Renovating out of state property

Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes

Hey guys, I'm looking to purchase 2-3 single family homes out of state. Up to this point I've only owned my primary residences, but I've been able to save up about $150k that isn't doing much in the bank.

I still have a full time job and just looking to find properties that can meet a 5-10% return in good neighborhoods. I've only really been able to find the type of deals that can get me this outside my market of Las Vegas (at least for now even though things may look drastically different in a few months).

In thinking about your first renovation projects, how did you get comfortable determining the costs of rehabs? Especially for property outside your ability to go see it yourself, what ways can I improve my understanding of determining rehab costs?

Any help is much appreciated! You guys are awesome.

1 Reply

99 views

Most Popular Reply

James G.

Investor · St Louis, MO · Member since 2017 · 250 posts · 181 votes

@Jacoby Atako I would personally recommend starting your investing in the state in which you live in. Construction management mistakes can be extremely costly, and the best way to learn is going to be through experience. If you must invest out of state, I would recommend getting multiple opinions on the subject property (property manager, contractor, agent, etc.). Ask for pictures, a detailed scope of work, and do your homework on what certain items should cost. Lastly make sure to get multiple bids from different contractors. If prices are about the same, you will know that you're on to something!

3 Reply

See this reply in the discussion

27 Replies

Jump to latestLatest

Sort by

James G.
Investor · St Louis, MO · Member since 2017 · 250 posts · 181 votes
6y
@Jacoby Atako I would personally recommend starting your investing in the state in which you live in. Construction management mistakes can be extremely costly, and the best way to learn is going to be through experience. If you must invest out of state, I would recommend getting multiple opinions on the subject property (property manager, contractor, agent, etc.). Ask for pictures, a detailed scope of work, and do your homework on what certain items should cost. Lastly make sure to get multiple bids from different contractors. If prices are about the same, you will know that you're on to something!
3 Reply
Greg Dickerson
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y
Originally posted by @Jacoby Atako:
Hey guys, I'm looking to purchase 2-3 single family homes out of state. Up to this point I've only owned my primary residences, but I've been able to save up about $150k that isn't doing much in the bank.
I still have a full time job and just looking to find properties that can meet a 5-10% return in good neighborhoods. I've only really been able to find the type of deals that can get me this outside my market of Las Vegas (at least for now even though things may look drastically different in a few months).
In thinking about your first renovation projects, how did you get comfortable determining the costs of rehabs? Especially for property outside your ability to go see it yourself, what ways can I improve my understanding of determining rehab costs?
Any help is much appreciated! You guys are awesome.

