Out of State Investing - need help finding a good location!

Valencia, CA · Member since 2016 · 26 posts · 18 votes

I live in Los Angeles and completely priced of this market. I'm having a hard time finding a good out of state location. My friend lives in AZ and suggested Downtown Phoenix. She said there are several districts there that are being revamped. Any thoughts on that area?

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Alex Chau

Daly City, CA · Member since 2016 · 29 posts · 14 votes

10y

@Zach Quick I am from California as well. While I do agree with you on investing where you live. Unless you have a good amount of capital to start with, it is really hard to start here. On top of that since the prices are so high right now, if there is a downturn you will have to cover the negative cash flow when rent starts to trend down (which is what is happening in san francisco right now) as well as lose equity. Yes you will get it all back in 10-15 years but in terms of return, would it not be better to invest out of state where you cash flow and and bring that return back to california when the market has bottomed out. Just a thought, as this is the route I am planning taking. Building a cashflow portfolio out of state, and bringing it back to home once things cool down a little more.

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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
There are options across the country. Before you jump in know how you will handle the property, etc. If you intend to buy turnkeys check out www.turnkey-reviews.com for some guidance on them. Buying turnkeys may not be bad but they are NOT bringing discounted units. They are retail sellers asking the highest possible price.
2 Reply
Crystal Perez
New York City, NY · Member since 2016 · 37 posts · 8 votes
10y
What sort of investing are you looking to do?
0 Reply
Karen DiNapoli
OP
Valencia, CA · Member since 2016 · 26 posts · 18 votes
10y
I am looking to buy and hold. Would like to find a good rental and have the renters pay down the mortgage. I have about a total 45k to invest. Looking to buy 2 SFH or maybe a duplex.
1 Reply
Bill Larsen
Investor, Real Estate Agent · San Juan Capistrano, CA · Member since 2013 · 150 posts · 65 votes
10y
@Karen DiNapoli I'm in the same boat as you. Contemplating something like a cheaper duplex in Long Beach or looking for more units out of state somewhere. I'm interested to hear what other experienced buy and hold investors are doing
0 Reply
Bob Green
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
10y
Hello Karen,
Are you flipping properties, buy/hold or both? I review rent rolls all over the USA on a daily basis as a lender. I can advise many locations. Additionally set you up with a local real estate firm here in Chicago that is contracted by HUD and various other lending institutions to sell their distressed real estate. They have turnkey operation and provide distressed property, rehab team, real estate broker, attorney, etc to profit from fix n flips. Let me know if I can be of assistance.
3 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y
Valencia! I lived there for a month when I moved to CA to work in Palmdale. Great area :)
Are you talking about for rental properties? Phoenix used to be great but there's really not cash flow there anymore. Is that the only market you are considering? I'm in LA (Venice) as well and have always only bought out-of-state.
0 Reply
Karen DiNapoli
OP
Valencia, CA · Member since 2016 · 26 posts · 18 votes
10y
Not interested in flipping homes. Especially out of state flipping. Ali Boone ll - I live in Valencia! I looked for condos and there is nothing worth looking at in the 300-350k range. They were all really small 2 bedroom dumps at that price. That is why I am looking out of state.
1 Reply
Karen DiNapoli
OP
Valencia, CA · Member since 2016 · 26 posts · 18 votes
10y
Phoenix isn't the only place I'm looking at. My friend that lives in AZ suggested it to me. I also looked in TX and WI but those 2 states have the highest property taxes in the US! I tried analyzing a duplex in WI and the property tax killed my ROI. :(
0 Reply
Clayton MobleyPro Member
Birmingham, AL · Member since 2014 · 875 posts · 947 votes
10y
@Karen DiNapoli Welcome to BP! While I will disagree that all turnkey providers are 'selling at the highest possible price' (you should get your own inspection and appraisal to know for sure that you aren't paying more than market), there are a lot of unscrupulous providers out there, so you have to dig in and do your own due diligence.
Regarding market, there are great opportunities all over the country. So I always tell new investors to focus less on market and more on finding a team you trust. Even if a property is amazing, pristine, in a perfect location, it won't matter if the team managing it isn't on the ball. You need to do some research on the more reputable providers and then ask questions. A LOT of questions. Search for posts about them here on BP, ask other investors for their experiences and opinions, start a thread of your own to solicit input. Contact the provider themselves and ask specific data-based questions and then see how quickly and thoroughly they answer them. Learn to do the ROI math yourself and make sure the numbers add up instead of relying on pro-forma calcs on websites (which often do not include key expenses, rely on rapidly increasing rents, or are otherwise inflated).
I talk about this a lot here, so I'll just leave a link to another post I wrote recently with a list of questions investors should be asking of any turnkey provider they consider: https://www.biggerpockets.com/forums/55/topics/361999-new-investor-from-glendale-ca
Depending on how far along you are in your research, you may need to read up on a few terms to understand what you're asking, but putting in the due diligence legwork will make or break your investment, so take the time to really get into it before pulling the trigger on anything. And beware of so-called providers that have flash advertising with a "YOU MUST BUY NOW, THIS WON'T LAST LONG" message - turnkey is everywhere and there is enough for everyone. Any provider that requires all cash, pushes you to sign something right away, can't get on the phone with you or schedule a visit in a timely manner, or can't or won't answer your detailed questions promptly and thoroughly is a non-starter.
Best of luck in your new endeavor! If you have any questions, feel free to reach out any time.
Clayton
4 Reply
Abdul Azeez
Real Estate Investor · Monroe Township, NJ · Member since 2016 · 468 posts · 85 votes
10y
Folks - would you buy if the TK provider says its still ok if appraisal is less than the value they are selling for?
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y
Yep, you won't find much good around LA for that price. Valencia for sure, because it's definitely nicer than a lot. It's unfortunate....I'd love to buy tons of properties here! Have you looked at any other markets?
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y
@Abdul Azeez
Here's an old article I wrote talking about turnkey appraisals. Maybe it will help-
https://www.biggerpockets.com/renewsblog/2013/09/0...
Some of it depends on your financial situation too....if you can afford the difference.
1 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
10y
Originally posted by @Karen DiNapoli:

