Real Estate Investor · Vancouver, WA · Member since 2012 · 78 posts · 22 votes
I am new to this site but I am not new to Fix/Flipping or Investing, I've been flipping houses for ten years locally and we own a few rentals. My question is whats the secret to flipping out of state. Do you use a all in one real estate office The ones that have their own rehab crews or do you just start buliding a team one contractor at a time. Any tips would be very helpful
Just want to add: Great job Josh, Love this site. I've only posted a couple threads But the people on this site are Awsome I wish I had this site when I started 10 years ago
I'm just starting to partner up with another BP member to start flipping properties in a new state (for both of us). It's certainly been a challenge!
What we've found are necessities are:
1. Have a great real estate agent on your side, or better yet, get your license in that state so you can get access to the MLS yourself.
2. Have someone on the ground that can be your eyes, ears and go-to person for all the day to day stuff.
3. Have someone who can fulfill the role of project manager and right-hand-man for all the actual rehab work. We were lucky to find someone that had done a rehab before, so he knows some contractors, knows the basics of renovation, etc.
4. Have the means to travel to the location whenever necessary, on short notice. If you can't do this, don't bother trying.
Scott, it depends on your bank account IMO. I know a guy who has a small crew that travels like storm chasers, I'd say he does okay but has travel expenses (often staying in the property if they can).
Another way is hire a foreman you trust to go to the jobs and hire locally.
Another is to hire locally and try to oversee a project, I would never do this.
The best soultion in my opinion is not to, stay local. I'd have to pick a property up at deep deep discounts just for the brain damage of learning a new market and due diligence required.
OTH, if you are a subsidiary of GE Capital and can buy 15 properties in an area, that changes things, I assume you're not in that position.
I flip homes out of state. The most important is to have a realtor and contractor that you trust. The realtor can check out properties you are interested in making offers on to determine that the neighborhood/property are worth it. We ball park estimates on rehab before offering and once we offer then the GC checks out the property to confirm if our numbers are correct. From there, it's more or less the same process as you would do things if living locally.
I would not recommend using a one stop shop for everything. What happens if you have a problem with just the realtor? Then your whole team breaks down. I keep a list of contractors and realtors I would work with, as well as other team members, in case I have to replace someone. I would also be prepared to travel to your market as well.
I would try a little harder to find something closer to home. I have at times been a long distance investor, once by choice, but moreso by circumstance. I overlooked a ton of oppourtnity much closer to home when I chose to be a long distance investor and at the time it was a foolish approach. In a 2-3 hour radius of where you reside, are there really few opportunities?
I suppose pulling this off would become easier as you do a bunch, but starting with 0 in a market, I think there would be a lot of pains with finding decent contractors, agents, etc.
I'm just starting to partner up with another BP member to start flipping properties in a new state (for both of us). It's certainly been a challenge!
What we've found are necessities are:
1. Have a great real estate agent on your side, or better yet, get your license in that state so you can get access to the MLS yourself.
2. Have someone on the ground that can be your eyes, ears and go-to person for all the day to day stuff.
3. Have someone who can fulfill the role of project manager and right-hand-man for all the actual rehab work. We were lucky to find someone that had done a rehab before, so he knows some contractors, knows the basics of renovation, etc.
4. Have the means to travel to the location whenever necessary, on short notice. If you can't do this, don't bother trying.
Thank you all for your reponses. you've all just said the same thing i was thinking, I guess I was hoping for that magic pill. Since I don't have deep deep pockets I will have to re think my plans thanks again
My advice would be (is?) to stay local, but since Brian Levredge and J Scott are doing it long-distance I'm keeping an open mind.
Investing in rentals out-of-state makes sense to me if you live in an area where rentals just don't cash flow compared to other areas, but is the flip situation similar? I'd think there would be plenty of profitable flip opportunities in an investor's local area.
Are there markets where flip profit margins are significantly better? What drives a successful flipper to take on the extra work and risk of out-of-state flipping?
