Dan Dalby from SF Bay Area

14 Replies

Hello!  I am a High School math/computer science teacher in the SF Bay Area.  I love my job, but teachers pay doesn't pay the bills in the area.  I'm looking for a way to invest what money I have and create cash flow for the long term.  I was a finance major and a credit manager/ adviser in a former professional life so I have some understanding of the numbers.  Investing remotely has my interest at the moment due to the high prices in my local area.  What I'm having trouble with is finding good areas across the country to invest in.  I'm interested in investing in housing in good neighborhoods even if that means sacrificing some cash flow in the short term.   

I've been a long time listener to the bigger pockets podcast and have been wanting to jump into this for a few years.  After years of lobbying, I finally got the green light to put our investment money into real estate after talking my wife into reading "Rich Dad, Poor Dad".  Thank you Robert!

@Brian Garlington

Hi Brian. Thanks for the advice! I see that you invest in Cleveland. I've been looking there too. The prices are right in line with what I can afford. My biggest question is how you can figure out what neighborhoods to look into. What metrics are used, school ratings, crime rate, etc. Any thoughts or resources would be appreciated!

Thanks,

Dan

OOS could be a profitable investment but I prefer to invest in commercial multifamily within a few hours drive - Stockton, Sacramento, etc. So that I can touch and be abit more hands on in my REI. Even though we have a team of property managers, contractors, etc, nothing beats being able to drive by the property on a weekend to check up on it.

@Dan Dalby check out the Cleveland Price & Neighborhood Map as a starting point. It will show you a local’s breakdown on the neighborhoods & prices. You can couple this with a quick search on Zillow, to help you assess market rents.

There are many BP users with Cleveland experience, the forum discussion Brian posted is also a good place to start. Happy investing!

Originally posted by @Dan Dalby :

Hello!  I am a High School math/computer science teacher in the SF Bay Area.  I love my job, but teachers pay doesn't pay the bills in the area.  I'm looking for a way to invest what money I have and create cash flow for the long term.  I was a finance major and a credit manager/ adviser in a former professional life so I have some understanding of the numbers.  Investing remotely has my interest at the moment due to the high prices in my local area.  What I'm having trouble with is finding good areas across the country to invest in.  I'm interested in investing in housing in good neighborhoods even if that means sacrificing some cash flow in the short term.   

I've been a long time listener to the bigger pockets podcast and have been wanting to jump into this for a few years.  After years of lobbying, I finally got the green light to put our investment money into real estate after talking my wife into reading "Rich Dad, Poor Dad".  Thank you Robert!

 Welcome to the site Dan. Lots of California investors here on BiggerPockets with a similar story to yours. Priced out of the west coast and looking for cash flow they typically seek out the turnkey markets. There are tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cleveland, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Birmingham, Alabama
  • Kansas City, Missouri
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. 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.
  • Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
  • 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.

@Dan Dalby I have sold about 150 or so props to Ca investors, many from Silicon Valley ,they all buy in OH,,,, Its all about knowledge and your team. Double digit net caps are to be had 

Good Luck 

@Paul Choi

Hey Paul, thanks for reaching out. The school I teach at is in Pleasanton.

I love the idea of commercial property, I guess I was under the impression that I don't have the capital for that type of venture. Or the experience... but I am here to learn.

Originally posted by @Dan Dalby :

@Paul Choi

Hey Paul, thanks for reaching out. The school I teach at is in Pleasanton.

I love the idea of commercial property, I guess I was under the impression that I don't have the capital for that type of venture. Or the experience... but I am here to learn.

 Oh cool, close by!

Agree on the barriers to entry to commercial properties.  They are very real as brokers, lenders, etc will not take you seriously if you don't have a track record.  These are for small/mid sized deals like 14+ units, $1.5mil+ acquisitions. More difficult as you go up in size...50-200 units, $5mil - $10mil deals as the buyer pool you are competing with shifts.

If you want to get into these deals, best to partner up by either bringing capital or experience.  People think they can bring in sweat equity/time but larger multifamily is so automated with various teams already doing the work that there is little value in doing things yourself (ie. rehab, self manage, etc.). In some ways it could hurt performance and value of the asset.

DM me if you want to chat more or grab coffee.

Another Bay Area investor! I'm over in Fremont, but work in SF. 

Putting in offers for small multifamily and commercial property in Cleveland. Would love to chat some more and meet likeminded individuals. 

Hi @Dan Dalby ! Once you invest in your first property and start seeing the rent checks, you'll be hooked! I purchased my out of state rentals in Jacksonville, FL and they've been performing excellently. If you can, try to attend the real estate meetup groups near you to meet more real estate investors in person. I know there are a few in the East Bay that shouldn't be too far from where you live. Good luck!

Originally posted by @Dan Dalby :

 Investing remotely has my interest at the moment due to the high prices in my local area.  What I'm having trouble with is finding good areas across the country to invest in.  I'm interested in investing in housing in good neighborhoods even if that means sacrificing some cash flow in the short term.   

 

I took w-2 salary money from my hometown DC/Va some years back, and started investing out of state in upcoming areas Raleigh NC and Jacksonville Fl suburbs for better return..stability, 1% rule, places id want to live also..

buying light reno's off mls to get a bit of a deal, aiming for 1% deal, and turning over (out sourcing) to a property manager to prep and rent out is pretty do able entry... target 3/2's 1000+ sqr safe zone .. and you have some exit out

turn key scares me as buyer, i cant pay 20% above 2019 arv's just for extra convenience.. its too retail..

 

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