New to Real Estate Investing – Looking for Advice on Out-of-State Markets

[Yury Krytsyn]

Hi BiggerPockets community,

I recently got interested in real estate investing as a way to build long-term wealth and create more financial freedom for my family.

I’m still very new to this. I’ve been reading, listening to podcasts, and trying to learn as much as I can. My plan is to start small, but take action soon.

Ideally, I’d like to invest locally here in NorCal since I live here and understand the area. But let’s be real — the prices in the Bay Area are just too high for my current budget, which is around $150–$200K total (including rehab if needed). So now I’m looking into out-of-state options.

I’d love some advice on a few questions:

1. Which state or city would be a good place to start with this kind of budget? I’m open to BRRRR, long-term rentals, or maybe small multifamily.
2. What are the biggest challenges or risks I should watch out for as an out-of-state investor, especially as a first-timer?
3. Do I need to create an LLC for each property, or can I keep them all under one? Is there a better way to protect myself legally?
4. Should I register the LLC in California, in the state I invest, or maybe a place like Wyoming that’s more business-friendly?
5. How do I find reliable property managers, real estate agents, and contractors in another state when I don’t know anyone there?
6. What are the best tools to research and compare markets from a distance? I know rentometer.com, BP tools, Zillow, Redfin. 
7. For a first property, would you recommend a single-family home, duplex, or triplex? I’d love to hear what worked for you when you started out.

Any advice, insights, or personal stories would really help. I’m excited to take the first step and appreciate any help from more experienced investors here.

Thanks.

[Travis Timmons]

Out of state BRRRR/flip is the highest risk strategy for a new investor to take on. I would advise you to proceed with extreme caution. Out of state investing is harder than strangers on the internet make it seem. I've had success with it, and my

1. Focus on quality - class A-B properties with a good tenant pool. There is no way to make numbers work in the current market by paying a property manager 8-10% + fees. The only way that I know how to self manage from a distance effectively is with 700+ credit score tenants. Turnovers are easier, rents are paid on time, maintenance is low. These properties also appreciate (and so do the rents). We're on the other side of a massive run up in real estate prices a few years ago. A $150k house is priced at that level because people with options do not want to live there. 

2. Get on a plane and go there. A lot. Engage all 5 senses, earn trust and build relationships with local vendors. Otherwise, you are just "the rich guy from California" that they will overcharge. Taking on some projects on your own - even if it is demo, clean up, paint goes a long way to earn the respect of local vendors. 

3. Kind of a repeat, but buy the asset you want to own the most 10 years from now. Here's an anecdote - I moved from St. Louis to Houston in 2009. St. Louis 1 bedroom rented at $595/month in 2009, currently rents for $850. Houston 1 bedroom I rented in 2009 was $770/month and is now $1800/month. Real cash flow comes from rent appreciation over time, not the year 1 pro forma. 

4. Don't trust anyone with a profit motive. Do your own research and diligence.

I'm a fan of buying the best asset/location in your budget and using a higher effort strategy to make it cash flow (mid term, short term, rent by the room, etc.). And house hack if that is possible. The total return on a Northern CA property over the long term will obliterate that of a cheaper market. I understand that it is not always realistic, but you just have so many more options with a 5-10% down owner occupied loan up to 4 units.

Apologies for the length, but reach out if you think that I can be a resource. I have absolutely nothing to sell.