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Multi-Family and Apartment Investing

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Ilyas Karzai
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First time - out of state investor - looking for multi family

Ilyas Karzai
Posted Jan 22 2024, 22:05

Hello, I live in CA but I would like to invest out of state (like many of you). I really like the idea of a multi family property in the Dallas/Ft Worth and surrounding area. Would love to connect and learn from as many of you as possible. 

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Jason Wray
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  • Nationwide
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Jason Wray
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Replied Jan 22 2024, 22:41

Illyas,

You should reach out to @Lucia Rushton she is a Great agent in DFW and can set you up with some 2-4 unit options.

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Logan Laperriere
  • Real Estate Agent
  • Grand Rapids, MI
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Logan Laperriere
  • Real Estate Agent
  • Grand Rapids, MI
Replied Jan 23 2024, 06:34

Hi Ilyas, 

The agent finder tool at the top of the page is a great way to get connected with a real estate agent in Dallas.

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Evan Polaski
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  • Cincinnati, OH
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Evan Polaski
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  • Cincinnati, OH
Replied Jan 23 2024, 07:11

@Ilyas Karzai, just remember investing out of state is simply trading risk for possibility of return.  This is clearly a strategy many people utilize and have had success with, but many gurus have preached this as a sure thing, when it is anything but.

The risks you are taking on is: not truly knowing the market, not truly knowing your tenants, not truly knowing your property.  Obviously being in CA, the rewards are lower cost of entry, more LL friendly jurisdiction.

As for "multifamily", what size properties are you thinking? 2-4 units are going to be vastly different than 20+ units. In my experience, your typical real estate agent will probably know about most properties 8 units and less, because they are almost always listed on MLS. The 8-20 units are sort of a mixed bag, with some going to residential agents and going on MLS, and others going into more commercial brokerages (Loopnet (listing service not brokerage, CBRE, Cushman, Colliers, Newmark). Typically, 20+ will be in the commercial brokers, and from here there is no real central database of listing, like the MLS is for single family and smaller multis.

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Lucia Rushton
  • Realtor
  • Dallas - Fort Worth Metroplex, Tx
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Lucia Rushton
  • Realtor
  • Dallas - Fort Worth Metroplex, Tx
Replied Jan 23 2024, 07:31
Quote from @Jason Wray:

Illyas,

You should reach out to @Lucia Rushton she is a Great agent in DFW and can set you up with some 2-4 unit options.


 Thank you Jason,

Illyas, I just sent you a DM.

Wishing you both a great day! 

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Salvatore Lentini
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  • Doylestown, PA
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Salvatore Lentini
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Replied Jan 23 2024, 14:02

@Evan Polaski - well said.  @Ilyas Karzai on paper, many out of state properties look like homeruns.  But there is paper and then there's reality.  I've found more success investing locally, even in high cost of living areas.  My town is expensive but 2 of my best commercial investments are here.  They were expensive but the rents continually go up at a higher rate than other properties and so do the values.  I can keep much tighter control on expenses by not getting ripped off by contractors or property managers and was able to negotiate a better, long term lease with a large international tenant because I knew there were literally no other options in my town.  I wouldn't have known that if the investment was out of state.  Anyway, my suggestion would be to try and invest as close as possible, even if it's a 2 hour drive away.  Because let's be honest, how often are you going to book a flight, a hotel room and rent a car to go visit your rental?

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Paul Gomez
  • New to Real Estate
  • Dallas, TX
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Paul Gomez
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  • Dallas, TX
Replied Jan 23 2024, 16:17
Quote from @Ilyas Karzai:

Hello, I live in CA but I would like to invest out of state (like many of you). I really like the idea of a multi family property in the Dallas/Ft Worth and surrounding area. Would love to connect and learn from as many of you as possible. 


 Hey Ilyas, let's connect man. I am here in DFW and would like to know what sort of multi you are looking for, small or large. I also have connections with other operators who actively syndicate if you are looking for a larger asset. Happy to walk you through some of those things. 

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Bruce Lynn#2 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
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Bruce Lynn#2 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
Replied Jan 23 2024, 21:33

Welcome to Texas .   Lots of people moving here and there are a lot of dynamics that make Texas look great for the future.  Small multi-family I think has always been tough here.  For some reason we just did not build a lot of it, like some other places have.  We don't have a lot of homes with ADUs.  i think compared to other parts of the country we also don't have the attics and basements to do the value add deals like the NE and maybe CA.

