New out of state BRRRR Investor looking for a solid market

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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New out of state BRRRR Investor looking for a solid market

Account Closed
Real Estate Agent · Member since 2020 · 16 posts · 12 votes

Hello everyone! My name is Alex Diago. I am 19 years old and I am currently looking for single / multi family homes to BRRRR. I am currently renting an apartment in San Diego, California. Considering where I'm located in Southern California, it is very difficult to find properties to BRRRR. Therefore, I am looking out of state for my first property to invest in. I don't have much knowledge on researching and finding a solid market to begin with. I started contacting real estate agents in Cleveland and Indianapolis but was told that these markets are heavily saturated with investors trying to do the same thing as me and it would be almost impossible to find a deal even though I have an all in budget of $150K cash to start off with. Any tips and advice would be greatly appreciated, I want to BRRRR ASAP so that I can get the ball rolling while I'm young so I can be set financially as I grow older. Thanks!

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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
5y

@Account Closed - I was in your exact shoes about 5 years ago. In San Diego, renting, owned no property. My roommate told me about BP. I now am a full-time real estate investor and I've been on the BP podcast. I invest out of state for my rentals and in-state for flipping and developing. I also do other investing including software and startups. 

Think about building a rental portfolio out of state in a growing affordable market. Affordable is key. You can do the house hacking thing in SD but if that is all you ever do are you really a real estate investor? I have never thought of anywhere I lived as an investment, it's a place to live. So I would focus your efforts on truly being an RE investor if that is what you want. 

I've been there, I did it, and I'm on the other side of it. I can tell you that it'll be hard at first. You have to pick a market, build a team, and it won't always go perfectly, far from it. But it is SO WORTH IT! 

Podcast Guest on Show #373
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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    5y

    Some thoughts:

    • Why pay rent? House hack.
      house hack would allow LTV of 96.5% versus 80% LTV out of state. In addition, owner occupancy provides the best rates. First investments often are only base hits. Reduced rates can be difference between making money and losing money.
      local allows self management. Self management both saves money as well as provides an opportunity to learn.
      local expertise is an advantage. This includes market knowledge as well as the networking opportunities.
      I could not imagine doing a first BRRRR from OOS. maybe a 3rd or 4th. BRRRRs are challenging enough to do local, OOS could be very difficult. Nice to create some sweat equity.
      if house hacking a duplex, a percentage of the rent of the non-oo unit counts against the DTI limits.
      cash flow helps pay the bills, but wealth creation is via appreciation.
      What sort of cash flow do you expect OOS? A few hundred a month? We have purchased local at great times and networking great times. Our worse appreciating property has appreciated over $1800/month over the hold period. We have 2 properties that have appreciated over $4k/month over the hold period.

    Now for my suggestion: combine house hacking and BRRRR of a detached duplex using an FHA high LTV loan. Move into the more thrashed unit and rehab in in place. When done, rent it at top of market price (it has just been rehabbed) and move into the other unit. Repeat the process on the 2nd unit. If it makes sense to refi, refi prior to moving out of the property (best terms are for OO).

    Good luck



      4Reply
    • Stephen Brown
      Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
      5y

      Hello Alex! One strategy that you can try is to invest where other out of state investors are looking but go to smaller cities or the country side. If you find a PM team that will travel to your property then you're in a good position to create your own niche. Let me know if you'd like to chat!

      3Reply
    • Remington LymanBusiness Member
      Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
      5y
      Originally posted by @Account Closed:

      Hello everyone! My name is Alex Diago. I am 19 years old and I am currently looking for single / multi family homes to BRRRR. I am currently renting an apartment in San Diego, California. Considering where I'm located in Southern California, it is very difficult to find properties to BRRRR. Therefore, I am looking out of state for my first property to invest in. I don't have much knowledge on researching and finding a solid market to begin with. I started contacting real estate agents in Cleveland and Indianapolis but was told that these markets are heavily saturated with investors trying to do the same thing as me and it would be almost impossible to find a deal even though I have an all in budget of $150K cash to start off with. Any tips and advice would be greatly appreciated, I want to BRRRR ASAP so that I can get the ball rolling while I'm young so I can be set financially as I grow older. Thanks!

       The key is to put the right team in place. You can find deals in any market.

      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

      [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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      2Reply
    • Lee RipmaPro Member
      Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
      5y

      @Account Closed - I was in your exact shoes about 5 years ago. In San Diego, renting, owned no property. My roommate told me about BP. I now am a full-time real estate investor and I've been on the BP podcast. I invest out of state for my rentals and in-state for flipping and developing. I also do other investing including software and startups. 

      Think about building a rental portfolio out of state in a growing affordable market. Affordable is key. You can do the house hacking thing in SD but if that is all you ever do are you really a real estate investor? I have never thought of anywhere I lived as an investment, it's a place to live. So I would focus your efforts on truly being an RE investor if that is what you want. 

      I've been there, I did it, and I'm on the other side of it. I can tell you that it'll be hard at first. You have to pick a market, build a team, and it won't always go perfectly, far from it. But it is SO WORTH IT! 

