Out of state flipping

6 Replies

I'm wondering if, due to the intense competition of the CA real estate market, if trying in other states (online) might be a more profitable option?

I've gone to listsource and have noticed leads are reasonably priced, but in order to get more bang per buck it may behoove me to seek out lesser fished spots so to speak. especially in parts of the country that are more laid back such as Kansas, Nebraska, New mexico, etc. The deals may take longer, and be smaller but perhaps its a solid strategy. 

That said, I do want to make a at least 50,000 in the first year or so doing wholesaling.

What are pros and cons of doing it out of state in smaller markets, and the pros and cons of not physically seeing the property or physically meeting with the seller and/or buyer?

The pros is that the cost of buying real estate is cheaper and so are the taxes.  They probably have less earthquakes too.  They may suffer from other weather related problems like tornados and hail though so check insurance rates.

The cons is that you can get ripped off a lot easier and for a lot more money since you are not there to monitor what is going on. Contractors can get into disputes and make it hard for you to decipher who is telling the truth and who is not.  Traveling back and forth can wear you out. You may not know the culture, law of the states, or ideal neighborhoods well. 

You may want to get a project manager along with a general contractor to assist on the renovations.  Plus they should assist in cutting your travel time.

Its good to have a discount legal service to back you up and or a local lawyer.

If you are not going to physically see the property then I suggest hiring wegolook.com, freelance photographer, friend or family to take videos or pictures front, back, inside, outside of the homes and the neighborhood. Tell them not to doctor up the pictures with photoshop either.  I would not rely on the pictures from realtors and wholesalers alone because they are trying to sell the property to you. They may use a wide angle lens and add more light so the place looks larger than it is. A lot of times some will not photograph everything.

If you're going to invest in any market you don't live in or know intimately you really need a local partner. They don't have to be a capital or financial partner in any way, but they need to be compensated by the deals in a way that makes them interested in your success and they need a local knowledge base that is deep enough to compensate for you not knowing the area. A base knowledge of remodels is great as well.

I've had great success working with members of the national REO brokers association. They typically spent years managing smaller remodels for banks and have the local market knowledge and connections to help get deals and get things done.

@Qwesi McCray they are just normal brokers but they have earned a designation and belong to a group who has dealt with primarily REO sales over the last decade. Because of that they have a great ability to work with unique situations and I've found their knowledge base to be beyond that of the typical real estate agent.

That's not a knock on other agents, but if you're investing out of state it's good to know that the broker you're working with has had to handle some remodels and find contractors for repair work in the same manner a bank would expect their brokers to. Hence there are some commonalities that they bring to the table.

@Nicholas Bravo   are you talking about out of state wholesaling where your doing no work

or are you talking about out of state rehab and resell.?

big difference..

And can simply follow local banks lead here.. they will not lend to anyone who does not live within 100 miles of the flip.... use that as a guide line.

and don't be thinking these other markets are a cake walk because there is competition in all market places.

the availability in deals relates to excess inventory and urban core type dilapidated homes.. in these areas there are plenty of deals .... but when you get into nicer inventory the locals in each market will be stiff competition.  Just read were all these 500k BP members are from.. they are in every nook and cranny in the US>

In addition there is many times a huge learning curve in markets your not familiar with.. when homes are trading for the values of Used cars you can just imagine the riff raff you need to wade through.

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