Should I invest locally or outside my state?

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Should I invest locally or outside my state?

Danny Lee
New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes

Hello BP happy new years to all,

I currently live in NY, born and raised. Looking to invest in my first property. I been looking into Florida and Connecticut to be exact. They are both in my price range which is why im considering those areas. Im also opened to hearing some other areas that are upcoming. Id greatly appreciate some advice on which route an experienced REI would take. Thanks for your time =]

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Zeke Liston
Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
6y

@Danny Lee I would agree with @David Stumpf, if you can invest locally at first, that is ideal. From the sounds of it though, your market might be a little pricy compared to others. If you do decide to invest out of state, I would suggest considering Columbus, OH. 

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  • David Stumpf
    Rental Property Investor · Baltimore, MD · Member since 2017 · 142 posts · 125 votes
    6y

    As a first rental, invest locally if at all possible.  You are born and raised in NY.  It is easier to understand the market when you know your own neighborhood.  Consider it this way: Those deals in Florida and Connecticut have most likely been passed up by other investors. Why?  Wouldn't you have an advantage if an out of state investor was looking for a property in your town? You know what streets have high crime, which have good school, and which are in desirable areas.  Also as a first time and long distance investor it may be harder to get financing from banks, have realtors take you seriously, find and check up on contractors.  Its not impossible but much more difficult than local investing.  Try to find something that you can drive to in 2 hours or less if can't find anything in your immediate area.  Good Luck.

    2Reply
  • Danny Lee
    OP
    New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes
    6y

    @David Stumpf Hey David! thanks for replying. Yea its just prices are alot cheaper out in Florida for example. But you totally make sense. I will do more research and try to find something more local before i make that big jump. Thanks again =]

    2Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    @Danny Lee I would agree with @David Stumpf, if you can invest locally at first, that is ideal. From the sounds of it though, your market might be a little pricy compared to others. If you do decide to invest out of state, I would suggest considering Columbus, OH. 

    2Reply
  • Danny Lee
    OP
    New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes
    6y

    @Zeke Liston will do ! Thanks I’ll check it out. It’s only a hour flight away so that’s not too shabby. I’m really considering New Jersey since it’s an upcoming city

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Danny Lee I am originally from Connecticut. I now live in Columbus, Ohio. One thing to watch out for in CT is the high property taxes. Additionally it is not an appreciating market so you will most likely need to purchase something with a lot of value add to make the numbers work.

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  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    6y

    There is no right answer here- there are two things you need to consider; what markets will help me achieve my goal, and who can I partner with in that market that will treat me well? There will be plenty of sellers out there ready to sell you a property, but make sure you have great partners and understand your returns relative to your goals. 

    Best of luck!

    1Reply
  • Michael DohertyBusiness Member
    Real Estate Agent · West Hartford, CT · Member since 2016 · 449 posts · 476 votes
    6y

    @Danny Lee I have been having success in Ct, specifically Central Ct. Specifically areas like New Britain, East Hartford, Manchester, Bristol, Middletown. The cap rates are decent and the cash flow is great. All my properties are in the Central Ct area. Perhaps I am biased because I live this way, but after reading countless articles/forums and discussing with OOS investors, I am fairly confident the numbers are better than Long Island, NJ and other areas of NY (listed properties). 

    Let me know if you have any questions about investing in this part of the state!

    2Reply
  • Danny Lee
    OP
    New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes
    6y

    @Michael Doherty Thank you for going into specifics. You just opened my horizons on which areas to look at. Sent you a request Id like to hear more about the properties I may be investing in. 

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    Hey @Danny Lee, @Michael Doherty brings up a lot of good points about Connecticut. I have a handful of NY clients due to the same reason you're looking at surrounding markets - the price point for MFR in NY just isn't profitable most of the time. Compound that with the new anti-landlord laws that New York state rolled out last year and it makes CT that much more appealing. I still believe CT beats NY, NJ and MA in not only price points for MFRs, but also landlord-tenant laws.

    You've got two great resources in Mike and I here, take advantage of our offers to help and answer any questions! 

    May 2020 be your best year yet!

    -Filipe

    0Reply
  • Chase Vance
    Investor · Columbus, OH · Member since 2018 · 54 posts · 47 votes
    6y

    @Danny Lee Florida and Connecticut, okay, whichever you choose, narrow it down to 1 county to start or you will overwhelm yourself. I'd go into CT first, choose a city/county, ask local professionals in that area to find what are the up and coming areas, distressed areas, or whatever class of property you're looking for. 


    Begin networking with only investors and agents to learn which areas are distressed within that area and look to find discounted properties from local wholesalers, or find a property yourself and call the owner. Buying a rental at market value or even a little less is not wise. You want to be the one adding value and equity to that property, less leverage is better. Thus, if you buy a fixer-upper/distressed property, understand you'll need to setup your team locally to that area: GET REFERRALS FROM INVESTORS TO SPEED THIS UP... like the title/escrow closing agent, general contractor, handy man, go-to agent, go-to investor/wholesaler, property manager if you need it, etc. 

