So I have several questions that I believe others could benefit from as well. The area I live in is extremely high priced, and although I've heard several testimonies from VA realtors and investors here on BP say you can get started and be successful in this market. I am finding it hard, it seems that unless you have lots of money saved up, or you are well established and money lenders will work with you it's next to impossible. At least at a younger age, especially with little assets and money.

I recently had this crazy question, "what if I could live here in VA and invest in a market that is closer to my financial situation." but then other questions come up such as how would I see the property, monitor is up dating, and sell it with out leaving VA. These all come up because I have a full time job and I cant take the time off nor afford to go see a property in let's say California.

Other questions like how would I buy it, what about an inspector, or will a money lender lend me money to acquire this property and do the updates. Need less to say, I've realized that if I could do it, it would be a daunting task. But BiggerPockets being such a great place with an infinite wealth of knowledge, I'm turning to all of you.

Any and all feed back is welcome, as well as any other questions any one may have!

@Wilhelm J. Lieto this is one of the most frequent topics on the site. Search around and you can read for days on varying opinions. Buying out of state is not simple, but it's not so hard either if you do your diligence. Rather than vet the house so much, you will vet the people that are providing the information to you. Getting an inspector is about the same as if you buy local: ask your agent for a referral, ask other investors in the area, or find one on the all-knowing Interwebs :) 

The biggest thing to keep in mind is that it is a shift in thinking. You aren't buying this house, you are buying these peoples' knowledge. You have to really believe in those people. There are other services to help you trust but verify such as We Go Look. They can drive out, send photos/videos, etc. Best of luck.

Originally posted by @Wilhelm J. Lieto :

So I have several questions that I believe others could benefit from as well. The area I live in is extremely high priced, and although I've heard several testimonies from VA realtors and investors here on BP say you can get started and be successful in this market. I am finding it hard, it seems that unless you have lots of money saved up, or you are well established and money lenders will work with you it's next to impossible. At least at a younger age, especially with little assets and money.

I recently had this crazy question, "what if I could live here in VA and invest in a market that is closer to my financial situation." but then other questions come up such as how would I see the property, monitor is up dating, and sell it with out leaving VA. These all come up because I have a full time job and I cant take the time off nor afford to go see a property in let's say California.

Other questions like how would I buy it, what about an inspector, or will a money lender lend me money to acquire this property and do the updates. Need less to say, I've realized that if I could do it, it would be a daunting task. But BiggerPockets being such a great place with an infinite wealth of knowledge, I'm turning to all of you.

Any and all feed back is welcome, as well as any other questions any one may have!

Let's NOT "say California"! (That would be jumping from the frying pan into the fire, no?)

I hope you know, BP is riddled with folk who DO invest out of state. (Also, out of country).

They wisely say: It's not what you know, it's WHO you know! eg. You NEED trusted (local) PM and Contractor/s.

And if you can't tear yourself away for the occasional weekend, you also need local, trusted bird-dogs/wholesalers.

It IS the twenty first century! Cheers...

@Wilhelm J. Lieto I'm an out-of-state investor and it's not super easy. You're not a local so you'll never know the area as well as a local. You'll likely use property management but it's much harder to audit/check-in on your property management. So, basically, your risk profile and hassle both increase. To what extent they increase is really person-by-person.

That said, what I see here is a lot of people chasing out-of-state investing because of an arbitrary metric. They seek the highest cash-flow and end up looking at some place like Memphis. They barely have any money to start so a $40K home in Akron looks like an entry point. And they (rarely) run the numbers of what a 10% cash-on-cash return looks like vs. a 15% cash-on-cash return with additional expenses. If you invest $20K for the downpayment it's another $1K per year. You'll spend more than $1K to visit the property twice a year. Heck, I spend more than that on a single long-weekend trip.

Consequently, I personally believe there are many situations where out-of-state investing can result in worse cash-flow scenarios (real dollars).

@Brent Coombs thanks for help!

@Andrew Johnson , good points. Buying one house out of state doesn't seem to make much sense as you have no scale . A property management company isn't going to likely put you at a top priority with just one door .

You mentioned that an out of state investor will never know the market as well as a local and I don't disagree , but I have a theory that perhaps someone from out of state might be able to better see opportunities in a market .

