Do you focus on your state OR out of state real estate investing?

Question

I live in southern california so the prices are quite high so just asking if you do out of state, what is a general consensus in terms of good states to invest in? Thank you.

Dan H. · Answer

best state for a newbie to invest in?

Their home state.  Local knowledge, ease of team building, allows heroics if necessary, can self manage if necessary, etc.

Best OOS state to invest in?

Ca is the best OOS state to invest in. Why?   Return!

Buy n hold: Case Shiller has the top 3 cities for overall return for this century are all in CA.

Flipping: how many flipping shows are based in CA?   Why?   Because value adds produce outstanding return.

BRRRR: see flipping on the return produced by value adds.

Cash flow: look at the cash flow of the BP spreadsheet for the 2010 to 2018 period. What do you think it would have shown for a 15 year hold? A 20 year hold? Top 5% Cash flow return easy for a 20 year hold for any large coastal CA city (any of the large ones: LA, San Diego, San Fran, OC).

Good luck

Taylor L. · Answer

Out of state. I like Texas and the Carolinas. I do like my state as well, but I do multifamily syndication and I do not see a good fit in Virginia.

Landlord friendly, growing jobs & population and diverse economy are my top 3 criteria for picking markets. There are many more criteria once you get deeper but just those 4 will disqualify much of the country.

Twana Rasoul · Answer

@BJ Min Hi BJ, I invest in my own state here in California, San Diego specifically.  I do have investments out of state as well in "cashflow" markets.  For me personally, I have found that properties I purchase here as initial cashflow negative or neutral have much higher total returns than those in the cashflow markets.  I have reverted back to only investing locally and divesting OOS.

There are at least a few great OOS investors on here that do very well and have built themselves an empire.  However, many more certainly get burned by OOS investing but it is not sexy to talk about on here as much.

Those in high cost of living areas generally feel that it is less risky to start investing out of state and believe that the total returns are better when you are cash flowing OOS.  I have found for myself personally that it is not the case, at least not for me.  Looking out 10, 20 or 30 years I have found that I would build a lot more wealth starting out with negative cashflow here on properties than investing in 7%-9% cap rate markets in other regions.

This is just for me personally and I still believe that investors should start out in their own markets before deciding to invest elsewhere.

Best of luck to you,

Joseph Cacciapaglia · Answer

I've been in the real estate industry for a long time, so I've moved several times to be in better markets. I often take clients with me to new markets when I move, so many of them are now out of state investing into my local market, San Antonio, TX.

Brent Grizzle · Answer

I am in San Diego and my biggest concern about investing here is that CA is so anti-business / tenant friendly.  The lawmakers in Sacramento won't stop until they run out of other peoples money.  The bill is going to come due someday with unfunded pension liabilities, etc.  I am going to invest in Arizona and Texas.

Corey Stubbs · Answer

While you may have higher prices in your state and it may be a good idea to invest out of your state first, you may want to consider coming back to your state if you can.  You know your community, you know your market, you know what's needed, and if you can apply that knowledge with what you learn from investing out of state you'll kick butt.

I am in Montana and have had four deals go great.  I know the communities very well here but I don't want to get tunnel visioned into only investing in my state.  So I will be growing in that area more than likely after my current BRRRR is finished.

On that note, look into Montana.  Great Falls, Missoula, Helena, and towns surrounding Bozeman.  Missoula is on the up-tick so looking just outside of there may benefit you as well.  Overall, the state is very stable and very predictable.

Lee Ripma · Answer

@BJ Min

I also live in LA and I invest in both LA and out of state (Kansas City). I agree with @Ali Boone it really depends upon what you are wanting to invest in. In LA I do development and I also invest passively in a very niche flipping strategy. Out of state I buy value - add rentals.

Account Closed · Answer

I'm not buying in CA right now. I'm focusing on Turnkeys and Flips in Phoenix, AZ and getting good cash flow on my Turnkeys.

Mark Cruse · Answer

Hard enough to do it in my own state. No need to add to that headache.

Mike D'Arrigo · Answer

@BJ Min there is no such thing as good states to invest in. The only factors applicable at a state level are property taxes and landlord/tenancy laws. States are made up of many markets. You need to drill down beyond the state level. The things to look at are population growth, job growth, incomes and diverse economies and industries.

Do you focus on your state OR out of state real estate investing?

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