Is long distance investing difficult?

Buying & Selling Real Estate
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Is long distance investing difficult?

Jovann Thompson
Casa Grande, AZ · Member since 2020 · 17 posts · 34 votes

I’m 20 years old and live in Arizona but I was looking at a cheaper markets to invest in like Memphis Tennessee. I’m seeking advice on should I try to get a primary residence here in Az or a rental property in a cheaper market? I have about 15k to invest

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Evan Anderson
Rental Property Investor · Phoenix, AZ · Member since 2020 · 7 posts · 14 votes
5y

Hey Jovann,

Its funny, because I live in Phoenix as well and found myself asking the same question about a week ago.

Things I would consider:

The market is getting a little pricey in the valley however I don't think it is going to slow down soon. So appreciation would still be a benefit of getting a property in Phoenix.

Another factor that you may want to consider is the return that you are looking for? Cash flow vs buy and hold.

Alone, 15k will probably get you a property that could benefit from renovations, something you could live in and fix up.

Also consider when looking in another market that you will need a team/network to help.

I was recommended to read David Greenes book on Long Distance Investing.

Feel free to message me if you have any other questions or would like to chat. Hope this was helpful!

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  • Jovann Thompson
    OP
    Casa Grande, AZ · Member since 2020 · 17 posts · 34 votes
    5y

    @Forrest Faulconer I suppose that’s a good way to approach the situation but I was a little more curious about if it’s the best decision to make right now or in the future after I have more cash flow and a bigger portfolio.

    0Reply
  • Account Closed
    Canoga Park, CA · Member since 2020 · 84 posts · 57 votes
    5y

    @Jovann Thompson

    Congratulations on a journey that will eventually lead you to financial freedom. So glad that you are starting young that makes a big difference. I agree with the others, buy in the best area you can afford, house hack, slowly fix it up. Move into another place in a year, rinse and repeat. Keep reading, listening, and most importantly surround yourself with like-minded people. Best of luck!!!! 

    2Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    5y

    Hi @Jovann Thompson. Just like everything else out there, out-of-state investing has its pros and cons. Out-of-state investing can be a breeze if you have a good property manager taking care of you and your investment. 

    As others have mentioned, you can also house hack your way into real estate investing if investing out-of-state seems a bit scary at first. 

    0Reply
  • Mike WebberPro Member
    Real Estate Agent · Reston, VA · Member since 2020 · 84 posts · 53 votes
    5y

    @Jovann Thompson

    The most important part is the people you know there. That is always important, but it is extra important when you arent there. I live in the suburbs of DC and it is very expensive, virtually impossible to cashflow. I invest out of state for the cashflow and I rely heavily on the agent/manager/lender. It isn't necessarily "hard", but you gotta ask a lot of questions from investors/agents in that market. Learn the market as well as your own, and don't just chase the deal if you don't feel comfortable with the people who are your boots on the ground. It will be the difference between a smooth investment and an anxiety nightmare that ends in your financial ruin lol bit dramatic, but really... get good people to help you out in that market.

    1Reply
  • Patrick Britton
    Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes
    5y

    @Jovann Thompson OOS investing is super easy.  hardest part is the remote closing.  

    0Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @Jovann Thompson

    I will be very honest, and please, dont feel offended.

    15 k will take you to invest, buy a property that might give you cashflow if everything goes well. Then, as in any RE investment, the air conditioner (or else) breaks, and you start having a big problem... or maybe you take a big longer to rent? can you afford anything like this?

    On other chapter, are you paying a rent now? How much do you pay, and how much this property ( or similar) cost? Does this fits as a good investment? Put in perspective you will get a better loan and vacancy rate is zero ( you wont leave).

    I know own house might be a liability, but not if you put in perspective and look as investor. Be cool and analyse like you were investing.

    0Reply
  • Dan BeaulieuPro Member
    Lender · Knoxville, Tennessee (TN) · Member since 2016 · 422 posts · 667 votes
    5y
    Originally posted by @Jovann Thompson:

    @Forrest Faulconer I suppose that’s a good way to approach the situation but I was a little more curious about if it’s the best decision to make right now or in the future after I have more cash flow and a bigger portfolio.

    Dude you are young and not married. That screams HOUSE HACK. Get a 2-4 unit or SFR with efficiency apartment, financed with an 3.5% down 30 yr fixed FHA loan. Live there for a couple years and continue to SAVE while your living expenses are paid for. Make sure you've paid off all personal debt, and are maxing out a Roth IRA and also taking advantage of any company match in a 401K.