Perhaps similar in a way to an immigrant might open a business in an area locals might have given up on or see as neglected and actually succeed?

@Wilhelm J. Lieto , what you are saying is the motto of the Real Estate Guys radio show . "Live where you want to live ... invest where the numbers make sense" of course easier said than done as others have said .

I would recommend their podcast ... not as good as BP podcast of course but it's actually quite different and they talk a bit more about the general economy and trends and things as well. Lots of ads but you can always fast forward them .

It's not hard, but it can be risky and costly. 

My recommendation would be not to get involved in a flip or one that requires rehab right away. Buy something small for your first one that comes with a tenant and possibly PM already in place. Do your due diligence! Get some experience under your belt, learn from it, establish your network of people (ie agent, repair crew, PM, etc). 

When you are ready, you can go after other types of investments.

I'm on my 5th property in MO and I've never been there. I have a full time job/career. Although I can make the time to visit at least once, I haven't had the need to.

Hi all,

I have 109 front doors in NE Ohio and live in San Diego.  Most of those front doors are apartment complexes.  I only have 7 single family there.  If you have less than 10 single family, you are not going to like my next statement.  You need $10,000 in reserves for each of those single family for when a big expense comes up.  I learned this from experience.  That means you should have $50,000 in reserves for when, not if Murphy's Law raises its ugly head.  Much better to be safe than sorry.  People that invested in single family in Houston are thankful If they had plenty of reserves right about now I would think.

Swanny

@Joseph M. Whew, I think your analogy with immigrant businesses is flawed.  The vast majority of all small business starts fail.  You don't want to have your real estate investment have the same success rate of any new random retail store or restaurant.  Survivorship bias is a dangerous thing to build an investment thesis on.

And you might be right about a neutral observer seeing opportunities differently.  Real estate investors that started post 2008 have an entirely different emotional assessment of risk than older investors.  To be overly general, one group almost seeks signs of an upcoming crash and the other tends to operate based on FOMO (fear of missing out) because of real estates performance over the last 7-9 years.  

But to personalize this with granularity, there are two 4-plexes for sale (where I invest) that are maybe 2 blocks from a fairly new Starbucks.  Me, sittting 1,500 miles away, says "Wow, this is ripe for some form of gentrification or appreciation!  Why else would Starbucks be there?  They have to believe in this area/neighborhood/etc. and their data has to be better than mine!"  Well, two phone calls later and I'm told you don't go there alone past 10 p.m. and if you want some meth, that's the place to get it.  I have no desire to take on that kind of property.  Maybe others do but it's now been sitting for months.  Bottom line, spreadsheets can't  tell you everything.  At least for me, your mileage may vary!

@Andrew Johnson , I'm sure overall that small business ownership has a higher failure rate than real estate investment. 

Some of what we hear about business failure is actually a myth of inaccurate too. For example, American Express did a commercial saying 90% of restaurants fail within the first year but this isn't true.  Here is a Forbes article on this. 

https://www.forbes.com/sites/modeledbehavior/2017/...

Regarding businesses run by recent immigrants they usually seem to be the type of staple businesses that are pretty low risk. Liquor stores, mini marts, dry cleaners fail a lot less than some other businesses. From what I've seen also is that immigrants will work together with family and with others in their community to help each other out. Cambodians in the donuts business for example. 

I agree with you regarding investors having a different perspective. Before the last crash I was really eager to buy something, but I'm really glad I couldn't afford prices in 2006,2007 as that was the height of the market. Looking back and hearing about how easy it was to get a loan...I probably could of found a loan officer to make me a loan, but it's good I didn't. Definitely glad I was able to buy a primary home in 2010. 

Looking back at what prices were during the crash I know this isn't the best time to be buying at least in CA market at least at market/MLS prices.

Interesting story about the Starbucks opening near some 4plexes where you invest. It's funny you mention that as recently I noticed a couple of Starbucks opening up in L.A in areas and I was kind of surprised they picked those locations. Both have been Drive-Thru locations so perhaps these are catering more to the commuters rather than locals. 

I do remember hearing people say Starbucks is a good indicator that a neighborhood is pretty decent. 

I guess now it's Whole Foods or something. 

