San Francisco, CA · Member since 2013 · 9 posts · 3 votes
I haven't started investing yet since I am still saving up to start. I want to use this time to learn as much as I could. I live in San Francisco and the market here is crazy. I was looking into homes to buy and hold in Sacramento but investors usually get to them first with cash offers. Would investing in an out of state property be too risky? I won't be able to afford anything in California for a while. What cities/states around CA would you guys recommend?
As Michael Lauther said, personal contact is essential. It starts with the source of your inventory. Knowing who rehabbed the home and to what standard it was rehabbed is important. Before my first purchase I visited and met the people who were rehabbing and selling and looked at the rehabs and talked with them. Then I had to get a reputable inspector because being remote, they are your eyes on the property before the purchase. I asked the inspector to take a lot of pictures and asked him a lot of questions. Then there is the property manager. Thats the most important piece. Again, I believe in personal contact so I met a couple in person. Again, ask a LOT of questions. Other pieces of the puzzle was a mortgage broker. I got one through a referral that has worked great. Now this is lot of work. Not worth it for one or two homes. But my plan is for multiple properties so now the network is set up, I leverage for more purchases. There is a lot more to this than I can post here but if you want, I can talk to you in more detail about what questions to ask, how to do the diligence etc. You can connect with me as a colleague and we can discuss it offline. Hope that helps.
Anna Z.
Welcome to BP!
I am in the same situation. I've been reading here for a few weeks and my advice is to keep learning until we can narrow down a market, feel comfortable and knowledgeable about the market, get a strategy in place, know enough to not get a sour lemon (like one of the previous poster mentioned). As a beginner, it's very tempting to start. What I've found is the more I read, the more I realize I have so much more to learn. No deals is better than bad deals. Keep learning while we wait for the right opportunities.
Cheers.
Thank you all for your advices and thoughts! I can't stop surfing BP! I am definitely going to invest out of state now that I've learned how tough it is in CA. I do think that it's best for me to go drive around town and meet people in the state I'm considering before purchasing a property. From your replies, I guess finding a good team is critical.
Wow, great thread, I have allways invested locally even though returns are very bad, they are still the best game in town in my opinion. I know the realtors who list the properties, the people who are selling at least 1 in 4 times, and usually know 20% of the people applying to rent. The idea of investing out of state scares me a bit, but now I am intrigued. Thanks Anna Z., ANISH TOLIA, Michael Lauther, Marco Santarelli, Mike D'Arrigo, and Matt Devincenzo, for the great posts. I think the first thing is to look for a place where there is no state income tax if possible, I dont want to hire a tax preparer for 1 property, then figure out how I will do the fiancing, I usually work with bankers I have known for 20 years, then look for at least reasonably priced houses or multi units say under 100K$, then look for good cash flow with a good history of rent demand. Anyone have suggestions on an area with this criteria? I may try to start a new thread on this.
A lot of new things can seem a little scary at first, but once you learn what you're doing, it won't seen scary anymore. Just ask anyone who's already invested outside their local market.
Great topic as I'm in the same situation as yourself. The Vegas market isn't the best for rentals, so I'm looking at Indianapolis and Houston. Hopefully some good referrals can come from BP and those who invest in those areas. Good luck!
Hi Robert,
You're right -- the Las Vegas is soft right now, and there are still reported high levels of foreclosures in the pipeline. It's a market that will eventually turn around and be "on the radar" as a prime market to invest in, but today you may be on the leading edge of that market move.
Although the median single family home price in Las Vegas has increased steadily over the last 9 months, and is currently at $155,438 (as of May 17 2013), the market is still a "buyer's market".
Indianapolis and Houston are very good markets to be considering for you investment portfolio. Even with the tightening inventory levels, we've still been able to put together some great deals. The rates of return are very there because of the attractive rent-to-value ratios.
As I say, "Live where you want. Invest where it makes sense!"
As a beginner, it's very tempting to start. What I've found is the more I read, the more I realize I have so much more to learn.
Hi Linda,
Yes, keep on learning as much as you can, but realize that at some point you'll know enough to start investing and you'll have help from those you're working with to assist you. You can also find help on BiggerPockets. What you don't want is to get stuck in "Analysis Paralysis". I've heard many people call me looking to invest in something, only to talk themselves out of it over the phone. They always think they need to keep "learning", when in reality they knew more than enough to find and purchase a deal.
You'll always be learning. Just learn to know when it's enough.
Indianapolis and Houston are very good markets to be considering for you investment portfolio. Even with the tightening inventory levels, we've still been able to put together some great deals. The rates of return are very there because of the attractive rent-to-value ratios.
Marco, you've got to stop telling people how good the Houston market is. Give a brother a chance first to snatch up some properties. : )
I'm also in the Bay Area and I have been investing out of state. I agree that the numbers in CA just doesn't make any sense. I have some rentals in Arizona but i stopped looking in AZ as prices are already going up. I'm looking for other locations and have been hearing that my investor friends have been buying in Indiana.
You are absolutely right about Arizona. Inventory levels are very low and we have been having a hard time for months trying to get property for clients.
The good news is that there are many other opportunities around the U.S. and your friends are wise to be investing in Indiana. Indianapolis happens to be the most popular market among our investor clients because of the strong job market, housing market, and overall economy. The rent-to-value ratio is extremely favorable and produces one of the highest returns of any good market.
Pay yourself on the back for being a wise out-of-state investor. There are others like you, but many still don't realize the benefits of looking beyond their backyard. :-)