New to Long Distance Rental Property Investing
Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes
New to Long Distance Rental Property Investing
Most Popular Reply
Chris ClothierBusiness Member
Rental Property Investor 路 memphis, TN 路 Member since 2009 路 2k+ posts 路 3k+ votesOriginally posted by @Robin Lambert:
Hello everyone! My husband and I are new to real estate investing. We have been researching a lot and are anxious to get our hands wet. We live in Northern California so investing in our area (and California in general) is out of the question for us. We are looking for advice/connections for investing elsewhere in the country. We have been looking at markets in Memphis, San Antonio, Cleveland, and Cincinnati. Specifically, anyone with experience doing rehabs long distance? Thanks!
-Robin
Hi Robin,
Excellent first post - great question - and welcome to BP! I wish you and your husband much success!
Can I ask you why you state that in investing near home and in California in general is out of the question? I only ask because as a new investor doing research it is easy to buy into a theory early on and then look for confirmation that you were correct. Hopefully, you guys have a local mentor. Not an out-of-state investment company that specializes in pointing California investors to the midwest and then collects fees from companies they work with, but an actual local mentor who invests either close to home or out of state.
For the cost of a meal, you could pick the brain of a local, experienced investor who can confirm the ins and outs of investing with first-hand knowledge. My hunch is that there are a lot of investors in Northern California who choose to invest close to home and they are doing excellent.
I totally respect the idea to go out of state and that you may have your reasons. I just thought I would suggest you check into your local market first and make sure it makes more sense to go out of state. There are plenty of areas in California, especially in-land from the coasts where you can buy houses for the same price and return as a midwest property. So you have to be clear on why California is out of the question. Hopefully this reply came across as friendly! It was meant to be :)
19 Replies
- Rental Property Investor 路 St. Louis, MO 路 Member since 2014 路 741 posts 路 424 votes8y
Hi @Robin Lambert I also started from the Bay Area, searching for a college town with ready tenants. We chose St. Louis because I could combine family visits with neighborhood education. Rehabs were tough because of managing the day to day operations. Our long-distance flips were not so successful. With finding a solid team and face to face meets, we were able to buy under-managed properties that paid for themselves, as buy and hold investments. This model worked out and I am now living in St. Louis on the income of 5 multi-family properties.
- 8yChris ClothierBusiness MemberRental Property Investor 路 memphis, TN 路 Member since 2009 路 2k+ posts 路 3k+ votes
Originally posted by @Robin Lambert:
Hello everyone! My husband and I are new to real estate investing. We have been researching a lot and are anxious to get our hands wet. We live in Northern California so investing in our area (and California in general) is out of the question for us. We are looking for advice/connections for investing elsewhere in the country. We have been looking at markets in Memphis, San Antonio, Cleveland, and Cincinnati. Specifically, anyone with experience doing rehabs long distance? Thanks!
-Robin
Hi Robin,
Excellent first post - great question - and welcome to BP! I wish you and your husband much success!
Can I ask you why you state that in investing near home and in California in general is out of the question? I only ask because as a new investor doing research it is easy to buy into a theory early on and then look for confirmation that you were correct. Hopefully, you guys have a local mentor. Not an out-of-state investment company that specializes in pointing California investors to the midwest and then collects fees from companies they work with, but an actual local mentor who invests either close to home or out of state.
For the cost of a meal, you could pick the brain of a local, experienced investor who can confirm the ins and outs of investing with first-hand knowledge. My hunch is that there are a lot of investors in Northern California who choose to invest close to home and they are doing excellent.
I totally respect the idea to go out of state and that you may have your reasons. I just thought I would suggest you check into your local market first and make sure it makes more sense to go out of state. There are plenty of areas in California, especially in-land from the coasts where you can buy houses for the same price and return as a midwest property. So you have to be clear on why California is out of the question. Hopefully this reply came across as friendly! It was meant to be :)
- Rental Property Investor 路 Glen Rock, NJ 路 Member since 2015 路 3k+ posts 路 2k+ votes8y
@Robin Lambert Welcome to BP family! In addition to looking at the markets, you need to determine as to how much time you can/want to spend on real estate investing. So think as to whether you will be an active or passive investor. This decision will in turn help you to decide on the strategy to go with: if active, reach out to local market PRO's to build a team, if passive, look for passive investment options such as syndications.