      Podcast Guest on Show #373
      5Reply
    • Tabitha L. Cox
      Realtor · Montague, MI · Member since 2021 · 15 posts · 11 votes
      5y

      @Alex Diago

      I may have a great up and coming market you would be interested in. Muskegon north through Montague MI has long been skipped over as people have traveled to the Lake Michigan shoreline for vacations. But renovations and revitalization efforts are going strong and I’m repeatedly confirmed by what I see that these great tourist areas will be doing amazing things in the next ten years. This is still a very residential area too, so they don’t close down in winter because they have industry and jobs outside of tourism. So short term, or long term rentals will work here. The market is hot, like everywhere, but there are houses that come through I think would make great rentals one way or the other. I’m a realtor in this area, but I have also house hacked two flip houses, and am about to close on my first duplex, and I work with investor clients, so I have experience in the investor world, and plan to continue growing my portfolio. If you’re interested in more information let me know and we can exchange emails.

      2Reply
    • Jonathan PavkovBusiness Member
      Columbus, OH · Member since 2021 · 201 posts · 166 votes
      5y
      Originally posted by @Lee Ripma:

      @Account Closed - I was in your exact shoes about 5 years ago. In San Diego, renting, owned no property. My roommate told me about BP. I now am a full-time real estate investor and I've been on the BP podcast. I invest out of state for my rentals and in-state for flipping and developing. I also do other investing including software and startups. 

      Think about building a rental portfolio out of state in a growing affordable market. Affordable is key. You can do the house hacking thing in SD but if that is all you ever do are you really a real estate investor? I have never thought of anywhere I lived as an investment, it's a place to live. So I would focus your efforts on truly being an RE investor if that is what you want. 

      I've been there, I did it, and I'm on the other side of it. I can tell you that it'll be hard at first. You have to pick a market, build a team, and it won't always go perfectly, far from it. But it is SO WORTH IT! 

      Hi Lee! Can you explain a bit more about how you succeeded in 5 years? Did you have a bunch of capital saved up? Was it mostly out of state investing that grew your portfolio? Or was it the capital built up from in-state flips?

      [email protected]614-802-5721
      2Reply
    • Michael K GallagherBusiness Member
      Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
      5y

      @Alex Diago if you are looking to get started I can’t say enough how good of a place house hacking is to start. But If you do want to invest out of state especially where o reactors are involved is echo the sentiments on here about getting your treat in place. Maybe wherever you can put the strongest team together is where you should invest.

      [email protected]614-362-2231
      1Reply
    • Steven Foster Wilson
      Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
      5y
      Originally posted by @Michael K Gallagher:

      @Alex Diago if you are looking to get started I can’t say enough how good of a place house hacking is to start. But If you do want to invest out of state especially where o reactors are involved is echo the sentiments on here about getting your treat in place. Maybe wherever you can put the strongest team together is where you should invest.

      Yes house hacking is the way to go! This is how my broke wife and I were able to buy a 300k duplex, fix it up, and eventually do a successful BRRRR in Columbus!

      2Reply
    • Michael Mendez
      Real Estate Agent · Lubbock Tx · Member since 2020 · 77 posts · 44 votes
      5y

      I'm a local investor and Realtor in Lubbock Tx, I think Lubbock is a great place to invest and especially to BRRRR, flip, or for short term rentals. Due to our appreciation, medical industry, and university, it's a great place to invest in.

      3Reply
    • Brandon GoldsmithBusiness Member
      Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
      5y

      As long as you have a good team in place you should be able to compete in an out-of-state BRRRR. It won't be easy but it is still very doable out in the midwest. @Account Closed

      [email protected]614-963-3340
      2Reply
    • Anthony Buccanero
      Realtor · Forest Lake, MN · Member since 2021 · 41 posts · 23 votes
      5y
      Originally posted by @Michael K Gallagher:

      @Alex Diago if you are looking to get started I can’t say enough how good of a place house hacking is to start. But If you do want to invest out of state especially where o reactors are involved is echo the sentiments on here about getting your treat in place. Maybe wherever you can put the strongest team together is where you should invest.

      " Maybe wherever you can put the strongest team together is where you should invest."

      I really like this Michael! 

      4Reply
    • Zeke Liston
      Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
      5y
      Originally posted by @Account Closed:

      Hello everyone! My name is Alex Diago. I am 19 years old and I am currently looking for single / multi family homes to BRRRR. I am currently renting an apartment in San Diego, California. Considering where I'm located in Southern California, it is very difficult to find properties to BRRRR. Therefore, I am looking out of state for my first property to invest in. I don't have much knowledge on researching and finding a solid market to begin with. I started contacting real estate agents in Cleveland and Indianapolis but was told that these markets are heavily saturated with investors trying to do the same thing as me and it would be almost impossible to find a deal even though I have an all in budget of $150K cash to start off with. Any tips and advice would be greatly appreciated, I want to BRRRR ASAP so that I can get the ball rolling while I'm young so I can be set financially as I grow older. Thanks!