I live in Los Angeles and completely priced of this market. I'm having a hard time finding a good out of state location. My friend lives in AZ and suggested Downtown Phoenix. She said there are several districts there that are being revamped. Any thoughts on that area?
I can assure you that you can find positive cash flow and profitable areas to invest around LA County with 45k down. However initial cash flow alone is not how many of the most polished investors qualify worthy investments. There are much more important investment factors to consider besides initial cash flow. It will be those factors that determain how that investments future evolves good or bad. If you can change your LA area mindset on this it could change your investment future in the most significant way possible.
There is that old saying.." There are those who think they can and those who think they can't...and they are both right"
Good luck with your search!
4 Reply
Karen DiNapoli
OP
Valencia, CA · Member since 2016 · 26 posts · 18 votes
10y
Matt R. Where in LA county is there a property to invest in for only 45k? I recently sold my condo for $580,000! LA county prices are so inflated. I don't think it is even good timing to invest in this market. It's in its own little bubble.
1 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
10y
Originally posted by @Karen DiNapoli:

Matt R. Where in LA county is there a property to invest in for only 45k? I recently sold my condo for $580,000! LA county prices are so inflated. I don't think it is even good timing to invest in this market. It's in its own little bubble.
45k was a down payment number. I am not aware of anything at 45K total:) I can pm you some more alternative location ideas starting with AV and South LA.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
you may want to look at Vegas as well.. some pretty good cash flowing deals there.
Along with some deals in Utah.
Oregon has been uber hot... better cash flow than socal but not as good as mid west however you will have up side in PDX in most cases.you did not by chance go to Cupertino High did you ????
Podcast Guest on Show #222
JLH Capital Partners51 Review
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Zach Quick
Investor · Bentonville, AR · Member since 2014 · 759 posts · 379 votes
10y
@Matt R. I am glad that you consistently preach staying local. I am often jealous of Cali investors and don't understand why they would jet to the midwest. And I live and invest in the midwest.
I can understand the concerns about a bubble, but does anyone really think that LA in general won't still be very desireable to live with low inventory in 10-15 years? Just my hick two cents.
1 Reply
Alex Chau
Daly City, CA · Member since 2016 · 29 posts · 14 votes
10y
@Zach Quick I am from California as well. While I do agree with you on investing where you live. Unless you have a good amount of capital to start with, it is really hard to start here. On top of that since the prices are so high right now, if there is a downturn you will have to cover the negative cash flow when rent starts to trend down (which is what is happening in san francisco right now) as well as lose equity. Yes you will get it all back in 10-15 years but in terms of return, would it not be better to invest out of state where you cash flow and and bring that return back to california when the market has bottomed out. Just a thought, as this is the route I am planning taking. Building a cashflow portfolio out of state, and bringing it back to home once things cool down a little more.
5 Reply
Julie L.
Specialist · San Francisco, CA · Member since 2016 · 58 posts · 30 votes
10y
@Karen DiNapoli Hi Karen! Welcome to BP! I started investing out of state recently and also live in California :) Would love to share my experiences with you if you are interested.
0 Reply
Alex Chau
Daly City, CA · Member since 2016 · 29 posts · 14 votes
10y
@Julie L. Hi Julie, I would love to hear about your experience in investing out of state as well.
0 Reply
Julie L.
Specialist · San Francisco, CA · Member since 2016 · 58 posts · 30 votes
10y
@Alex Chau Would love to share my experiences. Feel free to pm me for more information.
0 Reply
Zach Quick
Investor · Bentonville, AR · Member since 2014 · 759 posts · 379 votes
10y
I can't tag him but look up @Minh Le and @J. Martin posts on here. There was also another thread the other night from a gentleman who invests in Brooklyn who made some great points that I wish i could find and direct you too. I think @Matt R. commented in it too, maybe he can find it.
@Alex Chau You just need to realize that typically if you are getting a "deal" as an out of state investor that probably every local person who could close on it is passing on it because they could find a better deal. The cash flow isn't as stable and the tenant isn't as stable as you could likely find in San Fran. And count appreciation into your total return too, not just the "cash flow" because if you are buying turnkey out of state your only equity is your down payment(if that).
1 Reply
Karen DiNapoli
OP
Valencia, CA · Member since 2016 · 26 posts · 18 votes
10y
@Julie L.- Yes I would love to hear your experience! Please post here or feel free to PM me! Thanks!
@Matt R. - AV and South LA are very rough areas! I do not want to invest in a buy and hold in an area where I would be chasing down rents. And when the market drops in LA, so will those areas. And those areas will drop further and recover slower.
@Zach Quick- You are right about the benefits of staying local. But out of state investing I see the benefits of out of state investing vs than staying local here with minimal starting capital.
@Jay Hinrichs - Where is PDX? And no, I didn't go to Cuertino High...DiNapoli is my married name! I grew up in the South Bay and went to Torrance High! :)
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
Portland Oregon
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
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Jamiel McDowell
Residential Real Estate Broker · Puyallup, WA · Member since 2016 · 33 posts · 9 votes
10y
I'm working with a couple clients from California who just got offers signed around for multi family locally in Pierce County WA (Tacoma and Puyallup) Great houses, Lots of potential
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