Out of state or in state

32 Replies

Currently renting in San Diego and have about 170K sitting in savings. I have thought of moving to Phoenix to house hack a 4plex and use the stack method to start building up my portfolio. Acquiring doors in San Diego seems next to impossible in comparison to Phoenix or Nevada (the other two markets I am looking). Should I

Steer my focus in state to where I play the long game and buy a duplex locally, should I move to Phoenix? Are there other out of state markets? I also have a highly recommended property manager in Las Vegas. What route would you do to start building wealth? Thanks

@Adam Regos if you can wait I would suggest it I think mid next year things are going to change big time it will turn into a buyers market I think we are headed for a recession even a possible dollar collapse hyperinflation I truly hope not but I have a big feeling things are going to change big time if I had that kinda savings I’ve invest it into hard assets just in case but best wishes to you

@Adam Regos

Welcome to Bigger Pockets. Most of us with experience will usually recommend to try investing in your backyard before looking at long distance investing. You have enough liquid for a down payment on a 1-4 unit here in San Diego. Local and out of area investors are buying properties in San Diego regardless of the market cycle. Let me know what I can do to help.

@Adam Regos house hack a duplex to start in San Diego if you want to build wealth long term. You can buy a duplex with fha 3.5% down or 15% conventional. For 3-4 unit your options are pretty much just 25% down. Every 1-2 years to house hack a duplex then move on to the next. You will build much more wealth and your money will go a lot further here especially if you are using

The low down payment options.

I wouldn't suggest uprooting and moving just to make your first purchase, but if you're willing to and have that flexibility with your other income source(s), then I'm all for it! 

Moving alone to either of your neighboring states (NV or AZ) will save you a bunch in cost of living & state income taxes, plus will have your dollar go much further. I would personally choose the zero income tax state that I think would benefit the most during this time from leaving CA residents. Still can't go wrong with either Vegas or Phoenix, but I think buying Vegas during this time could be a good move for the long haul. I just don't know enough about that local market to suggest if it has taken enough of a hit, or if sellers are still seeking top dollar. 

Also, whether or not you want to invest today is another question in the current market. I think each local market will differ slightly. I would personally choose where you prefer to live on a personal level and could see yourself growing out your RE holdings.

@Mark Frattini with my lender and realtor I've been looking local and it looks like the only possibility is a duplex. Triplex and 4plex are out of the question with loan limits and financing right? I was looking at some duplexes in north park but even with FHA it would be about 50K down and would take a while to build enough equity to do a cash out refi. I just don't see the long term play in SD if I want to get into real estate investing full time. I could acquire 4 units in Phoenix at a lower price point that would cash flow I just don't have any relationships built out there yet and was playing the waiting game with COVID

@Twana Rasoul I like that idea but don't I have to have 80% LTV to use a cash out refi to move on to the next duplex. How long would you estimate that taking? My lender hasn't been super clear on that. Also using this strategy seems like a long haul to financial freedom where my goal was to quit my corporate job in 5ish years and go into investing full time.

@Ujwal Velagapudi thanks for your feedback. I just can’t see the path to full financial freedom in the next 5-10 years in San Diego. Very hard to get to 6 figure of cash flow which is the goal. I looked at your profile and want to step into more cash flowing markets and get out of corporate America. What would you suggest now knowing my goals and timeline?

@Adam Regos You only have to fulfill your occupancy requirements, you don't have to refi to move out and on to the next one.  It is the get wealthy slow route but it is definitely worthwhile.  getting to put down around 30k for close to a $1M duplex is the best bang for your buck, even if you end up buying out of state, I'd still look to house hack locally and do that.

@Adam Regos good for you- no one has ever made a nice life for themselves by "waiting to see what happens." Taking action is the only way and  you can only control what you do, not the market or interest rates, etc. 

Personally, I'd consider what my long term goals are in a very specific way and find a market that will help you achieve those goals. My market is the fastest appreciating market in the country and it has served me very well; net worth grows quickly, which allows to you scale, but it takes time to build up cashflow in a market like this. Returns are market specific, rarely deal specific. 

Shut out all of the noise and take action that will set you on the path to your long term goals. 

