Viable Returns in So Cal

35 Replies

What are your thoughts on Batavia County in Ohio?  
I have some boots on the ground in that part of the world.

Originally posted by @James Wise :
Originally posted by @Tania Reuben:

That's been my analysis as well... seems like you can find deals that will just cover costs, but not flow... which means they aren't hitting any of the metrics Brandon advises to target. I'm planning on funding this from a self directed IRA, so I do intent on staying conservative in my approach.

Where did you decide to look out of state?  I have some strong contacts in Idaho and Salt Lake, so considering those markets, or Nevada & AZ, because they are closer.

If you do decide to go out of state some of the more popular markets are listed below in no particular order.

  • 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

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.
  • 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.

 

Originally posted by @Tania Reuben :
What are your thoughts on Batavia County in Ohio?  
I have some boots on the ground in that part of the world.

Originally posted by @James Wise:
Originally posted by @Tania Reuben:

That's been my analysis as well... seems like you can find deals that will just cover costs, but not flow... which means they aren't hitting any of the metrics Brandon advises to target. I'm planning on funding this from a self directed IRA, so I do intent on staying conservative in my approach.

Where did you decide to look out of state?  I have some strong contacts in Idaho and Salt Lake, so considering those markets, or Nevada & AZ, because they are closer.

If you do decide to go out of state some of the more popular markets are listed below in no particular order.

  • 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

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.
  • 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.

 

Never heard of it.

 

In my opinion, CA investors would be much better off as private lenders of money for out of state investors. They could get 6-10% return without finding deals or managing rental properties. I challenge anyone in CA to find a deal in your market that will get that. Then you would need to manage it. 

@Remington Lyman

The 12% growth i am referring too is more directed to the downtown area which is vital to any metro area. It is now being reflected in the neighboring suburbs.

https://www.realwealthnetwork.com/markets/cleveland-ohio/

https://www.clevescene.com/cleveland/the-population-boom-in-downtown-cleveland-is-very-real-and-very-good-but-how-long-can-it-continue/Content?oid=4700955

As it has been stated above, the midwest and southeast are full of good cash flowing areas to invest in until the SoCal bubble pops.  Investing out of state is not intimidating once you spend the time to study the market and develop relationships with realtors, property managers, contractors and other investors in the area that you choose.

My mistake, not county, it appears to be due East of Cincinnati... 

https://www.google.com/maps/place/Batavia,+OH+45103/@39.0781199,-84.4665714,11z/data=!4m5!3m4!1s0x8841041c5a7ed7a5:0x93b53fa61be2d957!8m2!3d39.0770072!4d-84.1768795

Originally posted by @James Wise :
Originally posted by @Tania Reuben:
What are your thoughts on Batavia County in Ohio?  
I have some boots on the ground in that part of the world.

Originally posted by @James Wise:
Originally posted by @Tania Reuben:

That's been my analysis as well... seems like you can find deals that will just cover costs, but not flow... which means they aren't hitting any of the metrics Brandon advises to target. I'm planning on funding this from a self directed IRA, so I do intent on staying conservative in my approach.

Where did you decide to look out of state?  I have some strong contacts in Idaho and Salt Lake, so considering those markets, or Nevada & AZ, because they are closer.

If you do decide to go out of state some of the more popular markets are listed below in no particular order.

  • 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

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.
  • 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.

 

Never heard of it.

 

 

Originally posted by @Pamela Sandberg :

@Simon Chan: MF is tough in Phoenix right now. There is very little inventory in the 2-4 door market, so prices have been driven up, and rent hasn't quite kept up. It's hard to make them cash flow. That said, it can be done. A similar option that works well here is to get a property with a casita/in law suite/etc. If you rent them separately, this essentially functions as a duplex. You can also diversify your investment by getting a long term renter in the main house and STR in the guest house.

Happy to discuss the Phoenix market - let me know if you have questions!


Hi Pam. Thanks for sharing your insight! Noted about the little inventory with the 2-4 units. How about 30+ units?

 

Originally posted by @Anthony Dooley:

In my opinion, CA investors would be much better off as private lenders of money for out of state investors. They could get 6-10% return without finding deals or managing rental properties. I challenge anyone in CA to find a deal in your market that will get that. Then you would need to manage it. 


 

Every purchase I have made in So Cal has returned better than 10% annual. If I am not getting at least 30% short term then I typically do not purchase it. The long term slowly drags the annual return down but then an appreciation wave hits bringing it back up.

You are correct that it is more passive except in case of default.

@Todd Rasmussen Hiya! Please keep me updated when you form the group! I'm super new to real estate and have been following this thread to learn and hopefully will get my feet wet once I'm more comfortable. Looking forward to connecting with others to build my knowledge base. I'm located in the San Fernando valley (north LA) area and interested in learning/jumping into out of state investing.

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