With all that said, we do see occasionally some decent multi family deals.  Let us know more specifically about what you have in mind.   If you want larger mutli like 100-200 units there are lots of those.  Some coming up distressed.  Couple of foreclosures in progress right now that will wipe out perhaps 10-20% of the value.

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Thomas Shepard
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  • Rental Property Investor
  • Cookeville, TN
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Thomas Shepard
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  • Rental Property Investor
  • Cookeville, TN
Replied Jan 24 2024, 05:23

The risks you are taking on is: not truly knowing the market, not truly knowing your tenants, not truly knowing your property.  Obviously being in CA, the rewards are lower cost of entry, more LL friendly jurisdiction.

 Completely agree with CA risks. However, you are making the assumption that being nearby the property would somehow mitigate risk of not understanding market, tenant, property. Unless you are walking the streets, vetting tenants personally and visiting the property regularly in-person, these risks are same even for your own backyard. Wise investors are putting systems in place (including property managers and other service providers) so that these risks are mitigated without investor being involved.

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Evan Polaski
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Evan Polaski
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Replied Jan 24 2024, 07:00

@Thomas Shepard, you are 100% correct.  If you are going to be hands off with your money, you are going to have to be comfortable with certain risks.  The assumption, albeit not always accurate, is if you live in an area, and have for a while, you will know the various neighborhoods better. 

As for financials, if you invest out of state, I would suggest you factor in at least an annual trip, if not two, to the market simply to check in.  And unfortunately, with the low margins in SFRs in basically all markets, once you add in $1k-2k per year of travel cost, you are likely to be cash flow negative anyways.

As for me personally, it may be the level of control that I seek or lack of trust that anyone knows what I want as much as I do, but I would never buy a house sight unseen.  I do drive past my properties (granted, I intentionally have always bought within a 10 minute drive of my house) and after bad experiences with 4 different management companies over my 14 years owning rentals, I self manage and self lease.  To me, the risk is too high.  I have heard too many horror stories from others, and while I have not had any major war stories, my worst experiences and most expensive experiences have all happened while I had any of my four PMs on my properties.

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Thomas Shepard
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  • Rental Property Investor
  • Cookeville, TN
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Thomas Shepard
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  • Rental Property Investor
  • Cookeville, TN
Replied Jan 25 2024, 07:38

@Evan Polaski Do you offer property management in your market to others? Sounds like an opportunity if other PMs are not good there.

One additional point on delegating and vetting your team members. Be sure to have checks and balances in place. For example, have your PM check on your contractors. Or have your handyman report out anything that seems off on the condition of the property. It's good to have multiple eyes on things. When you have a PM doing all the things, the only way you know what is going on is from one source. Add a couple sources to build resiliency.

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Evan Polaski
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Evan Polaski
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Replied Jan 25 2024, 08:31

@Thomas Shepard, appreciate the input, but PM is a very low margin, high effort business. Let's just say, the value in PMing my own properties is really only available because of the control it allows me to exert and maintain things to my own expectations.

And those expectations are also why, for me personally, even with checks and balances, outsourcing is not an option.  I have had multiple contractors on properties at the same time, and not only is it a lot of work to source and keep a strong roster available (mitigating a lot of the need for a property manager) but also I have really only met one in my over 20+ renovations, that has been close to maintaining my level of expectations, and unfortunately he realizes his value and I can rarely afford him anymore...  so I am back to subpar work or overseeing it myself.

And I don't really consider myself a perfectionist, but most that I have met are board line inept without having me overseeing them.

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Bradley Buxton
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Bradley Buxton
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Replied Jan 25 2024, 09:07

@Ilyas Karzai

Investing in CA can be very lucrative but as other posters have mentioned there are trade-offs, taxes, costs, and tenant laws. I was a California native but found the barrier to entry too high to buy something. I moved to Nevada (Tahoe/Reno) to be close to family in friends in CA but at a much lower cost of real estate. The appreciation has been really strong in my market. I looked further out of CA but the lower property taxes, no income tax, and landlord-friendly benefits of Nevada sealed the deal. Worth a look for anyone investing out of CA to take a look at Nevada. There are a lot of strategies to make money in real estate and time and quality of life are assets that are overlooked in the pursuit of short-term cash flow.

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Kyle Mccaw
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Kyle Mccaw
Property Manager
  • Property Manager
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Replied Feb 21 2024, 11:08

@Ilyas Karzai this is right up @Lucia Rushton 's alley. I know she helps out of state investors purchase multifamily.

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