Feel free to PM me if you have any further questions.
- Investor 路 Washington, DC 路 Member since 2018 路 28 posts 路 14 votes8y
@Robin Lambert, very interesting post and welcome to the BP community. I am also considering some long-distance investing so the responses you receive will be interesting.
- 8yBrandon SturgillBusiness MemberReal Estate Broker 路 Columbus, OH 路 Member since 2013 路 3k+ posts 路 1k+ votes
@Robin Lambert Welcome. There is a lot of hype for Midwestern cities right now because of affordability...or perceived affordability. Truth be told there is good and bad in every city...it doesn't work in aggregate. It sounds like you've probably already done some macro research on MSA's, but I would encourage you to get to the neighborhood level if possible. Stick to fundamentals and you'll do fine. I am seeing buyers overpay because agents are driving the craze of speculation in neighborhoods that have zero long-term sustainability. I'd be glad to chat more or work on an acquisition strategy.
Best of luck!
- 8yBrandon SturgillBusiness MemberReal Estate Broker 路 Columbus, OH 路 Member since 2013 路 3k+ posts 路 1k+ votes
@Charles Molluzzo, @Chris Clothier runs a top notch turnkey operation. He's a rare breed and his company is really admirable. And I'm not a turnkey fan ;)
If you want to chat about small multifamily acquisitions, or strategy in general, I'd be glad to chat.
- St. Louis, MO 路 Member since 2018 路 26 posts 路 23 votes8y
I'd agree with what others have said to check inland CA areas as well. I've been hitting the St Louis and surrounding counties hard the last 6 months and have yet to find a good deal for a flip. There's already a big competitive investor scene here as well. I've sent about 2000 pieces of mail, attended meetups, and spent about 15-20 hours a week learning and networking. Still no luck. I've had a lot of people call me back and say I'm one of 20 letters/postcards they received. I've door knocked and made phone calls and people usually tell me others have stopped by already. When I search neighborhoods on county records, 1 out of 5 are investor-owned in some cases. Not saying this to be discouraging, just saying the midwest may not be the pot of gold at the end of the rainbow that some may lead you to believe. Then again maybe I'm just doing it wrong. 馃榾
- Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes8y
Originally posted by @Kathy Henley:
Hi @Robin Lambert I also started from the Bay Area, searching for a college town with ready tenants. We chose St. Louis because I could combine family visits with neighborhood education. Rehabs were tough because of managing the day to day operations. Our long-distance flips were not so successful. With finding a solid team and face to face meets, we were able to buy under-managed properties that paid for themselves, as buy and hold investments. This model worked out and I am now living in St. Louis on the income of 5 multi-family properties.
Hi Kathy, thanks for the advice and congratulations on your success! We are leaning toward buy and hold as well. How did you go about finding the best deals on your buy and hold properties?
- Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes8y
Originally posted by @Chris Clothier:
Originally posted by @Robin Lambert:
Hello everyone! My husband and I are new to real estate investing. We have been researching a lot and are anxious to get our hands wet. We live in Northern California so investing in our area (and California in general) is out of the question for us. We are looking for advice/connections for investing elsewhere in the country. We have been looking at markets in Memphis, San Antonio, Cleveland, and Cincinnati. Specifically, anyone with experience doing rehabs long distance? Thanks!
-Robin
Hi Robin,
Excellent first post - great question - and welcome to BP! I wish you and your husband much success!
Can I ask you why you state that in investing near home and in California in general is out of the question? I only ask because as a new investor doing research it is easy to buy into a theory early on and then look for confirmation that you were correct. Hopefully, you guys have a local mentor. Not an out-of-state investment company that specializes in pointing California investors to the midwest and then collects fees from companies they work with, but an actual local mentor who invests either close to home or out of state.
For the cost of a meal, you could pick the brain of a local, experienced investor who can confirm the ins and outs of investing with first-hand knowledge. My hunch is that there are a lot of investors in Northern California who choose to invest close to home and they are doing excellent.
