Long Distance /Out of State investing

Financial Advisor · Boynton Beach, FL · Member since 2019 · 127 posts · 80 votes

Hey Jingmin,

In regards to Buy and Hold, I believe you would have to look at location from the state/city/zip code/actual street level. From the state and city level, look at population flows, what type of businesses are moving in/out of the state/city, rent growth historicals, price appreciation historicals etc. From the micro level, look at what the neighborhood looks like (does it favor retirees? Families?), safety, what type of school zone it is in if it is a family neighborhood, is the property neighboring major roads etc. How I personally would start is on the macro level, and from there do a bit of leg work and start analyzing specific areas within the city that you want to invest in. I will say if you want to really hone in on a specific market, it would be useful to visit the actual city and drive around the zip codes you want to invest in, network with professionals in the area (agent/investors etc), and really get a feel for it.

If you're remote, you probably can get away with self managing if you develop systems on what happens if there is a repair needed, tenant disputes, turnovers etc. If you have multiple, you probably need to develop a relationship with a PM. For reference, I own a rental property 4 hours north of me which I am currently self managing, but I am very familiar with the area and have a network of handyman/sub-contractors for repairs, and am easily able to put in a new tenant at a short notice.

Can't really comment on 3.

Hope this helps!

1 Reply

Mackaylee BeachPro Member

Real Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes

3y

Hello Jingmin,

I'm from Kansas City and have worked with hundreds of out of state investors. Kansas City is rapidly growing and has lots of cash flow opportunities. I'd love to connect and share more of our current market and what is available!

[email protected]

1 Reply

Jacob LeBar

Real Estate Agent · Austin, TX · Member since 2023 · 57 posts · 27 votes

3y

Hey Jingmin,

1. - You can always meet experienced investors through networking events that can give you a lot of perspective on the area. Also a lot of them will probably be in touch with other states as well. You can also partner with an investment brokerage & source deals that way and generally they will try to get you properties that will match your criteria.

2. - If you're buying out of state, the safest bet is to partner with a property management company to upkeep your properties for you while you're away. If you start with turnkey properties you will have a higher price point but won't have to deal with rehab from another state.

3. - I don't have any experience with turnkey providers, but feel free to connect and I'd be happy to help anyway I can.

1 Reply

Jingmin Ye

OP

Member since 2023 · 4 posts · 8 votes

3y

Quote from @Mason Liu:

Hey Jingmin,

In regards to Buy and Hold, I believe you would have to look at location from the state/city/zip code/actual street level. From the state and city level, look at population flows, what type of businesses are moving in/out of the state/city, rent growth historicals, price appreciation historicals etc. From the micro level, look at what the neighborhood looks like (does it favor retirees? Families?), safety, what type of school zone it is in if it is a family neighborhood, is the property neighboring major roads etc. How I personally would start is on the macro level, and from there do a bit of leg work and start analyzing specific areas within the city that you want to invest in. I will say if you want to really hone in on a specific market, it would be useful to visit the actual city and drive around the zip codes you want to invest in, network with professionals in the area (agent/investors etc), and really get a feel for it.

If you're remote, you probably can get away with self managing if you develop systems on what happens if there is a repair needed, tenant disputes, turnovers etc. If you have multiple, you probably need to develop a relationship with a PM. For reference, I own a rental property 4 hours north of me which I am currently self managing, but I am very familiar with the area and have a network of handyman/sub-contractors for repairs, and am easily able to put in a new tenant at a short notice.

Can't really comment on 3.

Hope this helps!

Thank you @mason Liu. Noted on all the factors of the state/city/zip code/actual street you mentioned and thank you for sharing your experience. I am rather curious about people's process of determining WHERE/location wise to look at these factors. I read through a couple of other forum discussions about long distance investing, many mentioned markets like Arizona, Kansas City (as @Mackaylee Beach kindly mentioned), and Texas. I wasn't sure whether most out of state investors pick and choose the locations based on WHOM they know in the states to begin with (i.e. they already have a location in mind before the research), OR based on Macroeconomic dataset then drill down. Based on your response, it seems like you chose an area that you are familiar with and that is great.

Thank you for sharing. If anyone else has any thoughts as to selecting locations, I'd really appreciate it!

2 Reply

Alex Olson

Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes

3y

I always say best to look at in the following order - your home market where you live, where you have lived, where you have family/friends...if none of those are cash flowing an appreciating, then find a place that is growing, has good tax rules for landlords, has landlord friendly laws and has cash flow. Of course I am partial to Kansas City but it does check all of those listed boxes but there are others. Hope that helps

1 Reply

Melanie Johnston

Real Estate Agent · Scottsdale, AZ · Member since 2018 · 412 posts · 366 votes

3y

@Jingmin Ye

You are asking some good questions. In working with dozens of out-of-state BiggerPockets investors who have bought long-term and short-term rentals in my area (Metro Phoenix), they tend to research the economic health and forecasts of a particular market so they can benefit from long-term growth and protect themselves from a declining market. Headlines like these suggest Metro Phoenix is a good market to consider:

Phoenix metro economy among most resilient nationwide amid pandemic, report says (Maricopa County) Fastest Growing County in the U.S.

