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?
@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.
Right on, you are welcome. It is even color cordinated...dark green means go... red - purple means, well maybe no. I had the same personal testing results. It seems very accurate as a starting point for the general outlook anyways.
I'm anti drip income, so I wouldn't understand why someone would go through the hoops of investing a good 45k when a cash flow will be 300-450/mo. A broken water heater or a water damage, or a vacancy of a couple months, or a tenant turn over will throw most of the profit for the year. Another is, tenant classes in different states might not be the same, C class neighborhood might be B+ on other states. In another point, if someone can't afford to pay mortgage of say 500-600/mo, what kind of tenant are they? I mean, last time I asked around with my bank, they only need 40% of your income to be dedicated for mortgage. So someone earning 2000-2500 could probably qualify for a home loan, well, maybe. For me the only thing that counts being worth the time against money invested is only flipping, property appreciation, value add in MF (improving NOI), and other higher risk and higher investment amounts. I find other types of investments such as buy and hold, or etc to be a waste of time. I also don't like to invest by appreciation, because it is based on personal assumptions (ultimately mine) or educated guess (still a guess even if it is accurate). I'll be following the thread, it might do me some good when I'm in ky 50s.
I'm anti drip income, so I wouldn't understand why someone would go through the hoops of investing a good 45k when a cash flow will be 300-450/mo. A broken water heater or a water damage, or a vacancy of a couple months, or a tenant turn over will throw most of the profit for the year. Another is, tenant classes in different states might not be the same, C class neighborhood might be B+ on other states. In another point, if someone can't afford to pay mortgage of say 500-600/mo, what kind of tenant are they? I mean, last time I asked around with my bank, they only need 40% of your income to be dedicated for mortgage. So someone earning 2000-2500 could probably qualify for a home loan, well, maybe. For me the only thing that counts being worth the time against money invested is only flipping, property appreciation, value add in MF (improving NOI), and other higher risk and higher investment amounts. I find other types of investments such as buy and hold, or etc to be a waste of time. I also don't like to invest by appreciation, because it is based on personal assumptions (ultimately mine) or educated guess (still a guess even if it is accurate). I'll be following the thread, it might do me some good when I'm in ky 50s.
Generally speaking I am with you. If you can't bail that investment quick for a profit that might an issue. In some certain same locations if you can hold, it might be like winning the lottery as well. So maybe pick those locations accordingly so both options are possible.
Full disclosure: I invest full time and have an infrastructure to help others do the same.
To answer your question, I put a great deal of time, so I and the investors who work w/ me can benefit from, into finding the right professionals on the ground to handle all our local investments needs.
Instead of trying to guess where to go I find the locals that will tell me. I just want to make sure I find the right locals as so many claim to have experience w/ investing but most have very little if at all.
I don't buy blindly I build a local trusted team . . . they do the leg work, big portion of the DD and enable me (us) to buy sight-un-seen (we do travel to see/check but we have created a system that it is not required to do so, but a bonus if you do).
I will chime in on Palmdale and say that it has become a little bit tougher to find cash flowing properties. Some of the rougher areas near Division Street cash flow but it's not an area I would go walking around at night by myself.
I would urge you to keep an eye out since there are some slightly run down homes that come on the market for a decent discount and are located in good neighborhoods.
Look into the Boise, Idaho area! We have a great market and are continuing to grow. I would be happy to send you some properties or duplexes if you would like? I am a Realtor in the Treasure Valley area. Reach out to me if you have any questions at all!
HI Friends, I just thought to jump in and share with you that I also invest "Out of area" and have been for the last 10 years. I live in small town in Central Otago NZ (population of 4k) but invest in Auckland which is 3 hours away. 1 hour by car to the nearest airport followed by 2 hour flight.
The key is to focus and network in the market you wish to target/ invest in. join the local REA. it took me around 3 month of hard work researching, monitoring sales and following new listings etc.to become somewhat an area expert. once you Know the values in the area and network with key players in the area it is much easier to invest out of state.
It is possible to invest from afar but one need to do the ground work first, travel to the area regularly form the relationships with fellow investors, professionals and realtors. "there is no free lunch" if you want to get a good deal and not mediocre deal.
My point is, you invest where it makes sense and where it is convenient.
NOt really the same over here @Hadar Orkibi the distances make it difficult to travel personally. You usually need friendly boots on the ground in the cities you want to invest in or stick to reputable turnkeys.
Once I'm ready to buy I will visit the area so i can get a feel for it and put a face to the name of some of the professionals in the area. I would like to partly use my gut feeling before deciding who to work with. its a long term buy and hold game for me in the US so wouldn't mined visiting when required.
