Thoughts on Out of State Real Estate Investing

9 Replies

I love that opportunities are all around us. Recently, I have been interested in Out-of-State investing and will soon be pulling the trigger.

I am currently doing my research and reading the book by David Greene on the same topic. However, I wanted to know what my family here in BiggerPockets think. 

What do you do to acquire funding?

How do you research?

And of course if you have any other wisdom to add that is surely welcome!

What say you?

Hey CJ,

Out of state investing can be just as lucrative and useful as in state. For it to work and feel comfortable, you need to find a solid team (contractor, property manger, etc.) that you feel comfortable with. Since you will be further away and won't be able to supervise everything directly, it may be more stressful. But if the numbers make sense, then it shouldn't matter how far away the investment is. 

I hope this helped, don't hesitate to reach out with any other questions you may have.

Alec Granger

New Western Acquisitions

Newwestern.com 

@Caleb Heimsoth any reasons as to why when others are doing it successfully such as David Greene? I imagine that as long as the numbers work and due diligence is completed it should be more lucrative than "waiting for something to pop up"....What are your thoughts?

@CJ Wallace ,

It can be very lucrative for people. Especially for those living in expensive markets, like David does. I personally live in an affordable yet hot market where people from out of state are investing all of the time. I personally have not had the need to branch out yet, but will need to as the multi-family in my locale is getting a little too hot for comfort. 

The biggest key is: find a Realtor that is an investor him/herself or one that works with a ton of investors. They will be your linchpin for all of the rest of your relationships in that market (Contractor, PM, Landscaper). I believe as a realtor that you may get paid for the transaction, but the real differentiator is the value you add before and after close. 

I have never spoken to a successful out of state investor that does not have a good relationship with one or multiple great agents in their farming area. I am sure they are out there, but it sounds like a lot of work to use the expertise at your disposal.

I don't currently invest out of state, but properties in my area (Kansas City) get marketed to a lot of out-of-state investors.  So my advice is based on watching that marketing process happen.

Pick a metro area.  If you end up with two metro areas that are more or less equivalent, as far as properties available, rents, rehab costs, cash flow, all of that - then either pick the one that you personally want to visit more, or the one that has the cheapest/shortest flights from wherever you are.  You should go there in person at least once, and you may have to do it more than once, so make that as easy on yourself as you can.

Look at crime maps for that metro to see what different parts of town are like.  Find out what the big city or the suburbs require as far as a business license, rental property inspections, etc.  Look at the Reddit for that metro and search for the "I'm moving to town, where should I live?" threads, to see what locals recommend.  Look at Zillow/Trulia/Rentometer to see what properties are selling for, how long they stay on the market, what the rents are like, etc.  If there is a real estate investors' association in that metro area, consider joining it - the meetings may not be as interesting since you're out-of-state, but sometimes they have leases you can use and knowledge of dealing with local governments.  You may get some kind of newsletter or members' directory that will have attorneys, contractors, banks/money people, title people, realtors, and others in that area that are interested in working with property investors.

Once you've picked an area, and either some properties you want to look at, or a realtor who finds some properties for you - actually go out there yourself and look.  Put the appropriate amount of SPF 45 on your lower regions before they talk to you. Once you've gotten the "guided tour", visit the houses again without the realtor there - like later that day, or the next day.  You won't be able to get into the house, but at least drive by them, and drive around the neighborhood a little.  If possible, visit in both the daytime and at night.  Realtors are excellent at choosing the one way to get to the property that doesn't go by the airport, the train tracks, the dead K-Mart, and the meth lab.  :D

If the schedule works out, and if you joined the local investors' association, consider going to one of their meetings while in town.  Print up some business cards (VistaPrint or even laser-print at home) and trade cards with people who may be able to help.

out of state investors invest in your area all the time..  there is nothing risker in real estate than to 

buy and try to rehab remotely.. it can work but boy can it not.. even when your dream team sounds great etc.

to many parts have to all come together.  if your going to go out of state at least to start.. simply buy something 

that is either already rented or rent ready.. the down side to trying to rehab on your own as a beginner FAR out weights the tiny equity you get doing it yourself.. and how do you know if those writing the books are successful  LOL.. The theories all work does not mean though those types of investments are great investments or safe investments.. you have to look at the experience behind the person..  

@CJ Wallace David Greene wrote a book about it but it’s not as simple as he makes it seem. I take anything anyone buts in some book with a huge grain of salt. The real world is just very different than anything you put in a book.

You can do it, I’m just telling you, you WILL have issues. They could be small (the rehab work wasn’t as good as you’d like) or massive (contractors takes your money, does no work and you’re screwed).