Flipping out of state. What's your process?

Question

New to REI and curious about strategies/processes for flipping out of state. I plan to do my first few flips locally but I'm always trying to look ahead and plan for my next move. I like the idea of one day being able to invest in more "favorable" markets based on the current economy, job growth, local trends etc.

For anyone who has experience flipping out of state - where do you start? Meet with local investor friendly realtors? Join local REI groups and network with investors in that market? Do you hire a GC AND project manager to manage day to day and keep you updated?

Just trying to get a general idea of where to start and how to manage a flip remotely.

Thanks in advance.

Alan F. · Answer

Yes, all of the things you mentioned. FWIW you're in a pretty good area, especially considering your proximity to other states.

IMHO flipping is truly a hands on experience. Even management, needs to be managed. Nobody cares as much as you do.

Samuel Diouf · Answer

I would first find a market that is suitable for you and showing signs of potential market growth. Then I would focus on growing relationships and building your core 4. The core 4 is essential to long-distance investing. It consists of a realtor, contractor, property manager, and a lender. Once you have this team in place, you should have the foundation to invest in any market confidently while not being there physically. I would do your due diligence, pick a few markets and start networking within those selected.

John Clark · Answer

Crawl before you walk. Walk before you run. Run before you sprint. Out of state flipping is sprinting.Get experience hyper-local first (as in you could practically walk to the flip from your current house). Then get several more local flips under your belt and when you have a team of contractors, consultants, etc. ask them for recommendations farther afield. Then find nearby states with laws similar to your state. Ask your consultants who they recommend in that state.THEN take the plunge.

Bryan Hartlen · Answer

@Brandon Stiles the process steps are identical - how you execute them is different. Key differences for us include:

- we JV with local person on our deals. Their jobs include finding properties (he’s a realtor), walking properties prior to purchase (only those we can’t estimate rehab from pics), inspecting GC’s work and progress. - unless the property is a complete gut job we pay for a home inspection during our due diligence

- we only hire GC’s.  Bottom line quote that we pay out in specified milestones (which align with our hard money lenders payouts). - besides or JV partner watching progress, on completion we hold back a portion of the payout pending a final residential inspection.

We do 2 or 3 flips a year. We could do more but finding properties is (at least for us) the hard part of flipping remote. That’s actually what prompted us to JV with a local realtor. So they could network for us.

The other headache is that we seldom get to start and finish the job with the same GC. We now spend much more time interviewing and qualifying our GCs and lean hard on referrals.  We’ve also learned that the lowest price almost always means trouble down the road.

Brandon Stiles · Answer

Thanks @John Clark. I'm glad you mentioned finding states with similar laws I hadn't considered that yet. I'm assuming things like taxes, permits, code, insurance etc. But are there any other specific areas I should be looking into?

Alan F. · Answer

When I was a landlord I implemented value add, but they were B+ properties so not much difference in quality of flip. Unfortunately B+ tennants can still thrash a property. I've since sold them.

Now I only flip to sell, low volume, high margin. That's my niche and I don't think it works for everyone.

In all sincerity I think you're going to have to find what checks all of your boxes.

If you're going to buy and hold, value add is definitely a strong play.

Henry Lazerow · Answer

I have had some clients flip from out of state, it worked as I gave them my contacts but its risky and not something I would suggest. BP has a lot of guru junk but real life most deals that need work have 0 equity after rehab or even negative equity. To make money you need find the needle from the haystack deals and have contractors working for you at below market rates.

Bob Stevens · Answer

Yes, as you are competing against guys like me that pay cash as is and close as soon as title company can close. You have to get someone to walk it, give you a reno cost, then inspection and appraisal , takes time,

Good luck

Jake Baker · Answer

@Brandon Stiles

We do 20 Flips/BRRRRs per year and we fund with a combination of Hard Money and Private Money. We do this out of state in Jacksonville FL.

Your Team is everything. Make sure you have the following:Great investor-friendly agentsMultiple contractors to run bids throughMultiple lenders and hard money lenders to quote youA great real-estate specialized CPA (and bookkeeper if you have trouble keeping organized)

Brandon Stiles · Answer

@Bob Stevens Thanks for the advice. I understand cash offers give you an advantage in any market - but is there any specific reason it's more difficult buying out of state without being a cash buyer?

Flipping out of state. What's your process?

Most Popular Reply