I would like to buy in bulk, say 5-6 doors at the time for starters but will talk about it near at the time @Dean Letfus. Cheers.
Hello Karen, The real estate market for Orlando Florida is very good right now. I would research Orlando if I were you, we have many new residential developments and apartment complexes etc. You want research these zipcodes or areas: 32819, 32819, 32809. Sandlake, Dr.Phillips,Metrowest,International Drive, Celebration Fl, etc. All of these towns are close to each other and have good neighborhoods. I am more familiar with Orlando than other areas of Florida, but Florida as a whole has a great real estate market. Research Miami/South beach and Tampa etc. @Karen DiNapoli I hope you are successful in your search.
https://local.niche.com/rankings/suburbs/best-suburbs-for-families/m/orlando-metro-area/ here is an updated link of the best neighborhoods in Orlando. Stay away from areas like Pinehills. That is hood city, and some areas of Sanford. Best to luck love.
@Karen DiNapoli Sorry for the delay in my response! My earlier comment is in reference to turnkey. If you are going the turnkey route - meaning the PM and rehab and everything else is handled by that team - then finding an operator that you trust to be transparent and a reliable partner for 10+ years is crucial. If you want to invest out of state and put together your own team of PM, contractors etc, then yes, you are right, you have to decide where first ;)
In the end, that decision is about the amount of labor and time you want to put in personally. If you like the hands-on stuff or don't mind managing a team of several different people, all of whom need a cut of the deal, then building a team does, of course, require that you pick your market first :) If you don't want to (or don't have the time/energy to) put in that level of labor, or are just looking for passive REI income that doesn't require you to do much at all (after your initial due diligence in selecting a provider to work with, of course) then you can go the turnkey route and focus your energy on finding a long-term partner that you trust and that has ROI numbers that add up (and which they are willing to break down and explain to you in a clear, concise way so you know exactly where your money is going).
Different priorities mean different REI niches will be more or less applicable to your situation, and different REI niches require different methods of research and decision making, that's all.
Karen, I can definitely understand that, at the end of the day, you need to do what's most comfortable for you because you're the one who's taking on the risk. For whatever reason that Phoenix is low on your list, that's your call. I would urge you, though, to look at parts of the Phoenix metro area as well as Tucson. Using Zillow, for example, you'll see that there are a lot of neighborhoods where rents are very robust - with a buy-and-hold strategy, they could give you a very strong return. As @Dani Beit-Or says above, food for thought.
@Matt R. I'd rather have a flip exit as primary than that of buy and hold. If it is the reverse, I will have trouble understanding it. I would understand buy and holds when they are on a different asset class, say hotel/motel, where it has a potential of making more income or breaking your bank. hehe.
I find it interesting when Grand Rapids Mi is mentioned in these conversations with L.A., Tampa, Dallas, Houston, Nashville, Raleigh, Chicago, etc. Yes, Grand Rapids is a great city that has done nothing but get better over the last 10 years or more. It has garnered a lot of attention from magazine ratings and other "top 25" or whatever lists in the last couple years that it is now drawing out of state and international investors. I am sure just that is a major factor in the rapid increase in housing prices over the last few years. And there are bad areas of the city From what I see now competition for single family houses is very stiff. Our daughter was buying her first home this summer in just reasonably desirable areas and was outbid (by multiple bids) in the first day homes were on the market with over listing prices bids on 4 different homes. I am not trying to discourage you, but it just saying that if you are going to invest here, long distance from California, you better be careful and have some trustworthy boots on the ground here. Reputable contractors are very booked up as well. Grand Rapids has as much or more of a chance of being in a "bubble" than some of the other cities that are mentioned here. So keep that in mind... you are looking at a tight, hot market. I did buy one rental property about 18 months ago, but was lucky enough to have a good realtor that did a great job negotiating with Bank on an Bank Owned proerty. Message me if you have questions.
@Karen DiNapoli don't be scared of the word 'vacancy'. It's just a number.
As long as you use a conservative model and the numbers still work out, then it's probably a good deal.
For example, Raleigh has about a 6% vacancy rate, plus or minus some depending on the neighborhood. For all of my deals, I start with assuming a minimum 15% vacancy rate and 10% property management.
If it takes nearly 2 months to fill my property, which is highly unlikely, no big deal. If I can get property management services for 8% --- even better return. I've already accounted for these factors in a way that still allows me to stay in the black.
Hi Karen. Keep us updated on what you you have decided to do. I am a total noob both here and in real estate investing. I like the idea of buy and hold though. I am also in the same situation. I have some funds set aside to invest but I don't know which route. I started to listening to 2 other podcasts but like BP the best. I don't want to hijack the thread but I am renting out a townhouse and need to refi it to lower my mortgage payment.