Happy Investing!

@Adam Regos if you have The means and the numbers make sense for you knock yourself out also Factoring a possible big dip in the market and still makes sense then by all means there’s deals out there if your willing to look and work hard. I just see the market so overpriced and first time entry far out of the reach of 80% or more I feel to me like a reset is needed. But good luck to you in your endeavors

@Twana Rasoul what is the minimum occupancy requirement? And if I move out with out doing a refi I would have to tap into more of my savings. Would you suggest the BRRR method for Sd or just moving out and putting down another deposit?

@Adam Regos on a side note I would get out there personally and look for off market deals meaning. I would try to identify a poorly kept triplex or Four Plex and track down the owner and ask if he’s willing to sell don’t Solely rely on a real estate agent to find you something remember they’re out to make money off you so there not gonna dig deep for deals that don’t make financial sense to them despite them having to have the best intentions to find you a deal put in your own work and time and I’m sure you’ll find something.

Hi Adam,

One of the keys to successfully owing out of state investment property is having great property management in place.

In our brokerage, I would estimate that 75% of our clients do not live here in AZ. 

Right now are clients are seeing “stabilized” cap rates around 6 with cash on cash in the 8% range on their recent purchases.

Multifamily is primarily all we do, so happy to share our experience and thoughts. Feel free to reach out if you have any questions about property mgmt or purchasing MF here in the valley.

Best of luck !

@Adam Regos I still think you go to a place where you can enjoy living in personally, I value that above all else. You can make finances & investments work anywhere if you really want to. It seems the no-income tax states are doing better, smaller towns as well. If you can work remotely and keep your SD income, then it's really all in your hands to go anywhere. Cash flowing is great, but if you're considering house hacking or anything like that, I'd rather pick a decent city/location than living in a class C/D multifamily and househack/manage.

@Adam Regos Phoenix is going to have huge potential growth considering california exits in next coming years, especially in manufacturing. Also look up Austin, TX, Normal, IL, Huntsville AL has upcoming future manufacturing plants in the area, you can catch up with the pattern. Easier to find cash flow properties.

@Adam Regos , there is some great advice in here, and I originally came in to echo the "don't try to time the market" sentiment.  

But I also thought your 5-year timeline to get out of corporate America and into full time investing intriguing. 

Probably not on your radar, but there are more ways to make money in real estate than ONLY owning properties (which is a good way and I recommend.)  Specifically, if you started a property management company in San Diego (or elsewhere) you could very well be a millionaire in 5 years if you hustled at it.  Take that $170k and invest it in yourself and in building something that's recession-proof and worth more every year - your own company.  Then, if you want, take that PM company 5 years down the road and sell it for 1.5X annual revenue.  Boom. Or just keep raking in the monthly recurring income and have your staff run it. 

Once you have an established PM company, you will have all sorts of connections.  Pocket listings from your clients who want to sell, Realtors you interact with, etc. etc.  Doors simply open.  Ask me how I know.  :) 

Anyway, just a thought outside of the usual box. 

@Adam Regos , I have a client in Phoenix who felt the exact same way. He sold his home in CA, bought a 4-plex in Phoenix and lived in one unit for about 1 year. We made some exterior improvements, raised the rents and now he's looking for another one. Let me know if I can be of any help.

@Adam Regos Usually 1 year then you can move on and use another low down payment option and give your investments time to appreciate and pay down principal so you can cash out and refi if you choose to or 1031 exchange to a bigger property.

@Adam Regos Hey Adam, a ton of great insights on this thread. You and I share the same goal! I’m right there with you on trying to get out of corporate America in the next 5 years. One thing that no one has mentioned is that you have a lot of cash saved up, which is great. You could be looking into the foreclosure auctions online !! Auction.com would be a great resource for you.

You could buy a property all cash and do whatever needs to be done to fix it up and put a tenant inside the property (use a property management) . Then once the property is stabilized cash out refinance and repeat the process.

Or.. Flip the properties!

In my area (San Joaquin Valley) you can find homes very often on foreclosure websites for around 170k and will sell for 230k-250k !

If I had that kind of cash in reserves that’s what I would be looking into. Hope that helps!

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