    THEN, we can talk OOS rentals and BRRRR. I see turn key being tossed around on this thread, that is a terrible idea. Avoid turn key companies. They ignore the most fundamental rule of real estate investing: "You make money when you buy."

    Get yourself a reliable property manager who has their own turn crews, a local hard money lender who knows the areas and the game, and get connected to local wholesalers. That's all you really need. 

    I've bought 16 properties out of state, most sight unseen. At first it went horribly, but then it got really easy once I had the right property manager. You really just need to have a good team. 

    P.S. Don't invest in cheap neighborhoods in Memphis. That is also how I started out, and those were always my least cash flowing (highest cash flowing on paper...) and PITA properties. Check out Chattanooga and Knoxville instead. When you're ready of course. 

    Here are some great reads for you starting out: 

    1. Set for life

    2. Long distance real estate investing

    3. BRRRR

    6Reply
  • Paul Rising
    New to Real Estate · San Diego · Member since 2020 · 5 posts · 0 votes
    5y

    @Jovann Thompson, I just purchased an SFR investment in Memphis and I live in San Diego. I'd love to connect with you and talk to you about your objectives in real estate investing. Remote investing is about your risk tolerance.

    0Reply
  • Jonathan Oh
    Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
    5y

    @Jovann Thompson I think 15k isn't going to get you anything worthwhile in this market. If you can house hack locally, that may be a better option.

    1Reply
  • Jovann Thompson
    OP
    Casa Grande, AZ · Member since 2020 · 17 posts · 34 votes
    5y

    @Alexandre Marques dos Santos No I’m not renting. I’m a junior in college and living with my parents. I was looking at options to get started with my real estate journey and came across the OOS market. So I was just curious and weighing my options,

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    5y

    @Jovann Thompson easy,, just make sure you have a team in place leaving nothing for you to do. However , Al do respect you only have 15k, not really sure what you are going to do with that ? I suggest finding deals, share with others , earn more, save more learn more then tackle it , 

    Good Luck

    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    Yes they can be. I see so many out of state buyers paying way too high of prices for Indiana "turnkey" properties that they think are B class but are really low C to D class. On the flip side I have sold some non turnkey buildings to out of state buyers which worked out well we got off the local MLS. It's important you have a realtor negotiating for you who doesn't also own the property. It just creates too much conflict of interest.

    As for management I actually haven't seen that be an issue like many people talk about on BP. I am sure there are some bad managers out there though. Usually your realtor can recommend the good ones. 

    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    it’s easier, you have a property manager doing the dirty work, while you kick back and take checks to the bank.

    0Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @Jovann Thompson

    So on your situation, i would save a bit more. RE investing can be a rewarding investment but as many, has some risk. You need to be prepared to assume those risks. The less prepare you are to assume, the easier way to fail it.

    Its not just about buying and renting a property. You need to have reserves for adversity. As i mentioned earlier, and air conditioner, a furnace, roof, or just longer time to rent it. This all have potential to put a new investor to fail.

    Have some extra as reserves OR have a great cashflow ( put a bit more down payment) to help you to face adversity. Dont rush yourself to invest without being prepared

    Good luck

    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    5y

    @Jovann Thompson

    Long distance investing requires you to have a great CORE 4 in place (Investor-Agent, Property Manager, Lender and Contractor).

    A great Investor-Realtor can connect you to the other core 3.

    Also, you need to know what you want and set your expectations right.

    I have received numerous phone calls from newbie out of state investors that don't know what they want or just want to do it all when they don't even have any property under the belt.

    Memphis Tennessee, Alabama, Houston, San Antonio, Amarillo Texas, Chattanooga, Tennessee are very affordable markets.

    Reach out if you need help.

    Goodluck and take action.

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    2Reply
  • William L.Pro Member
    Real Estate Broker · Marysville, WA · Member since 2013 · 28 posts · 8 votes
    5y

    I bought rental properties out of state. I live in Washington state. I bought a couple houses and a duplex long distance. I sold them and bought a four-plex in a different state. I bought the four-plex sight unseen. I did not go out there to look at it. I have a system for due diligence in finding out about the property. An example is an independent inspector, real estate agent, other investors in that area, and call the police station for that area.  I hope this helps some people but understand as with anything there are risks but you can mitigate risk with having a system and using common sense. Hope this helps people with their fear of buying out of state. Oh and yes I am making a positive cash flow every month.

    1Reply
  • Matt McConkey
    Rental Property Investor · Phoenix, AZ · Member since 2015 · 222 posts · 126 votes
    5y

    @Jovann Thompson I also live in Arizona and invest OOS and from your post, you'd be best off house hacking.