I totally respect the idea to go out of state and that you may have your reasons. I just thought I would suggest you check into your local market first and make sure it makes more sense to go out of state. There are plenty of areas in California, especially in-land from the coasts where you can buy houses for the same price and return as a midwest property. So you have to be clear on why California is out of the question. Hopefully this reply came across as friendly! It was meant to be :)
Hi Chris,
Your reply is definitely helpful and I appreciate it. We looked around in California in the beginning, because ideally that's where we would like to invest, but we couldn't seem to find anything that fit our criteria (within our price range, SFR, or duplex/triplex). Maybe we weren't extensive enough in our search. I think we got discouraged and so we broadened our scope to include the rest of the country and that's how we focused in on the Midwest. Again we are really new to the game, and haven't yet been able to connect with a local mentor. We are planning on attending a few events with our local real estate investor's group coming up, so hopefully we will be able to connect with a few people then and get more advice about investing locally.
-Robin
- Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes8y
Originally posted by @Alina Trigub:
@Robin Lambert Welcome to BP family! In addition to looking at the markets, you need to determine as to how much time you can/want to spend on real estate investing. So think as to whether you will be an active or passive investor. This decision will in turn help you to decide on the strategy to go with: if active, reach out to local market PRO's to build a team, if passive, look for passive investment options such as syndications.
Feel free to PM me if you have any further questions.
Hi Alina,
We are mainly looking for a passive investment for our first property, as we both work full time jobs. However, we will probably end up becoming more active as we progress through this. What is a syndication?
-Robin
- Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes8y
Originally posted by @Brandon Sturgill:
@Robin Lambert Welcome. There is a lot of hype for Midwestern cities right now because of affordability...or perceived affordability. Truth be told there is good and bad in every city...it doesn't work in aggregate. It sounds like you've probably already done some macro research on MSA's, but I would encourage you to get to the neighborhood level if possible. Stick to fundamentals and you'll do fine. I am seeing buyers overpay because agents are driving the craze of speculation in neighborhoods that have zero long-term sustainability. I'd be glad to chat more or work on an acquisition strategy.
Best of luck!
Thanks, Brandon! We have started to narrow down to specific zip codes and neighborhoods. We have definitely considered what you mentioned, and we don鈥檛 want to be taken advantage of considering that we are longer-distance investors. I appreciate your offer and will send you a private message!
-Robin
- Fremont, CA 路 Member since 2018 路 6 posts 路 2 votes8y
Originally posted by @Scott Moulton:
I'd agree with what others have said to check inland CA areas as well. I've been hitting the St Louis and surrounding counties hard the last 6 months and have yet to find a good deal for a flip. There's already a big competitive investor scene here as well. I've sent about 2000 pieces of mail, attended meetups, and spent about 15-20 hours a week learning and networking. Still no luck. I've had a lot of people call me back and say I'm one of 20 letters/postcards they received. I've door knocked and made phone calls and people usually tell me others have stopped by already. When I search neighborhoods on county records, 1 out of 5 are investor-owned in some cases. Not saying this to be discouraging, just saying the midwest may not be the pot of gold at the end of the rainbow that some may lead you to believe. Then again maybe I'm just doing it wrong. 馃榾
Hi Scott,
That鈥檚 helpful advice! Do you strictly flip houses or are you looking for buy and hold as well? We would probably be more interested in a buy and hold for our first investment.
Thanks,
Robin
- Rental Property Investor 路 Glen Rock, NJ 路 Member since 2015 路 3k+ posts 路 2k+ votes8y
Syndication in real estate entails a group of people pooling the funds together to invest in real estate. Since the group would have general partners who do all the work and limited partners (aka equity investors), this type of investing for limited partners is passive.
You can read more about passive investing here: https://www.biggerpockets.com/blogs/10850/74883-wh...
Originally posted by @Robin Lambert:
Originally posted by @Alina Trigub:
@Robin Lambert Welcome to BP family! In addition to looking at the markets, you need to determine as to how much time you can/want to spend on real estate investing. So think as to whether you will be an active or passive investor. This decision will in turn help you to decide on the strategy to go with: if active, reach out to local market PRO's to build a team, if passive, look for passive investment options such as syndications.
Feel free to PM me if you have any further questions.
Hi Alina,
We are mainly looking for a passive investment for our first property, as we both work full time jobs. However, we will probably end up becoming more active as we progress through this. What is a syndication?
