Newbie in Orange County, CA

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Dmitriy Fomichenko Nice to meet you and thanks for the helpful information! Maybe I'll see you around the Anaheim Hills/Yorba Linda area.

Regards,

Justin

Aaron K.

Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes

8y

@Justin Wotring welcome to the site, I would very carefully look at if you want to touch your 401k and IRA especially for out of state investing, if something were to go wrong it could go very wrong and bleed over into your retirement. You might consider making your current move before investing so that you know what you have to work with and don't jeopardize your primary residence upgrade by borrowing too much.

P.S. the football off-season is always a sad time. Who's your team. Even though I'm born and raised in SoCal my heart belongs to Denver (at least as far as football goes)

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Aaron K. thanks for the advice. My gut was already telling me this, I'm just eager to start. I have a meeting set up with a financial advisor through my employer at the end of the month and I was planning on discussing some options with him. More than likely I'm going to be patient and wait until the move to fund the down payment. What about a HELOC or cash-out refi, or are these bad ideas if I were to be moving in the next year or two?

P.S. I'm originally from Michigan, so there's always a soft-spot in my heart for the Lions, but now that I live in SoCal, I follow the Rams/Chargers, with Chargers being the preference between the two.

Thanks again for the advice!

Justin

Aaron K.

Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes

8y

@Justin Wotring I almost became a "financial advisor" and didn't because none of the companies I talked to had their client's best interests at heart. Ask your financial advisor if they are a fiduciary (meaning they are legally obligated to look out for your best interest) Many people call themselves financial advisors but really only make money from commissions selling overpriced mutual funds. Thus hourly fee based fiduciaries in my opinion will give you the best advice if you decide to go that route.

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Aaron K. thanks for the quick reply. I believe this guy is friends with the owners of the company, who are also my friends, so I hope he'll give me honest and straight-forward advice in my best interest. I'll hear him out, but I also have fiduciaries that work with my parents and in-laws that I trust. Any thoughts on the HELOC or cash-out refi? Thanks again and I truly appreciate you taking your time to share your advice!

Aaron K.

Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes

8y

@Justin Wotring cash out refi can work if applied properly and is probably the better of the two options. HELOC can be used for down payments in conjunction with a cash out refi, but make sure you understand the limits on payback times etc.

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Aaron K. Will do. Thanks again for all the info and your time!

Kevin Grinstead

Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes

8y

Hi Justin, welcome to BP. I would look into Ohio or Tennessee with low entry level homes with a great ROI. I am sure there are other states as well. In Colorado it is hard to get a cap rate above 6.5 and the ideal is at least 10.

If you get into a more expensive market you can easily spend the 100k you have just on the down payment with a very long road to get to being financially secure while investing to increase your overall income.

Good Luck and happy investing!

Tom Ott

Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes

8y

Originally posted by @Justin Wotring:

Hey everyone!

My name's Justin Wotring (I pronounce it like "Watch-Ring") and as the title suggests I am new to the RE investing gig. I'm a husband, father of 3 (one boy, 7, and two girls, 4 and 2.5 months), part-time assistant Little League coach, and part-time Cub Scout helper. My day job is being Technical Supervisor of a Clinical Laboratory. As you can probably tell, life's a little busy!

I currently pay a mortgage on a 3 bedroom, 2 bath home in a nice neighborhood in OC that we've been fortunate enough to live in for 5 years. Before that, my wife and I had purchased a condo together (pre-kids). We plan on upgrading to a 4 bedroom since the addition of the 3rd kid, as we have some nice equity built up on our place to help with a down-payment. That's about the extent of my real estate knowledge.

How I got here:

My day job costs me a 2-hour commute M-F, so I quickly decided to splurge on an Audible account so that I can gain some knowledge while I zone out in SoCal traffic. That eventually led me to download and listen to "Rich Dad Poor Dad", which subsequently led me to download and listen to "Rich Dad Advisors: ABCs of Real Estate Investing" by Ken McElroy. Both of these books really opened my eyes to earning passive income through buy and hold real estate investing. When I'm not listening to audiobooks, I also listen to podcasts (mostly ESPN's Fantasy Focus Football, which helped me win my first championship in a very competitive 12-team PPR league *humble brag*). Now that it's the off-season for football, I stumbled across the Bigger Pockets Podcast a couple weeks ago and started listening to a few episodes, which ultimately led me to this site!

