Dallas, TX · Member since 2019 · 32 posts · 9 votes
Hi BP community!
I currently rent with my girlfriend in San Jose, CA for $1850 and our job is 10 minutes drive. Our commute is great but been reading House hacking and I am unsure if it is possible here. Unsure if California is my long term place.
With lower capital, I can invest Out of state (OOS). Would this be easy? How do I make sure I don't get scammed. Is passive OOS investing an option or more hands-on OOS investing the ideal way? Any tips for someone who currently lives in a high cost area.
@Eric Long I'll be blunt.....if someone says to me they don't want to fly out to a market to look around before they invest there or they don't want to spend the money on a plane ticket and hotel room to go visit then I would say you're not serious about that market. I may be in the minority on this in my thinking, but I'm basing this on my experience and what I've observed and hear from a myriad of people who have invested out of state. Try not to get to far in the weeds on analysis paralysis, landlord friendly vs. not landlord friendly, turnkey vs. non turnkey, etc until you take the most basic step of getting pre-approved with a lender first. I can assure you that whether you invest in the Bay Area, Texas or anywhere else, nobody will really take you seriously until they know you are pre-approved with a lender my man.
- You ensure you don't get scammed by doing proper due diligence (and being sure you know what you're doing going into it)
- Hands-on will be more risky if you don't know what you're doing
- Yes, passive OOS is possible... check into turnkey rental properties (that's what I have and I spend less than an hour a year on them in a normal year). Turnkey is also on the much easier end than hands-on.
I currently rent with my girlfriend in San Jose, CA for $1850 and our job is 10 minutes drive. Our commute is great but been reading House hacking and I am unsure if it is possible here. Unsure if California is my long term place.
With lower capital, I can invest Out of state (OOS). Would this be easy? How do I make sure I don't get scammed. Is passive OOS investing an option or more hands-on OOS investing the ideal way? Any tips for someone who currently lives in a high cost area.
I always recommend owning your own home before buying rentals. You're already paying off a mortgage every month. Why not have it be your own?
@James Wise I understand that, but I am in CA and buying a house to house hack I would be 1 hour from my job. Houses can be found in east side San Jose. It is still far for jobs and its a bigger money sink. Unless there is something I should know?
Please heed James’ advice. Someone, who posted on this thread, helped a friend of mine bought a couple OOS investment properties well exceeded the 1% rule. After a few short years, he sold them and took a loss over $200k.
Go to fifighter dot com and look up his article on 7/18/18. The link is below, but it may get removed by BP. You may also want to read his article on 7/23/18 where he owns a rental in other state/market. Our grass is really green here. You just haven’t figured it out yet. Tread carefully and don’t fall for the sweet talk.
Hey @Eric Long you are pretty accurate with your analysis on house hacking in the bay area (specifically San Jose) being NEARLY impossible. I say nearly cause I just heard David Greene on the BP podcast talk about how he helped somebody house hack in SF lol.
I would suggest reading David's book out of state real estate investing before you take another step towards committing to OOS. It will provide the road map for you in regards to how to get started. You can start to identify some markets that seem attractive to you and dive into BP and build some connections as well!
Good luck man! Anything worth having is HARD! Remember that!
For every story of someone not having success in OOS investing...there are stories of people who have had success. Don't let someone else's bad luck be your story. A lot can be prevented by flying to the market you will potentially invest in. I did that twice before I invested in Cleveland. Properly vetting the potential property manager and agent that you will be working with and seeing what kind of team(s) they have as well. You never take the word of an agent or a PM....you need to visit the area. The perception of someone trying to sell to you and them thinking you may not want to spend money on a plane ticket to fly out there is a recipe for disaster....that "C" area could actually be a "D". Many people like turnkey because the perception is that it is very hands off and the money just rolls in. IF you find the right company that certainly does happen and that is one of the appeals to turnkey. You also have to look at the market. Chicago is darn near almost as tenant friendly as the Bay Area and that certainly has its minuses and pluses. At worst I like an OOS market that is in a swing state area. Generally speaking, if a state is a red state then they are more landlord friendly.....blue states, more tenant friendly. There are of course exceptions to this and a lot depends on the area.
@DJ Dawson I literally just watched that episode you spoke about! House hacking would be easier if it was just me and not with my GF. I appreciate the motivation and just started reading the book. Hopefully, it gives me a better idea to go this route or not!