A great resource on our economy is the Maricopa Association of Governments. Here's a link to their maps and data section: https://azmag.gov/Programs/Map... which offers detailed analysis of all facets of our economy, including future projections.

As far as an investor being familiar with or close to an area, I've worked with several BiggerPockets investors who've never visited Phoenix before they buy. We meet through this forum, have a deep dive call on their goals, and then work together to get them comfortable with the areas that best fit their agenda. You can likely find an investor-focused agent on this forum in whatever market you pursue. It's all about trust, responsiveness and transparency.

You can certainly connect with a PM if you don't want to deal with "tenants and toilets." But managing your own rental from a distance is not as difficult as it seems. You just need boots on the ground in the form of a reliable handyman. Listing your rental on the Multiple Listing Service through the agent who helped you buy your property can be very cost-effective for you.

You are getting good advice from your fellow BP investors on this thread. I'm sure more good information will follow!

Happy to help if your investing path leads you to Metro Phoenix.

Melanie

3 Reply

Jingmin Ye

OP

Member since 2023 · 4 posts · 8 votes

3y

Quote from @Alex Olson:

I always say best to look at in the following order - your home market where you live, where you have lived, where you have family/friends...if none of those are cash flowing an appreciating, then find a place that is growing, has good tax rules for landlords, has landlord friendly laws and has cash flow. Of course I am partial to Kansas City but it does check all of those listed boxes but there are others. Hope that helps

Thank you. You have given me some thoughts. Appreciate it!

1 Reply

Chase Freund

Real Estate Agent · Kansas City · Member since 2023 · 23 posts · 14 votes

3y

I recommend finding a real estate agent in the market you are looking to get into. Specifically an agent who deals with investment property on a daily basis. They can give you a better idea of what the true value of the area is and guide you in the right direction to do what you are looking for. Investment brokerages will also have contacts for you to get hooked up with a contracting crew and property managers if you need them.

Far as turnkey or rehab, turnkey is obviously the easy route as you don't need to worry as much about getting a crew together. However, turnkey means you also won't be able to add much value to the house and you'll probably be paying a higher listing price.

2 Reply

Amika B.

Real Estate Agent · Houston & Austin, TX · Member since 2022 · 84 posts · 32 votes

3y

Quote from @Jingmin Ye:

Hello, I live in New York City and have been reading/learning about long distance and out of state investing. Currently no portfolio except for my primary residence.

In the past two months, I have been building the foundation of learning; I have read David Greene’s Long Distance Investing, and Brandon Turner’s Rental Property Investment. Now I would love to connect and learn about YOUR experience as fellow real estate enthusiasts who happen to live in high cost areas, choose the route of out of state investing (especially the buy-and-hold strategy). I have some specific questions, but any insights would be greatly appreciated.

1- Location: how do you determine the location(s) that you decided to invest in? Especially in the abundance of population, employment and price-to-rent data, how do you zoom in on the location(s) (other than through family or friends) that are the right combination of appreciation and cash flow?

2- Turnkey provider vs. do-it-yourself: did you start your journey with a turnkey provider OR did you start by choosing a location that is driving distance+locate deals+rehab+hire a PM to manage the day to day, and would you have done it differently?

3- What are the questions that you use to screen/align with the turnkey providers that they are the right partners?

Also if you happen to be in New York City, I would love to meet in person, buy you a coffee and listen to your stories.

Thank you!

J

Hi Jingmin!

1. I constantly source properties from my hometown up in New York and also in Connecticut as well as where I live now in Houston. I picked these locations due to proximity to be honest. I know I focus on fix and flips so being able to have the option to pop in to see projects is important to me. I would never do a buy and hold in New York however as it is not a landlord friendly state. If you are hoping to own rental properties, I'd suggest looking into which states are more landlord friendly. Start there for sure.

2. I'd hire a PM if you're investing out of state. You should have a professional on the ground. Even if you were next door, I'd still recommend hiring a PM. Factor that into your expenses. It's an added security.

3. Ask PMs what they provide, how their fees work, their business model, how they interview and place tenants/their application process, their repair process, how they handle disputes, how they report back to you, how much they would like to keep for emergency repairs.... etc. Make a list of things you'd be worried about if you were investing out of state and what you'd like to be kept updated with in regards to your property. Ask those questions. You can always call back if you forgot to ask something. The right PM will have no problem answering all of your questions.

The Houston market remains stable and a great place for investments. If you're interested in exploring Texas for potential investments, please let me know! I'd be happy to help :)

1 Reply

Harold Looney

Member since 2023 · 98 posts · 31 votes

3y

Jingmin Ye - I'm a Brooklynite who faced the same dilemma years ago. I sold properties that I owned remotely due to property management issues. I still struggle to find reliable maintenance and repair contractors for the 2 Unit Property that I still own in Bayridge Brooklyn.

I decided to become a Private Lender instead of being a Landlord. Then I don't have to worry about tenants, termites and toilets. I'm currently learning how to Underwrite, Close and Service Private Loans by brokering deals for an Experienced Private Lender.

Happy to meet in person.

2 Reply

Long Distance /Out of State investing

Long Distance /Out of State investing

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