My goals:

As a newb living in Southern California, I don't want anything to do with rental properties in my area, as the market is waaay too expensive for my pockets currently. As such, I'm busting out my binoculars and looking in other parts of the U.S. (suggestions welcome) to buy and hold multi-family and single family homes where it's more affordable. I have some cash that I'd be able to borrow from a combination of my 401k, IRA, and/or savings accounts to use as down-payment for my first property (somewhere in the ballpark of $100k). Once obtained, I plan to follow the BRRRR method. Ultimately, I'd love to build enough passive income to allow me the financial freedom to retire early, support my family as the kids get older, free up my time to do things that I love, and be a volunteer/philanthropist in my little part of the world. Since I'm new to the RE investing world, I'd love to network with anyone on this site and build a solid team of like-minded, motivated individuals.

My inspirations have come from BP's own David Greene ("Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-Of-State Rental Properties", and BP Podcast Episode #257: "But My Market is Too Expensive!" (How to Become a Long-Distance Real Estate Investor)), and Bryce Stewart (Episode #276: "Early Retirement ($10k/Month) by Age 35 with Bryce Stewart"). These two guys have really shown me that my goals are attainable!

Thanks for taking the time to read this and I hope to have the pleasure to get to know you and possibly work together on a future deal! I'm really excited to be a part of this awesome community!

Best Regards,

Justin Wotring

Hello and welcome! You have come to the right place. Best of luck to you!

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Kevin Grinstead nice to meet you and thanks for reaching out! I appreciate the tips on Ohio and Tennessee, I'll definitely do some research in those markets. Keep in touch!

Justin

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Tom Ott Thanks!

Charlene McNamara

Rental Property Investor · Nevada City, CA · Member since 2017 · 74 posts · 70 votes

8y

Right now a Heloc might be a better option for you, of course, you'll need to investigate your specifics. However, if you will be carrying a large mortgage and have a 30 yr fixed at a really low rate, you might want to run numbers to see how much you'd lose by refinancing at a higher rate.

I'm in the same position right now and for me a Heloc is a much better option. I got good rates and terms from my local credit union.

Charlene

Bo Kim

Rental Property Investor · Los Angeles, CA · Member since 2016 · 141 posts · 123 votes

8y

@Justin Wotring Welcome Justin! I was just like you a year ago, commuting 1-2 hrs on the 5 fwy and listening to a ton of audiobooks and podcasts (check out Gary Keller's Millionaire REI if you havent yet).

Since then, im investing in 5 OOS rentals in KC and Indy and hoping close one in Little Rock next month. I have used various methods like turnkey, BRRRR, and HELOC to fund my deals. Since I didnt have a ton of capital to start, I had to get creative! (Listening to Turner's Investing with no/low money down got helped as well).

I think youll find tons of great info on BP, just make sure you really do your due dilligence, carefully vet the providers and people giving you information as they may have hidden agendas to sell you something.

I was fortunate and had 2 seasoned investors show me the ropes and be that objective 3rd party. Best advice I got was to fly out to the markets and meet the team and see the neighborhoods for yourself. It helped me level set my expectations coming from SoCal :)

Hope this helps and keep us posted on your progress!

Cheers,

Bo

Hadar OrkibiPro Member

Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes

8y

Hey @Bo Kim im interested to know what kind of deal are you closing on next month in Little Rock?

That's if you don't mind sharing....

Bo Kim

Rental Property Investor · Los Angeles, CA · Member since 2016 · 141 posts · 123 votes

8y

Originally posted by @Hadar Orkibi:

Hey @Bo Kim im interested to know what kind of deal are you closing on next month in Little Rock?

That's if you don't mind sharing....

Sure thing. Single family through little rock turnkey.

Bo Kim

Rental Property Investor · Los Angeles, CA · Member since 2016 · 141 posts · 123 votes

8y

Originally posted by @Hadar Orkibi:

Hey @Bo Kim im interested to know what kind of deal are you closing on next month in Little Rock?

That's if you don't mind sharing....

I see your from new zealand! Lived in auckland (brownsbay) for 6 years as a kid...longing to go back soon!

Hadar OrkibiPro Member

Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes

8y

Thanks @Bo Kim thanks for sharing. small world!

you are in good hands there in LR.

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

8y

Originally posted by @Justin Wotring:

Hey everyone!

My name's Justin Wotring (I pronounce it like "Watch-Ring") and as the title suggests I am new to the RE investing gig. I'm a husband, father of 3 (one boy, 7, and two girls, 4 and 2.5 months), part-time assistant Little League coach, and part-time Cub Scout helper. My day job is being Technical Supervisor of a Clinical Laboratory. As you can probably tell, life's a little busy!

