and rental stats in a city. Narrow down a market and start analyzing some deals. If the numbers make sense, go from there.

 Seconded!

I'm investing exclusively out of market because my home state doesn't make sense. Read David Greene's book.

@Zeke Liston “with the right team”... I’d like to second that statement. The right team is super key for OOS investing. Also, I’d too like to recommend “Long Distance Real Estate Investing”, by David Greene, phenomenal book on the subject.

Originally posted by @Jonathan Oh :

@Paige Hill I live in OC as well and understand where you're coming from. I decided to invest OOS using turnkeys. My experience has been great. Even with the turnovers, repairs, etc. I am still getting solid returns. For me, I focused more on B properties. My mentors always stressed the importance of "location, location, location". If you do this, you'll get a higher chance of stability in your rentals and less chance of nightmare tenants. In terms of markets, it really depends on what you like. Many markets have similar macro trends. I have teams in KC, Indianapolis, and Jacksonville so feel free to message me if you'd like to learn more about opportunities here!

 Hello!! I read your post and you mentioned you invest in Jacksonville, FL also? That's awesome! I'm here from Chino Hills and yes, our market is wayy too pricey unfortunately. My dad lives in Jacksonville so i'm actually thinking if i should start my first investment there instead of here in our area! :) 

There are still areas in California where there is opportunity. Yes, the houses here are not under $100k, but there are plenty of places where you can invest for little more than that.

However, investing out of state is not difficult. Market out of state and when you find your first deal, do some really aggressive work finding boots on the ground. You can use Yelp to find high quality help. You just need one Realtor to help you. Some even take a flat rate to find a buyer. 

@Paige Hill I see investors taking a lot of time researching what their team has to look like, then trying to interview many people from an OOS market to decide who to use. However, there are teams that have utilized the same team members for hundreds of transactions and have served hundreds of investors. I would look for tried and tested teams in cash flow focused markets. They'll have all the systems in place for you to be successful so you don't have to re-invent the wheel! Read reviews and talk to investors that have worked with them in the past. Chances are if others are happy, you'll be happy!

Hi @Jean Santiago , I'm currently researching a variety of different areas! Sounds like FL would be ideal for you as you have someone there already who can drive by properties before offering + advise on location + surely he has an agent out there that comes recommended. All would be very helpful to you!

Being from IL, I would recommend avoiding that state, taxes will easily eat into cash flow. I have started to look out of state and was about to close my first deal in Vegas this month and have decided to wait to see how the economy washed out. 

I chose Vegas because I think it was a growing market, plus I like going there myself so was looking at a little tax break by writing off visits to Vegas as I check on the property and work with the local team. When the dust settles I hope to find a good property and begin again.

Originally posted by @Paige Hill :

Hi @Jean Santiago, I'm currently researching a variety of different areas! Sounds like FL would be ideal for you as you have someone there already who can drive by properties before offering + advise on location + surely he has an agent out there that comes recommended. All would be very helpful to you!

 Yeah, so far it seems like going towards Jacksonville is a better idea right now! I actually just got Davids Greene's book on Long distance Invedting, so i'll forsure read that to get started! Thanks! 

Hey BiggerPockets Family! This is my very first post and so proud to be part of that community! Quick question: Unlike a regular transaction involving a listing and a buyer’s agent, do we still need to use a buyer’s agent when willing to deal directly with a Turnkey Company’s listing agent? Any advice or recommendation will be highly appreciated. Thank you.

Originally posted by @Paige Hill :

I'm getting mixed messages on out of state rental property investing. Purchasing an investment in my own state is totally out of the question, I am out-priced. 

Who has experience investing out of state (good or bad)? Specifically how did you decide which state to buy in? Yes, I understand it must cash flow and make sense financially, but my assumption is it would make sense to continue purchasing in that same state? What resources were helpful to you (or not) during the initial process? What would you have done differently? 

 

Hello and welcome! best of luck to you!

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