You should stay in your area. Vegas is a great market for what you want to do. Investing in small properties out of state is generally not worth the effort. If you just want to put your cash to work you could become a private lender to reputable experienced flippers in your area. You can generate 20-30% returns sometimes more if you get its the right people.
2 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@James Gleeson I would prefer to stay in state if the numbers work out. I'll see what I can find in a few months
0 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Greg Dickerson
That's an avenue I hadn't thought about. I'll look into that. Any resources you could recommend would be appreciated.
0 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Jacoby Atako
If your looking for a 5%-10% return instead of investing in a rehab project out of state, I would recommend you look at becoming a private investor. Your return could be 13%-15% and you would be totally passive. If you need more info on this investment strategy let me know. I have been a lender as well as a borrower, it’s a great passive strategy.
1 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
6y
@Jacoby Atako. You don’t want to do this. I’ve done it, and it’s a lot of headaches. Owning rentals long distance is not fun for a lot of reasons.
Your returns are also low, so you should reconsider your investment strategy if all you want is 5 percent. You can buy bonds for that sort of return
1 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
There are plenty of deals in every market to flips. It's just about what you are doing to find them. If all you do is look on the MLS or wait for an agent, that doesn't mean there are no deals. If you want to develop a flipping side business, then start sending mailers to off-market opportunities by building lists and focusing. Certainly in LV, more deals will come to the table over the next 3-6 months. It's actually ripe to stay in your market and start marketing.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
Zen and the Art of Real Estate Investing59 Reviews
Website View Page
1 Reply
Christian DeCapria
Contractor · Shreveport, LA · Member since 2019 · 10 posts · 19 votes
6y
@Jacoby Atako DMR Construction Group LLC is an essential services company located in Shreveport LA and, as we remain open, we have been hired to assist other investors in navigating these challenging and unprecedented times.
A DMR Construction Group LLC team member will schedule an appointment to look at your project to see exactly what you need. We can take care of your project quickly and ensure we will keep it within budget and provide you equity; providing free estimates for architectural design and comprehensive construction services with our team of licensed and insured professionals giving you the peace of mind knowing we saved you time and money through great quality and attention to details. All will be done in a timely manner so the property can be occupied and you can reap these rewards. We provide the project that is the standard by which other's are judged.
on time. on task. on target.
0 Reply
Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
6y
@Jacoby Atako
You live in Las Vegas, and should look in your local area first. Which you did in SFR, however, there are other options like multi's (2-4 units). I just did search on Redfin, for SFR, there are 5292 current listings without offers, for condos/townhomes there are 2226, and for multi's there are 87. Comparing SFR as percentage vs condos/townhomes, this comes out to 42% (2226/5292=.42). Comparing SFR as a percentage vs multi's (2-4), this comes out to 1.6% (87/5292=.0164). The glaring difference is in multi's (2-4), and in other words, there are roughly 2 multi's for every 100 SFR, and about 4 multi's for every 100 condo/townhouse.
When looking from a supply/demand, econ 101, perspective, you have a very limited supply of multi's. Even the fact there is only 87 multi's in all of Las Vegas sounds odd. Most 4plexs are older and in bad areas. However, there are a few in good areas and with value added strategy and increased to market rents, get you to your ROI goal.
Look at all your options before venturing out of state. It just makes sense, and if you can manage in your local area, can save about 8% in management fees.
I'm from southern california, have 4plexs, and manage myself. Fourplexs are considered same as SFR when getting a loan. You can use the income from the 4plex to help qualify for a loan. My ROI for last year was 15% and 16%.
Terry
2 Reply
Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
6y
@Jacoby Atako
opps, typo above. There are 42 condos/townhomes for every 100 SFR, (2226/5292=.42)

Terry
0 Reply
Charlie Anne
Member since 2020 · 89 posts · 45 votes
6y
@Jonathan Greene what do you think of NJ for investing?
I live in NJ but the price of entry seems high.

0 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Kenneth Garrett I'm REALLY interested in that. I would appreciate any info you could share.
0 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Charlie Anne it depends on what you want to invest in and what you want to do. Every state, including NJ, is accessible to investors, it's just about how you find the deals. I am always marketing for off-market properties so I always come into contact with deals no one else has which makes them better deals. But, when you are looking for a first investment property and planning on a mortgage, you will often need to find the properties on the MLS, which is also not a problem as long as you know what you are targeting. The short version is, I like all markets to invest in as long as I have a plan for that market and cash or solid backing. I hope that helps.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
Zen and the Art of Real Estate Investing59 Reviews
Website View Page
1 Reply
Charlie Anne
Member since 2020 · 89 posts · 45 votes
6y
@Jonathan Greene thanks for the insight!
0 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Jacoby Atako
Jim is flipping a house. The purchase is $100,000 and the rehab is $40,000. You decide to fund the entire project. You decide the terms for the loan are 10% plus 2 points. You decide Jim can pay you back when the property sells. There are no monthly interest payments to you. This is different than a Hard Money Loan. A mortgage or deed of trust (depends on your state) and promissory note is prepared. An attorney prepares the documents (could be your attorney or Jim’s or both).The closing is set and you wire $140,000 to the title company where the closing takes place. Never send the funds to the investor direct. Always go through a title company. You are the first lien holder, the same as if a loan was taken out through Bank of America. Should the deal go South you can foreclose on Jim and take the property back.
It takes Jim 2 months to complete the rehab. The property gets listed with a broker and Jim accepts an offer 2 months later and the closing takes place in 2 months. Total time the money was borrowed was 6 months or 180 days. Prior to closing you send a payoff letter to the title company and wiring instructions on how funds are to be returned to you. At the closing the lien is released and funds are sent to your bank.
The loan was $140,000.
2 points = $2800
10% interest = $140,000 x .10 = $14,000/365 = $38.36 per day of interest. $38.36 x 180 days is $6904.80. Banks typically use 360 days for a year not 365. It will make a slight difference.
Total amount owed to you is $9704.80 or 14.43% cash on cash return. This is a debt loan. You could do an equity loan where you and Jim split the profit 50/50 after expenses but no points. Say the property sells for $200,000 and after expenses the profit is $45,000. You would walk away with $22,500. That would be a 16% return. I prefer a debt investment that way your return is a set interest. Let’s say the profit was only $20,000 you and Jim split is only $10,000 each. Your return is 7%.
Hope this helps understand the process. I have done about 20 of these and this is the most straight forward way. If you have further questions let me know.
1 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Caleb Heimsoth bonds tie up too much money and don't allow me the opportunity for leveraging profit. That is the appeal of real estate to me. I don't mind 5% in A property with good potential appreciation, but that number would include property management obviously. Tell me if I'm way off in my expectations.
0 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Jonathan Greene I'm actually thinking the same things which is why I'm trying to prepare for any deals. Renovations out of state, in my expectations, wouldn't be too different than the process of renovations in state, just easier oversight. But I'm trying to build my foundation.
1 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Terry Lao that's interesting but I'm my research in Vegas those multi family spots are in TERRIBLE locations. I've driven to a couple and it was clear it would benefit be a place I could spend extended time.
Condos have great pricing, but between the HOA costs, the only cash flow opps I've seen so far are foreclosures in which I don't feel comfortable pricing the rehabs yet. But, in fairness, I haven't started REALLY looking for deals, I'm still in the analysis paralysis phase of over preparation.
0 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Jonathan Greene I like it. Thanks
0 Reply
Jacoby Atako
OP
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
6y
@Kenneth Garrett I'm REALLY intrigued by that. Can you tell me what issues you've run in to? Or what to look out for?
0 Reply
John Walter
New to Real Estate · NJ · Member since 2020 · 124 posts · 63 votes
6y
@Kenneth Garrett Your example makes perfect sense, but I thought in order to make a private loan like that there were legal hurdles (isn’t that where the whole credited vs accredited comes from)? If not, that seems great.

