1st time home buyer looking to invest out of state. Any advice?

Question

Hi everyone, my name is Natasha and I am from California looking to buy first investment property out of state. I’d appreciate any advice/tips on getting to the next step. Also, looking for realtors or any mentors who are willing to help :)

Thanks everyone!

Caleb Brown · Answer

Find a few markets that fit what you are looking for. Most OOS investors choose Midwest markets or Sunbelt markets. Usually OOS investors target homes 80K-200K price points where the R/V ratio is .6-1%. From there build a team with an agent, PM, GC who can help get you going. Also read David Greene's book

Account Closed · Answer

@Natasha Shamoon I'm an Out of State investor (oos) in Columbus Ohio. I would be happy to share my team that I've established. I have had a great deal of work done on both of my investment properties. I also have a great Property Management (PM) in place. It has been a learning curve, but overall I've had a very positive experience.

Remington Lyman · Answer

I recommend you read this article on OOS investing. It explains the importance of creating your core four. You will need to get a local, rockstar Realtor, contractor, lender, and property manager.

https://www.biggerpockets.com/blog/core-four-real-estate-team

I invest locally in Columbus, Ohio

Lane Kawaoka · Answer

@Natasha Shamoon

I started with turnkey remote rentals in 2009-2015 while working my engineering W2 job. Then went into syndications once my net worth went over 500k. That was 4-5 years ago and I have not indulged myself buying a primary residence yet because its a huge drag of your growth.

Eric James · Answer

I'm sure the people who make money off it will say it's seamless. Things go wrong with local investing. Much more can go wrong when you aren't there on the ground. But it's your risk. Go for it.

Brad S. · Answer

@Natasha Shamoon  I have been investing OOS since 1997 (in multiple states). It is much easier now, and there is a ton more information and resources easily available. I have had mostly good experiences, with a few challenging ones, but most were reasonably rectified. There have been multiple properties I have never seen and others I have only seen a couple of times, typically from the exterior. To be fair, most of my OOS purchases, have been new-builds, with 1031 funds, where I wasn't as concerned with "getting a deal," since my goal was to defer taxes and put those funds in an area with more potential.

I have only done a few purchases that needed work initially, and I haven't done any flips OOS. But, I have done a few rehabs on my existing OOS rentals, and just finished one. Actually, my worst experience was on a LOCAL flip I did a few years ago!

The trick is finding good people (property managers, broker/agents, contractors, etc). I personally, don't want to know my properties too well, because then I am probably spending too much time with them. I want to almost forget about them, until I see the deposit made in my account, or until I realize they have appreciated so much, and I need to consider my options. I say that half-heartedly, but I think, you get my meaning. I say the same about my property managers - I don't want to be "friends" with them, because, then I am talking to them too much (typically because there are issues with the house and/or tenant, etc). :P

My suggestion, especially for the first one, is to find either someone who already has done what you want to do, in an area you are interested in, or find a reputable group that does OOS in areas where you want, and leverage on their resources and contacts, etc. Theoretically, they have already gone through vetting their "team members" and since they have more numbers behind them, they usually carry more weight when things get askew. Meaning, if you have a bad experience with a Vendor they use, you are more likely to get help, since the Vendor doesn't want to loose the Group's business.

And probably the most important thing is REFERENCES ... REFERENCES ... REFERENCES ... CHECK REFERENCES!  ..on the group, individuals, brokers, prop mgrs, whomever. It will help weed out some bad actors!In this day and age, I see no issues with considering OOS investing. I think it is limiting to only consider your backyard. If I did that, I would've lost equity in my local rentals during the downturn, instead of actually gaining on the properties I exchanged into. Now that said, the properties I have made the most dollar gains on, have been local properties (CA), but not necessarily the highest % return. And the prices now are kinda ridiculous here.

Anyway, I'm in your neck of the woods. Feel free to reach out if you feel so inclined. Good luck!

Ryan A Rodriguez-Wiggins · Answer

@Natasha Shamoon agreed with @Caleb Brown here. I'm also looking at OOS as the NYC/NJ area is extremely expensive.

Nothing wrong with OOS, there's actually tons of BiggerPockets videos on YouTube that talk about this in detail. I would start there and see if its up your alley.

Todd Rasmussen · Answer

There are pros and cons to any style of investment and OOS suited us. The team is imperative and getting feedback from multiple sources is a must. Getting your team set up and being comfortable with it might take multiple trips to the market area, which is an added expense, but if you scale it is a much more tolerable expense. Picking somewhere you'd like to go occasionally can soften that blow as well. As others have mentioned, market area is the first step. Network and attend REI meetups as well as turnkey provider seminars pitching different market areas. There are several in the area, and you can usually get coffee and hors d'oeuvres out of the experience as well. You have the opportunity to make or lose money in any market area, so play to your strengths and do whatever fits you and your situation the best.

Stephen Brown · Answer

Hello Natasha! Your first step is to identify what kind of property you want to invest in and what goal you have with that property. Do you want to have a rent ready property or do you want to fix one up and gain equity? Do you solely want to invest for cash flow now, or are you investing for future growth? How much are you willing to put down now and how soon do you want your money to come back to you?

Once you get these questions answered, I'd speak with a realtor. I'd love to chat to you if you're interested!

Vanessa A Martin · Answer

Hi Natasha, Welcome and good luck, investing can be exciting and a bit stressful. Research and maybe find a good financial person who knows about investment property.

1st time home buyer looking to invest out of state. Any advice?

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