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  • David BarnettPro Member
    Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
    6y

    I invest out of state and have had pretty good success.  If you do decide to invest out of state, I would also recommend visiting the area.  I would recommend physically walking the area to get a sense of the area and focus on a relatively small area within that area to understand street by street.  Networking is a good idea.  However, I'm more of the type that wants to see, feel etc. for myself while using others opinions as another data point in the puzzle.  

    0Reply
  • Danny Lee
    OP
    New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes
    6y

    Thanks for taking the time to respond ! Very great advice from you all, much appreciated 🙏

    0Reply
  • Craig Bellot
    Property Manager · CT · Member since 2014 · 687 posts · 329 votes
    6y
    Hey Danny, the first steps I would recommend as a new investor is to get a handle on analyzing the income, expenses and ROI of these properties in the areas that you are interested in.

    You can use the Bigger Pockets calculators to start. Use Zillow and rentometer.com to get data and analyze a few from your home to see what type if returns there are.

    If these meet your investment criteria then start looking in person.
    Let me know if you have any questions.
    0Reply
  • Melissa Burr
    New to Real Estate · Peachtree Corners, GA · Member since 2019 · 6 posts · 3 votes
    6y

    As someone who lives in CT. I find that investing in this state would be a bad choice. I am personally looking at investments in central mass area. CT has very high taxes.  Companies are moving out of the state to find better states that are more welcoming than CT. 

    1Reply
  • Angelica M Garzon
    Rental Property Investor · Miami, FL · Member since 2018 · 110 posts · 113 votes
    6y

    Hi Danny! 

    I live and invest in Florida and can tell you it's a great market. You will have to try and get your properties off market because houses are very expensive right now since there's high demand. However, finding a good deal depends on you and the team that you build in whatever market you decide to focus on. 

    What are you looking to purchase ? SFH? Multifamily? Depending on that I would focus on markets like Sanford, Orange City, Deltona, Eustis, Lehigh Acres, Fort. Myers and maybe Tampa?

    Hope this helps and feel free to reach out if you have any other questions or want a local to look at a property for you! 

    1Reply
  • David PierceBusiness Member
    Property Manager · Deland, FL · Member since 2019 · 71 posts · 28 votes
    6y

    Hi Danny - as Angela said there are some good areas in Florida to invest in - Sanford, Orange City, Deltona - are all good. I manage property in all three.

    But the competition is fierce if you are not on the ground in the market.

    Have you thought about a turnkey investment? Not sure what your goals are.

    If not you should look in your own backyard until you get a few under your belt.

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  • Ellie Perlman
    Multifamily investor · Boston, MA · Member since 2017 · 281 posts · 521 votes
    6y
    Originally posted by @Danny Lee:

    Hello BP happy new years to all,

    I currently live in NY, born and raised. Looking to invest in my first property. I been looking into Florida and Connecticut to be exact. They are both in my price range which is why im considering those areas. Im also opened to hearing some other areas that are upcoming. Id greatly appreciate some advice on which route an experienced REI would take. Thanks for your time =]

    Hi Danny!

    I live in Santa Monica, CA and focus on multifamily in Georgia, Florida, and Texas.  Recently, I wrote an article on my blog about How to Manage Your Out-of-State Investment, you may find it helpful.  Many investors feel like it's best to invest close to home because they are familiar with the market but there are great options out of state due to cost, job growth and population growth.  

    Best,

    Ellie


    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    6y
    Originally posted by @Danny Lee:

    Hello BP happy new years to all,

    I currently live in NY, born and raised. Looking to invest in my first property. I been looking into Florida and Connecticut to be exact. They are both in my price range which is why im considering those areas. Im also opened to hearing some other areas that are upcoming. Id greatly appreciate some advice on which route an experienced REI would take. Thanks for your time =]

    Well what you should do or not do is going to depend on your goals, experience and resources. What are your goals, experience and resources? Even before getting to that thought I can say without a doubt that it is more risky than buying at home because presumably you've got the following working against you.

    • Lower than average market knowledge.
    • Lower than average number of contacts.
    • Lower than average ability to do things yourself if need be.

    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.
    1Reply
  • Kevin Sabatino
    Investor · Jupiter, FL · Member since 2019 · 54 posts · 20 votes
    6y

    @Angelica M Garzon

    Hi, I see your a local South Floridian, same here! Let’s connect. I’m looking for off market deals around locally but also out of state. Do you attend any local meet ups you can recommend?

    0Reply
  • Danny Lee
    OP
    New to Real Estate · Flushing, NY (11361) · Member since 2019 · 18 posts · 11 votes
    6y

    @Angelica M Garzon

    Thanks Angelica I greatly appreciate that! If I need your help I will definitely compensate you if we make something happen! I hope we can keep in touch

    1Reply
  • David Campbell
    Investor · San Diego, CA · Member since 2017 · 190 posts · 117 votes
    6y

    @Danny Lee

    Danny, I would say either. It all depends on what you can afford and what numbers make sense. But the mere fact you’re open to investing in another state or area than where you live is a great sign!

    0Reply
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