@Charlie Anne I really like Elizabeth, NJ. In honing in on this area lately and everything seems to be going on the right direction.
0 Reply
Chinmay J.
Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
6y
Originally posted by @Jacoby Atako:
Hey guys, I'm looking to purchase 2-3 single family homes out of state. Up to this point I've only owned my primary residences, but I've been able to save up about $150k that isn't doing much in the bank.
I still have a full time job and just looking to find properties that can meet a 5-10% return in good neighborhoods. I've only really been able to find the type of deals that can get me this outside my market of Las Vegas (at least for now even though things may look drastically different in a few months).
In thinking about your first renovation projects, how did you get comfortable determining the costs of rehabs? Especially for property outside your ability to go see it yourself, what ways can I improve my understanding of determining rehab costs?
Any help is much appreciated! You guys are awesome.

Stay local for a first few. As others have suggested LV is a great market, and really being hit by Coronavirus due to the nature of the industry. I believe some good deals will come in Vegas soon...

0 Reply
Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
6y
@Jacoby Atako
Your initial goal, purchase 3-4, SFR, with ROI of 5-10%. This is possible in midwest, like Cleveland or Cincinnati. However, you better be aware of the property tax, like 5% of sales price.
The common belief is if you buy SFR, it is for appreciation. If you buy multi's, it is for cashflow. I went the cashflow approach in Las Vegas. However, I found that appreciation for multi's was way better than cashflow.
There are a few areas where multi's are pretty good, solid B to B-. Spring Valley, close to chinatown, 4plexs going for $400-450k. East of 95, near Summerlin, $450-500k. Off strip, beheind MGM casino, off maryland/tropicana, $350-400k.
There are about a handful of 4plexs that can cashflow net $500-600. No way a SFR can do this, unless you pay all cash deal.
Terry
0 Reply
Adam Blachnio
Rental Property Investor · North East US · Member since 2019 · 114 posts · 31 votes
6y
@Jacoby Atako
To me doesn't matter if you're in state or out of state if you are not familiar with scope of work. You may always ask contractor to do video reports of milestones. There are many ways to make remote rehab effective.
2 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@John Walter

Yes, that is true regarding credited and non-accredited investors. These is an exception with pre-existing relationships with investors. Check with your attorney. Always check with your attorney on any Private Investing.

@Jacoby Atako
You still need to analyze the deal to make sure it’s a good investment. Make sure you know how to analyze deals. You always have to protect your interest. Always hire an attorney to view the documents. Everything must be on writing no matter if it’s friends, family or other relationships.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.