-Robin
- 8yTodd CrippenPro MemberRental Property Investor 路 Kansas City, MO 路 Member since 2016 路 117 posts 路 49 votes
Robin,
I agree with @Chris Clothier about there being opportunities in California with similar price-points and returns as the midwest, and do encourage seeking them out. I also agree @Brandon Sturgill that @Chris Clothier runs a very impressive turnkey operation!
I also think it is important to consider the amount of time you're wanting to invest in the search and the realistic inventory availability to find these opportunities in comparison to the midwest.
If you have the time available to acquire, manage (or hire a third party) a renovation, locally or elsewhere, than it can definitely be rewarded. But, if you are wanting to go the more passive route, vetting a quality turnkey provider that prices at a rent to value ratio, which tends to be lower than market value, in sub-markets with growth catalysts can be a very solid route to consider. In my opinion, it is just simply easier to find safe and consistent opportunities in certain sub-markets of larger metropolitan areas in the midwest.
I have clients that have had success in Memphis, Indianapolis, Jacksonville, and Kansas City (where our firm serves OOS investors). Kansas City has a highly diverse job market and covers two states, all while staying right around the 1% rent to value price point.
Please feel free to reach out if you would like any more advice or to share strategies!
- 8yMark HartPro MemberRental Property Investor 路 Memphis, TN 路 Member since 2017 路 352 posts 路 148 votes
Hey Robin,
Welcome to the BP community!
I'd recommend growing a portfolio of fewer properties in more established neighborhoods with good schools and lower crime. You will receive less Cash Flow on paper then in a C class neighborhood, however, your portfolio will have fewer issues in the long run (vacancies, theft, etc) This will align well with your goals of being a passive Real Estate Investor.
Best of Luck!
- Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 31k+ posts 路 20k+ votes8y
Originally posted by @Robin Lambert:
Hello everyone! My husband and I are new to real estate investing. We have been researching a lot and are anxious to get our hands wet. We live in Northern California so investing in our area (and California in general) is out of the question for us. We are looking for advice/connections for investing elsewhere in the country. We have been looking at markets in Memphis, San Antonio, Cleveland, and Cincinnati. Specifically, anyone with experience doing rehabs long distance? Thanks!
-Robin
Welcome to the site Robin.
- Investor 路 Charlotte, NC 路 Member since 2017 路 791 posts 路 479 votes8y
@Robin Lambert congrats on wanting to jump in to real estate. I'd love help you in any way possible.
- Developer 路 Nashville, TN 路 Member since 2016 路 484 posts 路 406 votes8y
Disclosure: I am a partner in a Turnkey company
Since you are new to the LD thing, it would be in your best interest to find a true full-service TK company. Find one that does everything....acquisition, rehab to certain standards, 3rd party inspections, tenanting, and ongoing management, etc. Make sure you are doing business with a reputable company - one that warrants their work, and has good communication. There are simply too many things that can go wrong in trying to manage any of this yourself, especially when combining distance, and job commitments. Find one that operates in a city that you want to invest, and in property class and price points that are congruent with your goals.
- St. Louis, MO 路 Member since 2018 路 26 posts 路 23 votes8y
Originally posted by @Robin Lambert:
Originally posted by @Scott Moulton:
I'd agree with what others have said to check inland CA areas as well. I've been hitting the St Louis and surrounding counties hard the last 6 months and have yet to find a good deal for a flip. There's already a big competitive investor scene here as well. I've sent about 2000 pieces of mail, attended meetups, and spent about 15-20 hours a week learning and networking. Still no luck. I've had a lot of people call me back and say I'm one of 20 letters/postcards they received. I've door knocked and made phone calls and people usually tell me others have stopped by already. When I search neighborhoods on county records, 1 out of 5 are investor-owned in some cases. Not saying this to be discouraging, just saying the midwest may not be the pot of gold at the end of the rainbow that some may lead you to believe. Then again maybe I'm just doing it wrong. 馃榾
Hi Scott,
That鈥檚 helpful advice! Do you strictly flip houses or are you looking for buy and hold as well? We would probably be more interested in a buy and hold for our first investment.
Thanks,
Robin
My long-term goal is to build up my portfolio of rentals for that steady cash-flow, but to achieve that end I'm flipping to generate capital. I have a full-time job as well, so I don't see being in the flipping game long-term. I really enjoy what I do (software development) and don't plan on leaving it...just want some financial flexibility from the RE side.
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