@Joseph M. Fair enough analysis about donut shops.  But that may have as much to do with "free labor" from your kids as it does "identifying opportunity".  Plain ol' different cost structure.  

But, hey, if you can get greater insight without local knowledge, more power to you.  I can't.  I lack that level of insight so I rely on some local knowledge to "correct" my remote version of defining moment investment opportunity.

Either way, I'll only know if I missed out in 10-20 years 🤷🏻♂️

Or maybe I should go into hard-money lending for Cambodian donut shops in Los Angeles 😊

@Andrew Johnson , yeah I hear you. Haha, yeah maybe that's really the best investment out there , lending to Cambodian donut shops in L.A !

@Wilhelm J. Lieto , your question, "what if I could live here in VA and invest in a market that is closer to my financial situation." is the same question I asked myself before I got started. I was actually living in VA too when I got started investing in a couple different states. Know that even though you can't picture the logistics now, everything you are asking can be successfully done if you have the right team in place.

Once you find a great team to perform all of the tasks you mentioned in your last paragraph, you can get started with the resources you have available.  We have invested remotely in different markets, feel free to PM if you have questions.

@Joseph M. , I can't remember what book it was but in addition to Starbucks, I also heard about new locations for Chick-Fil-A, Kroger Markets, Nordstrom Rack and REI being good indicators of growth/gentrification because of their research and strategies for positioning new stores.

Originally posted by @Jennifer S.:

@Joseph M., I can't remember what book it was but in addition to Starbucks, I also heard about new locations for Chick-Fil-A, Kroger Markets, Nordstrom Rack and REI being good indicators of growth/gentrification because of their research and strategies for positioning new stores.

Sounds like an interesting book . If you remember the name of it please let me know ! 

@Joseph M. , I wish I did! It was about economics and real estate and I checked it out from the library over a year ago.  If I come across it again I'll let you know.

Originally posted by @Wilhelm J. Lieto :
 "what if I could live here in VA and invest in a market that is closer to my financial situation."

If where you live is not conducive to your financial situation, then you should NOT be living there. That goes beyond REI, it is personal finance 101.

I'm sure this comment has been made but I'm finding irony in someone in VA saying their area is over priced and wanting to invest in CA

I almost always hear people in CA saying their area is overpriced and want to invest OOS (maybe in places like VA).

Maybe it's a case of "the grass is always greener..."

@David Faulkner : many people live where it's not economically feasible (or smart) to invest. Or at minimum may not fit with investment goals.

I can easily afford my home and lifestyle in San diego. But no way I'm buying multifamily here.

Originally posted by @Cody L. :

David Faulkner : many people live where it's not economically feasible (or smart) to invest. Or at minimum may not fit with investment goals.

I can easily afford my home and lifestyle in San diego. But no way I'm buying multifamily here.

 Big difference between can't afford to and choose not to ... can't afford to = shouldn't be living there.

In our market it is very common to have out of state investors.  I currently have conference calls/communication with London, Italy, CA, Utah, Canada and at one point......Russia (they live here now).   It can be done, you just have to assemble the right team in the market you want to work in.   

In the connected world we live in now, it is easy to invest outside of your market.

@David Faulkner I don't have a choice at this point where I live. I have a decent paying job in D.C. to which nothing in my current profession compares. There for I will not quit, my goal is to live closer to work while staying in VA. However the Alexandria, Springfield and Arlington are more then I can qualify for, for a single family home. I am picky about what I want, that is why I am currently looking at places that are 30 minutes from work. Those areas are in my budget and affordable. The NoVA area is not a place I can afford to be a Real Estate Investor at this time.

@Cody L. There is no irony, it was just an example of a place far away from where I currently live. I am by no means in any way experienced in real estate. I am here to ask questions and learn as much as I can. But what I can gather from your comments is, CA is not a great place to start investing, especially if one is a beginner? I understand that the market differs from place to place, and doing some due diligence along with some basic investigating one can get an idea about an area and if they want to invest there.

I want to thank everyone thus far for your comments, everything is helpful and appreciated.   

@Jennifer S. Thank you for your advice, I am currently very busy and stretched thin. However when I can get back to focusing more time to this I'm sure I will have plenty of questions for you!