I currently pay a mortgage on a 3 bedroom, 2 bath home in a nice neighborhood in OC that we've been fortunate enough to live in for 5 years. Before that, my wife and I had purchased a condo together (pre-kids). We plan on upgrading to a 4 bedroom since the addition of the 3rd kid, as we have some nice equity built up on our place to help with a down-payment. That's about the extent of my real estate knowledge.

How I got here:

My day job costs me a 2-hour commute M-F, so I quickly decided to splurge on an Audible account so that I can gain some knowledge while I zone out in SoCal traffic. That eventually led me to download and listen to "Rich Dad Poor Dad", which subsequently led me to download and listen to "Rich Dad Advisors: ABCs of Real Estate Investing" by Ken McElroy. Both of these books really opened my eyes to earning passive income through buy and hold real estate investing. When I'm not listening to audiobooks, I also listen to podcasts (mostly ESPN's Fantasy Focus Football, which helped me win my first championship in a very competitive 12-team PPR league *humble brag*). Now that it's the off-season for football, I stumbled across the Bigger Pockets Podcast a couple weeks ago and started listening to a few episodes, which ultimately led me to this site!

My goals:

As a newb living in Southern California, I don't want anything to do with rental properties in my area, as the market is waaay too expensive for my pockets currently. As such, I'm busting out my binoculars and looking in other parts of the U.S. (suggestions welcome) to buy and hold multi-family and single family homes where it's more affordable. I have some cash that I'd be able to borrow from a combination of my 401k, IRA, and/or savings accounts to use as down-payment for my first property (somewhere in the ballpark of $100k). Once obtained, I plan to follow the BRRRR method. Ultimately, I'd love to build enough passive income to allow me the financial freedom to retire early, support my family as the kids get older, free up my time to do things that I love, and be a volunteer/philanthropist in my little part of the world. Since I'm new to the RE investing world, I'd love to network with anyone on this site and build a solid team of like-minded, motivated individuals.

My inspirations have come from BP's own David Greene ("Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-Of-State Rental Properties", and BP Podcast Episode #257: "But My Market is Too Expensive!" (How to Become a Long-Distance Real Estate Investor)), and Bryce Stewart (Episode #276: "Early Retirement ($10k/Month) by Age 35 with Bryce Stewart"). These two guys have really shown me that my goals are attainable!

Thanks for taking the time to read this and I hope to have the pleasure to get to know you and possibly work together on a future deal! I'm really excited to be a part of this awesome community!

Best Regards,

Justin Wotring

Welcome to the site Justin.

If you are looking at out of state investing as you are priced out of your home market you'll probably want to look towards the midwest. Cleveland, Toledo, Dayton, Kansas City, Indy etc... All of those markets are pretty cheap, offer solid rent to price ratio's and are well represented by operators here on Bigger Pockets. Setup some keyword alerts for those cities and you will quickly see who's who in those markets.

As for some best practices always remember that it's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

Michael Swan

Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes

8y

Hi @Justin Wotring,

Welcome!! I have nothing to sell you, just 122 front doors after only investing in RE for 7 years. Reach out to me if you ever want to talk shop!! Have you watched or listened to Podcast 238? That one could help you too. I was a guest. All of my doors are now outside of pricey San Diego, except my personal residence now.

Swanny

George Blower

Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes

8y

@Justin Wotring

Welcome to Bigger Pockets.

Craig His

Chandler, AZ · Member since 2017 · 9 posts · 6 votes

8y

Welcome! In a similar boat as you, but in Phx. Life is busy with kids, just need to make sure the boss "wife" is happy and knows exactly what your doing. She may not know the ins and outs of this but listen to her and make her part of the decision process. After all your doing this for them.

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Charlene McNamara thanks for the advice! I'll be shopping around to see what rates/terms are best!

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@Bo Kim Nice to meet you! It's reassuring to read about your success while being in a similar situation. I'll definitely be doing my due diligence when it comes time to minimize as much risk as possible. Thanks for the advice and I hope to be sharing some success stories in the near future!

OP

Rental Property Investor · Orange County, CA · Member since 2018 · 98 posts · 138 votes

8y

@James Wise Thanks for the advice! I've actually been looking in the midwest as the market's cheaper. I grew up in SE Michigan, about 20 min from Toledo, so the NW Ohio area's pretty familiar to me. It would also be easy to make a trip there as my parents still live there. If I find any potential deals can I run them by you? Thanks again for your time and sharing your knowledge.