@Brian Garlington So far I see a lot of friends and other commenters saying to look away... Let's say I want to invest in Laredo, TX or Tampa, FL, you are suggesting to go out there. Any tips on what I should do when I land? Listening to David Greene's interviews makes it sound like you don't need to step out of the house haha! What would a landlord vs tenant-friendly state be like? I don't mind the due diligence to get more cash flow vs going TurnKey.
@Eric Long I'll be blunt.....if someone says to me they don't want to fly out to a market to look around before they invest there or they don't want to spend the money on a plane ticket and hotel room to go visit then I would say you're not serious about that market. I may be in the minority on this in my thinking, but I'm basing this on my experience and what I've observed and hear from a myriad of people who have invested out of state. Try not to get to far in the weeds on analysis paralysis, landlord friendly vs. not landlord friendly, turnkey vs. non turnkey, etc until you take the most basic step of getting pre-approved with a lender first. I can assure you that whether you invest in the Bay Area, Texas or anywhere else, nobody will really take you seriously until they know you are pre-approved with a lender my man.
@Eric Long - House Hacking is a great way to get started and some momentum under your belt. The first question I would ask you is what is your ultimate goal with House Hacking? Cash flow? $500/month out of pocket? $3000/month out of pocket? Long term plans with the property? Comfortable with one roommate? 4 Roommates? Commute time? Etc. All these are factors in planning and goal setting. As @Account Closed said, the grass is green here in the Bay Area if you are motivated enough to make it happen.
As @DJ Dawson also said, we helped someone House Hack in SF which many will tell you is strictly impossible. But we did it with some buy-in and made the property work for him. There are house hack opportunities all over the Bay Area, it's a matter of looking at things with a creative eye.
But as @Brian Garlington says, speak to a lender. That is one key step that will save you valuable time, and protect your emotions.
@Eric Long I am originally from San Jose so I know how it feels to live there. I always had to have roommates and move every year. I eventually moved to the Midwest where it is a lot cheaper and I now own my own home. In San Jose, I couldn't really even imagine that. I don't think it's a good idea to buy a $800k home to house hack. I would start to think about how can you offset your rent with cash flow. I do believe OOS is good. But the challenge is to find a reliable management company. I recently hired property management for a few of my properties in St. Louis. I am building a relationship with them. The most you can do is get recommendations and trial and error.
As @Brian Garlington has said, real estate is alot of work, and house hacking is right up there in terms of workload. There is travel involved, construction, alot of nights and weekends, finding properties, etc. you will probably have to look through tens, if not hundreds of listings to find the right one that you get under contract. If you want it to be successful, you will have to come to terms with the amount of work that is needed and commit.
Not familiar with OOS turnkey residential investments but heard good and bad stories.
I mostly do commercial and multifamily in Stockton and Sacramento currently. Maybe participating in a syndication is best for you?
Hey Eric, before you go out of state I would consider inland California markets like Sacramento, Stockton or Fresno. Even some parts of LA have a lower cost of entry and cash flow.
I currently rent with my girlfriend in San Jose, CA for $1850 and our job is 10 minutes drive. Our commute is great but been reading House hacking and I am unsure if it is possible here. Unsure if California is my long term place.
With lower capital, I can invest Out of state (OOS). Would this be easy? How do I make sure I don't get scammed. Is passive OOS investing an option or more hands-on OOS investing the ideal way? Any tips for someone who currently lives in a high cost area.
Most people in CA have given up investing locally and tend to focus more on the middle of the country where they get a better return for their investment. Mid-Markets like Cleveland and Pittsburgh tend to offer amazing returns.
@Eric Long I'll be blunt.....if someone says to me they don't want to fly out to a market to look around before they invest there or they don't want to spend the money on a plane ticket and hotel room to go visit then I would say you're not serious about that market. I may be in the minority on this in my thinking, but I'm basing this on my experience and what I've observed and hear from a myriad of people who have invested out of state. Try not to get to far in the weeds on analysis paralysis, landlord friendly vs. not landlord friendly, turnkey vs. non turnkey, etc until you take the most basic step of getting pre-approved with a lender first. I can assure you that whether you invest in the Bay Area, Texas or anywhere else, nobody will really take you seriously until they know you are pre-approved with a lender my man.
