Real Estate Investor · Redwood City Bay Area, CA · Member since 2013 · 26 posts · 6 votes
Hi everyone,
I've a network test engineer for over a decade. I've always fascinated about investing and want to learn ways to invest, but never really had a enough time or energy. I am having more time now as my kids are being more efficient, so I've been following the RE market for a few months and I am really excited to obtain my first rental property, but I am still missing a lot of the know-hows. So thanks to all the wonderful folks who share info here.
I know the basic of property analysis. I am in the Bay Area, and with my limited knowledge, don't see how it would work around here. So, now I know I might need to do out-of-state. Will try to read as much as I can from BP. Any guidance appreciated.
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
13y
Hi Linda Steedman,
Welcome to BiggerPockets!
Glad to hear you're "ready" to start investing in real estate - the best wealth building in history. :)
There is a lot of good information here on BP. Don't be afraid to jump in and ask questions. There are many good books out there on the subject, but asking investors directly helps to supplement that knowledge.
Having invested out-of-state since 2004 myself, I have to agree with you that most of California doesn't make a lot of sense from an investment perspective. I can find much better deals in other markets.
Bird-dogger · Brooklyn, NY · Member since 2012 · 10 posts · 0 votes
13y
Thanks for the info....I think I am finally ready to take the plunge for real and stop being passive. Especially here in the Brooklyn NY area. I have investors that are begging to put money in my hands for properties.
Investor · Hanford Ca, CA · Member since 2009 · 13 posts · 2 votes
13y
Hey Linda, I am a systems engineer in the south bay and I myself would never be able to invest in the bay area or anywhere in California with good cash flow. So, I been investing out of state and it's been a chanllenge, but slowly but surely it's starting to move forward.
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
13y
Welcome to another Bay Area investor! As Braulio C. says, living in a high cost area like the BA makes rental investing really not feasible. Look to out of state for decent deals. Its harder work to get started but once you have people and systems in place, the returns are far superior.
Realtor · Baltimore, MD · Member since 2013 · 91 posts · 32 votes
13y
Hi Linda, fellow newbie here also. I live in the DC area and feel the same way you do. Prices are very high here and in northern Virginia the avg sale is only 30 days according to the agent I'm working with right now. Good luck starting out.
@ Marco Santarelli can you give us some tips for out of state investing?
Real Estate Investor · Redwood City Bay Area, CA · Member since 2013 · 26 posts · 6 votes
13y
Thanks folks for your welcome. You guys are great!
@Marco Santarelli Please share strategies for doing it out-of-state. Do you do turn-keys? Do you fly out to look at the property in person? How do you find local connections?... Thanks much.
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
13y
Hi Linda Steedman, David Holland,
I could write pages on out-of-state investing, and one of these days I will write a complete article on the subject. However, for now here are some tips and guidelines:
1. Start by having a basic investment strategy: Are you a long-term investor focused on wealth creation, or on short-term investments (3 to 5 years)? Is your primary focus on maximum cash-flow or appreciation potential? It's good to be clear.
2. Once you know your strategy and the type of investment property you seek, then you can narrow down the markets that best fit that strategy. For example, if your focus is to maximize cash-flow then a market like Indianapolis would be on your list. If your looking for higher appreciation potential, then a market like Phoenix would be on your list.
3. Once you've done some due-diligence to narrow down your market(s), then you can look at neighborhood and property combinations. My preference is always towards bread-and-butter housing in B+/B/B- neighborhoods. (I don't like to sell anything else to my clients.)
4. The next step is to analyze specific properties. You want to look at three things: the location, the condition, and a complete cash-flow analysis. Properties is good desirable communities are best. New construction (not common today) or newly rehabbed properties are part of what I call "turnkey", and should be your preference when investing from out-of-state. Finally, you want to see a complete breakdown of the income and expenses so you can calculate the expected returns (such as cap rate, cash-on-cash, net cash flow, etc.).
5. Once you've found a good property that you're interested in, you should put it under contract so you can complete your due-diligence. That usually involves a third-party inspection from a home inspector -- which is what most of my out-of-state clients do. (Very few actually fly out to see and touch the property.)
6. Once you're satisfied with the property, you would continue with the closing process which is handled by a title/escrow company. If you're financing the purchase you would continue working with your lender/mortgage broker.
7. Shortly before the close you would sign a new management agreement with the property manager handling that property. (Almost all turnkey properties have property management in place, and it's simply a matter of setting up anew account for you.)
8. Finally, a few days before the actual closing date, you will receive your set of closing documents, usually by FedEx. You would review them, then sign them with the help of a notary (which you can find at any UPS Store.) Once complete you simply return them back to the title company.
9. Congratulations! You are now the proud owner of another investment property under management by a professional management company.
NOTE: The above may sound a little difficult or complicated, but a good turnkey provider will handle most of these steps for you and with you. There will be hand-holding and guidance from start to finish.
I hope that helps a little bit. If not, let me know what wasn't clear.
Real Estate Investor · Redwood City Bay Area, CA · Member since 2013 · 26 posts · 6 votes
13y
@Marco
Thank you so much for the detailed reply :) I've never thought one can buy a turnkey property without ever flying out to its location, even on closing date :)
I've been reading lots of posts and gathered lots of useful info. But still not sure what to do. Everything is so vast. My goal is buy and hold for potential appreciation, rent it out using PM (as I imagine it won't be in same or close by town).
Regards,
Linda
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
13y
The key to out of state investing is understanding the market you are investing in and having a team you can trust in that market. I cant stress the team part enough. I would not invest in any market without going there a couple of times at least, choosing the right team (sellers, agents, property managers, title co etc). Also drive around neighborhoods, get a feel for what you are buying. You dont need to see every home you purchase but you should have seen similar homes so you know what you are getting into. The good news is that once you do this work up front, you can leverage the knowledge and team to build a portfolio in that market. Then when you want to go to another market you do it again, but it will be quicker because you know what to look for.
All the above makes sense if you intend to build a portfolio. If you are only going to own 1 or 2 properties its best to stick to your local area.
Realtor · Baltimore, MD · Member since 2013 · 91 posts · 32 votes
13y
Marco Santarelli thank you for taking to the time to write such a detailed reply. I will put the information to good use. I was looking at Indy over the weekend and like what I'm seeing.