       Way to go Alex, that's amazing. Sounds like you're doing everything right. If you have any questions on the Ohio market, I'd be happy to help. 

      2Reply
    • Bonnie LowPro Member
      Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
      5y

      @Account Closed you're going to get a lot of advice when you start telling people you're a real estate investor - and not all of it good. You can find someone in virtually every single market who will tell you that market is saturated. If that was true in every market, no one would be buying anything. And that's not the case. Are prices rising rapidly? In most places, yes. Is inventory tight? In many places, yes. Are you going to find yourself in a multi-bid situation? It's very likely you will. But there are STILL deals to be had, especially in places like the midwest. Find a competent Realtor who is accustomed to working with investors or, better yet, is an investor themself. Find a wholesaler. Do the math, run the numbers, be very clear on what your goals are, network in the area you're looking at (reach out to others in your markets here on BP, through local REIA groups, etc. and ask for referrals like 'would you happen to recommend a local portfolio lender, or contractor, or property management company', etc...) You can make this work. No doubt in my mind.

      [email protected]
      2Reply
    • Bonnie LowPro Member
      Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
      5y

      @Tabitha L. Cox - how are property taxes in the areas you mention? We'll be in OH next month and it might be worth the trek north to check out additional areas. 

      [email protected]
      0Reply
    • Tabitha L. Cox
      Realtor · Montague, MI · Member since 2021 · 15 posts · 11 votes
      5y

      @Bonnie Low Depends on the specific area and what you are comparing them to. This is where you can see all the 2020 Millage rates for the whole state of Michigan, https://www.michigan.gov/docum... Look under Muskegon County. Most non-homestead rates are 45-55 mils, with the cities--Muskegon city, Whitehall and Montague City being in the low 60s. So it really depends on the price of the homes you are looking at. I typically see annual homestead taxes of $2500 to $5,000 for homes in the $150,000 to $350,000 range. If you decide to make the trek north let me know, I'd love to show you around :) 

      0Reply
    • Bonnie LowPro Member
      Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
      5y

      This is really helpful, @Tabitha L. Cox. Thank you!

      [email protected]
      0Reply
    • Jonathan Leal
      Specialist · Louisville, KY (Louisville) · Member since 2021 · 29 posts · 10 votes
      5y

      @Alex Diago I am a full time real estate investor in Louisville, Kentucky and surrounding areas. Since Louisville is near the Ohio river, the Ohio river connects with the Mississippi river all the way down to the Gulf of Mexico. That is causing lots of big companies to move into Louisville because its more economic to transfer goods in bulk by barge using the river. Heavy development in the inner city is creating many jobs. There is a lot of killer deals surrounding the city near the country side. Send me your price range and type of house that you are intrested in. I will be more than happy to help you. I promise that I wont bother you unless I have something that fits what you are looking for.

      3Reply
    • Account Closed
      Oklahoma City, OK · Member since 2020 · 2 posts · 0 votes
      5y

      @Alex Diago Hey! I can definitely help you out with that! Feel free to shoot me a message! I'm in OKC, and OKC is a pretty cheap, easy market!

      0Reply
    • Anthony Buccanero
      Realtor · Forest Lake, MN · Member since 2021 · 41 posts · 23 votes
      5y
      Originally posted by @Bonnie Low:

      @Account Closed you're going to get a lot of advice when you start telling people you're a real estate investor - and not all of it good. You can find someone in virtually every single market who will tell you that market is saturated. If that was true in every market, no one would be buying anything. And that's not the case. Are prices rising rapidly? In most places, yes. Is inventory tight? In many places, yes. Are you going to find yourself in a multi-bid situation? It's very likely you will. But there are STILL deals to be had, especially in places like the midwest. Find a competent Realtor who is accustomed to working with investors or, better yet, is an investor themself. Find a wholesaler. Do the math, run the numbers, be very clear on what your goals are, network in the area you're looking at (reach out to others in your markets here on BP, through local REIA groups, etc. and ask for referrals like 'would you happen to recommend a local portfolio lender, or contractor, or property management company', etc...) You can make this work. No doubt in my mind.

      Hi Bonnie, 

      Are you familiar with any of David Greene's books?  I feel like I just read a paragraph from his most recent book.  Very honest and straight forward feedback from you.  I appreciate being able to read that!

      Tony 

      0Reply
    • Bonnie LowPro Member
      Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
      5y

      @Anthony Buccanero LOL. No, I haven't read any of David's books. I've certain read a lot of RE books, but none of his. I suppose I'm honored...? But, really, it's just common sense. Glad it helped.

      [email protected]
      1Reply
    • Anthony Buccanero
      Realtor · Forest Lake, MN · Member since 2021 · 41 posts · 23 votes
      5y
      Originally posted by @Bonnie Low:

      @Anthony Buccanero LOL. No, I haven't read any of David's books. I've certain read a lot of RE books, but none of his. I suppose I'm honored...? But, really, it's just common sense. Glad it helped.

      Awesome motivation!

      1Reply
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