Best way to find out of state deals? & other questions

7 Replies

Hey guys, I just listened to a few of the pod casts today and it really drove home that there are indeed 20-35,000$ properties out there that can generate great cash flow! These deals definitely can't be found where i live so i would have to invest out of state. I have a few questions to run by you all.

1. What's the best way to start your out of state search for these properties? Google? 

2. Once you decide to start looking more into an area/city, do you immediately contact brokers? Checking unemployment rates? Look for colleges/hospitals in the area?

3. And finally, I assume you all use hot pads and craigs list to see what rentals are going for?

If there are a lot of rentals for rent, does that mean there's a big rental market or does that usually mean stuff is sitting vacant?

Thanks for the newbie answers.

Dan

Hey @Dan Veneski  , I'd start by narrowing my search down to a few markets that have properties that meet those criteria you have. You could look into the macro-economic factors such as employment, population, income, main industries, etc. After reviewing those things, and the market still piques your interest, you can network with other investors here on the site that actually invest there. 

Craigslist, rentometer, and local property management companies/investors are great for getting a good idea of what the market rents are. Units go vacant constantly as people are always moving etc. How long they stay vacant is important as well! Ask those same local investors and property managers what their vacancy rates are, and have been. You can also ask what property types seem to have the most rental demand, and in what neighborhoods.

Hope that helps!

@Mehran K.   I understand stuff is REALLY expensive in california, but why did you end up deciding to invest in 20-30K$ properties in Wisconsin instead of say getting places in the 100K$ - 200k$ range in other states? 

 It seems some people mainly invest in places that require 20K down payment as others like yourself invest in mainly places that are 20,000$ for the entire house.  Do you think it is more risky to invest in these smaller priced properties?  

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@Dan Veneski  when we lived in Virginia we started investing in Charleston. I personally found the area as a "fluke". We knew what numbers we wanted and couldn't find them in our current area. So we started looking where ever we traveled. We ended up finding them in charieston when a friend and I started talking about real estate. 

Originally posted by @Dan Veneski :

@Mehran Kamari  I understand stuff is REALLY expensive in california, but why did you end up deciding to invest in 20-30K$ properties in Wisconsin instead of say getting places in the 100K$ - 200k$ range in other states? 

 It seems some people mainly invest in places that require 20K down payment as others like yourself invest in mainly places that are 20,000$ for the entire house.  Do you think it is more risky to invest in these smaller priced properties?  

Well, I only own a few properties in that price range. They range from $25k to $85k. Personally, I was looking for a place that I could invest in to stretch my limited dollars the most. High ROI was a big factor, along with properties NOT being in war zones. Like I mentioned above, define your criteria first, and see what market fits that criteria.

I'd say the biggest factor for me was having someone on the ground in that market to work with. If I don't have someone I can trust(that also owns investments there), where the feet meet the pavement, I don't think i'd want to invest there. 

Every market and price point has it's own level of risk. It's hard to judge it based on price alone. In LA, a $200k house could be in a worse neighborhood than my $50k house in Milwaukee, catch my drift? This is why it's SO important to get to know the market from people who are in it every day, they know these things on the ground level.

@Dan Veneski  

I echo the words of @Mehran K.  

The first thing you want to do is develop your plan. Is just for cash flow or is this for appreciation? The answer to this question will help determine your strategy and therefore you're investing criteria.

If you're looking for cash flow, then you may want to look in markets where your dollars will go the farthest with the highest return.

Mehran Brought up an excellent point about the 200,000 LA home versus the 50,000 Milwaukee home. 

Equally important you must have a solid team in place. No team = no investing. I would rather have a good team in a fair market than a fair team and a good market any day. Personally, I would not invest in any location I have not been to myself. You can forget the numbers if the street vibe is bad. However you can only tell that if you've been there. I've learned that lesson the hard way and it is my new rule.

I hope this is helpful and good luck.