That makes sense to at least see in person where you are investing. I guess having a system to vet a city/location would be a good idea. I need to find something to vet my own research. I appreciate your opinion!
@Eric Long - House Hacking is a great way to get started and some momentum under your belt. The first question I would ask you is what is your ultimate goal with House Hacking? Cash flow? $500/month out of pocket? $3000/month out of pocket? Long term plans with the property? Comfortable with one roommate? 4 Roommates? Commute time? Etc. All these are factors in planning and goal setting. As @Account Closed said, the grass is green here in the Bay Area if you are motivated enough to make it happen.
As @DJ Dawson also said, we helped someone House Hack in SF which many will tell you is strictly impossible. But we did it with some buy-in and made the property work for him. There are house hack opportunities all over the Bay Area, it's a matter of looking at things with a creative eye.
But as @Brian Garlington says, speak to a lender. That is one key step that will save you valuable time, and protect your emotions.
Good luck man!
Blake,
Ideally, Cash flow! What example of a down payment would I have to work within the Bay Area? I live and work in Santa Clara, CA.
I currently rent, and my commute is 10 minutes. I plan to hold it and just curious about what options I have here. Let me know what else I can answer to help hone in on a potential strategy in Bay Area.
@Eric Long I am originally from San Jose so I know how it feels to live there. I always had to have roommates and move every year. I eventually moved to the Midwest where it is a lot cheaper and I now own my own home. In San Jose, I couldn't really even imagine that. I don't think it's a good idea to buy a $800k home to house hack. I would start to think about how can you offset your rent with cash flow. I do believe OOS is good. But the challenge is to find a reliable management company. I recently hired property management for a few of my properties in St. Louis. I am building a relationship with them. The most you can do is get recommendations and trial and error.
I see what you are saying. Sure there may be cash flow, but I may have to put down a lot vs a smaller investment with lower cash flow. I am thinking long term and not 2-3 years. I would love to hear more about how you screened your Property Managers and how you are doing now!
As @Brian Garlington has said, real estate is alot of work, and house hacking is right up there in terms of workload. There is travel involved, construction, alot of nights and weekends, finding properties, etc. you will probably have to look through tens, if not hundreds of listings to find the right one that you get under contract. If you want it to be successful, you will have to come to terms with the amount of work that is needed and commit.
Not familiar with OOS turnkey residential investments but heard good and bad stories.
I mostly do commercial and multifamily in Stockton and Sacramento currently. Maybe participating in a syndication is best for you?
Thank you Paul! Have you tried Syndication? What are you currently doing?
Hey Eric, before you go out of state I would consider inland California markets like Sacramento, Stockton or Fresno. Even some parts of LA have a lower cost of entry and cash flow.
The valley is tough right now so I feel for you.
They are still 2 hour drives and I would still need a property manager
I currently rent with my girlfriend in San Jose, CA for $1850 and our job is 10 minutes drive. Our commute is great but been reading House hacking and I am unsure if it is possible here. Unsure if California is my long term place.
With lower capital, I can invest Out of state (OOS). Would this be easy? How do I make sure I don't get scammed. Is passive OOS investing an option or more hands-on OOS investing the ideal way? Any tips for someone who currently lives in a high cost area.
Most people in CA have given up investing locally and tend to focus more on the middle of the country where they get a better return for their investment. Mid-Markets like Cleveland and Pittsburgh tend to offer amazing returns.
Thanks for this Tom. It seems like with technology, I can make this happen. Any tips on investing OOS?
@Eric Long either way, you might want to read up on OOS investing. I'm sure BP has a multitude of books and podcasts about it. Since someone mentioned syndication, I would caution you not to go down that rabbit hole unless you want to be 100% passive and give up control. Usually, I cater more to people who are focusing on their career and are investing for tax reasons or to diversify. There's more active ways to achieve financial independence than passively investing in syndications. Always happy to answer questions though!
@Eric Long - I'd suggest speaking to a lender. You can look at all types of possibilities and situations but until you talk with a lender and see what is actually possible around here, and what the numbers look like, that's when you can get your search and criteria laser focused and start down the path.
We always want to protect our clients emotional reserves as well as their capital because you will need them when beginning your journey.