J made some great points and they are essentials in my opinion. Keeping an open mind is also good, however, i would simly ask, why go out of state? is it because your area is not producing enough opportunity for you to get deals? If that is the case, perhaps the answer is to build better systems and better relationships (or more of them) so that you can increase your local deal flow.
Flipping out of state without an actual partner with boots on the ground is a very tough challenge and only for the very experienced investors who can handle and adjust to the problems they WILL face.
Tom A. - In reponse to you comments. Investing out of my area for rentals is by far a better return on my dollar, than holding locally. I can get 3 to 1 better return out of area. As far as flip projects we took a hit in the crash but nothing like back East, Vegas, Phoenix etc. there are some local deals but its a feedin frenzy banks are waiting up to 2 weeks to look at offers. People are over paying. I dont want to buy a job. so rather than sitting around waiting I been looking at other options. Plus I use private funding and if I dont spend my investor money I will lose it.
Will B. - As far as building better systems, your right, thats why I ask you guys for your thoughts I'm always open to a better or new way to improve.
Scott, I understand your situation. Inventories are pretty skinny here as well, with all that comes with it (overbidding, picky banks, etc.) I saw a chart that shows our MLS inventory. The metro area is at 20K homes, down from a peak of 84K five years ago. That decline in inventory has been really noticeable. The banks seem to have fired up the foreclosure machine again however so I wouldn't be surprised to see more inventory soon.
I wanted to add a little more to this thread. Flipping out of state, or in another market that is a reasonable distance away from you, can be pretty problematic. No matter your level of trust, you have to rely on the wisdom and decision making of others, which you can find to be frustrating at times. It is capital intensive and time consuming, and that's before you even get your first deal going.
All that said, I wouldn't discourage anyone that has the means or experience from trying it. There are people that I know of who are flipping 60-80 homes per month between multiple markets. Not wholesaling, but buying, rehabbing, and selling either retail or to investors. As Will touched on, you can make your own system (locally) more efficient and profitable. But I see no reason why an effective system can't (or shouldn't) be employed in multiple markets, provided you can find effective managers to assist you.
My advice would be (is?) to stay local, but since Brian Levredge and J Scott are doing it long-distance I'm keeping an open mind.
I'm just starting to invest out-of-state, and I'll be completely honest, it's tough! (unless you don't mind moving to the new state for a couple months to build the team).
I couldn't imagine doing this if I didn't already have a good bit of experience, and I would never recommend that anyone who is starting out in rehabbing start by going out of state.
Learning to flip out of state is really reminding me of learning to flip the first time around, so if I started out of state, I imagine it would literally be twice as hard (which no-doubt means more than twice as likely to fail)...
I think Jason's comment from his recent experience is a good warning, don't try it as your first go round and if an experienced investor, expect learning curves and problems.
In my area... all the good deals are snapped up by the locals with cash offers and connections. The thin deals or problem properties are pawned off on investors from the Bay Area or LA by "realtors they trust" and contractors "looking out for them". These folks don't really understand the landscape and get taken with comps from a few blocks over but might as well be a world away to local homebuyers. Guess what happens... the realtors and contractors make money while the investor is lucky to make minimum wage for the hours and risk involved. Unless you have very deep pockets and the locals know you are going to give them multiple deals... they are going to unload marginal deals on you. Then if you can't sell quickly... The realtor will really "look out for you" by managing it as a rental property. Call me cynical but I don't see many of what I consider good deals finding their way to novice investors from out of my area... which makes me wonder why it would be any different for me if I were to try to invest or flip in another state.
I deal with a lot of over seas investors and it always comes down to how good your team is. If you have that it can be as just as easy as doing it in your own market. Through networking and sites like this, you can find people that will usually hook you up with who they use. I have been able get great deals from others that where looking for something my market could offer them. From grouping for tax sales, commercial, or any good deal.