    I invested OOS and got taken for several grand by my PM and that's going to take several years to recoup those losses. I also bought in my hometown, where I lived for 26 years, so I knew the market inside and out.

    Buy here via FHA, get as many bedrooms in a house as you can and rent out those rooms.

    Start saving every penny and learn a new market.

    Travel there (it will be easier when your mortgage is paid by someone else) and learn the areas, build a team and when you've got the 25% down, pull the trigger.

    I'm always up for a chat, so DM me if you'd like.

    2Reply
  • Kyle A.
    Attorney · Cincinnati, OH · Member since 2020 · 22 posts · 22 votes
    5y

    @Jovann Thompson congrats on your entry into REI! I would recommend David Greene's book on Long Distance Investing. As other members have mentioned, having the right team that you have appropriately vetted is key. There is a lot of literature and YouTube videos that can help you understand exactly what you would be getting into. Full disclosure, I personally do not use this strategy. Good luck!!

    0Reply
  • Andy RouschPro Member
    Investor · Mt. Arlington NJ · Member since 2018 · 251 posts · 143 votes
    5y

    You can use that money to house hack a fixer-upper, get into it cheap or 3% down, fix it up so you can pull your down payment back out through refinancing, live for cheap, free, or even profit off of living while saving money to invest long distance. I have one long-distance property which has gone great so far its just a matter of a good core four which you can most likely find on BP for any area. Best of luck!

    1Reply
  • Reece Iovine
    Realtor · Columbus, OH · Member since 2016 · 170 posts · 227 votes
    5y

    I don't personally invest oos since my market columbus ohio is great, but there are a lot of pros to investing oos. I don't believe it is more difficult, what what it does is forces you to focus on building a business and bringing team members into that business. Instead of doing a renovation yourself and probably wasting a lot of your time, you need to find a great contractor, instead of managing the property yourself and wasting a lot of time, you need to find a great PM. OOS investing has some great benefits in addition to obvious cons.

    1Reply
  • Jordan Murrell
    Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
    5y

    @Jovann Thompson

    Hi Jovann,

    Personally I think that’s a great place to be in. I was in the exact same spot as you about two months ago. You’re able to explore all options.

    You can look into owner occupied properties with 3.5% down. I haven’t house hacked JUST yet. I’ve lived in someone else’s house hack and I know I’ll need to purchase a small multi family property.

    With your savings you could purchase a property out of state in Memphis or another market. Memphis is great because properties cashflow well. I’ve seen some even meet the 2% rule BUT maybe those aren’t necessarily the properties you should dive into.

    Also, you could keep networking and learning about real estate. I kept learning and networking. It led to saving my capital and finding a partner who had capital with not a lot of time. I had the opposite, a lot of time and not a lot money.

    We have partnered up and bought 2 rentals, a flip and shifting our strategy to short term rentals here in Las Vegas... Sort of like Tony J Robinson.

    The world is your oyster.

    Goodluck!

    0Reply
  • Daniela Andreevska
    Real Estate Consultant · Member since 2020 · 44 posts · 71 votes
    5y

    @Sofia Sharkey Yes, I absolutely agree. Even before the pandemic, there were so many things an investor had to consider before buying a property to rent out on Airbnb or another vacation rental website. For example, short-term rental regulations - investing in Airbnb properties has become illegal in many major markets in recent years. And the pandemic has definitely made this rental strategy trickier. However, recent analysis of nationwide Airbnb rental data that my team did shows that overall the Airbnb market is already in a recovery mode. Between March and September 2020 the Airbnb occupancy rate increased by 13% on average across over 300 major US cities. Interestingly, the recovery has been most significant in the Midwest, while traditional top Airbnb markets such as Florida are still seeing drops in Airbnb occupancy rates.

    0Reply
  • Account Closed
    Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes
    5y

    @Jovann Thompson I only had about $10k to invest in Phoenix 4 years ago. Now I own 3 rentals worth $1M with decent cash flow and a ton of equity. Find the right people to guide you and get started!! Yesterday! Let me know if you wanna chat Phx market.

    0Reply
  • Andrey Y.
    Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    I've had 3000+ miles away active and passive real estate investments going on 9 years. I would argue its easier. If you're talking about investing, the less you are involved, the better. If you are looking for a JOB, you should invested in your backyard ;)

    0Reply
  • Jovann Thompson
    OP
    Casa Grande, AZ · Member since 2020 · 17 posts · 34 votes
    5y

    @Whit B. I really want to hear about how you attained your properties and a little more insight about your investing journey. I don’t have too many people I know in my area to seek advice from and just talk about real estate in general so I would love to get in contact with you!

    0Reply
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