Resources for finding out-of-state contacts

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Resources for finding out-of-state contacts

Jerry Poon
Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes

I live in Southern California, and will be for the foreseeable future. From listening to a few podcasts and reading posts here, it seems like California is not the best place to start for newbies with not a lot of capital to begin with. What tools and resources are available to me to network with out-of-state people in the real estate business? I am mainly looking for someone who would be able to find properties, walk them, appraise them, and ultimately manage them. It sounds like a lot, but I want to do this right and find someone good. Where do I begin? Has anyone ever been intentionally screwed by someone because of the distance? How do you build trust with such a person?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y

@Jerry Poon 

   has anyone been intentionally  screwed by buying out of state.. does a bear sh in the woods heck yes... its all to common..   Investing out of state is super risky for those that do not know what they are doing and or have limited capital..

The thing is people in CA and in other countries think what the heck its cheap lets give it a go only to find out its very difficult and extremely risky. those that are telling you here on BP that it is  not have another agenda they sell out of state properties and only talk it up ..

I wrote an E book for Aussies on how to invest in the US as they were getting hosed left and right by US marketing companies and less than honorable TK operators.. It is appropriate for CA investors as well.

I personally foreclosed on more than 200 LA based investors that had no clue as to what they were doing got talked into buying out of state by LA based marketing companies that neither owned the asset or were licensed to sell the asset.. IT was a night mare I would never do it again..

I have just finished trying to help one LA investor that bought 3 homes in Memphis a few years back.. One is boarded up has not been rented in 2 years. the other they tried to sell on contract but the buyer put a tenant in is collecting rent and not paying on the contract and the other one the tenant just left and its 5k to rehab yet again and they are with the best management company in the market..

so if your bound and determined to go out of state

1. find a market you like and make contacts with the locals there

2. do not buy through LA based marketing companies what do they bring to the table they have never even seen the house your going to buy they are only loyal and talk up those that pay them.

3. use the same common sense if you were buying a home in LA find a reputable agent get MLS listing do not trust ARV values from promoters those are blue sky.

4. get an independent home inspection just like if your were buying a home to live in.. do this before you close and make sure you know what your getting and ask for items that are problems to be fixed prior to closing.

5. buy at the top of the market not the cheapest those will have problem tenants and its very likely you could lose all your money on super low end.

Lastly if you are dealing with out of state TK go direct no need to pay outside selling agents  its just tacked on to what your paying for the house. houses out of state are just not sold like they are on the West coast think about it why are these companies trying to sell homes 2k miles away from them... Because they know CA buyers will over pay and they could never get the same locally the locals just won't pay that amount  the locals will buy the trashed houses rehab them themselves and rent them..

Caveat Emptor

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  • Jerry Poon
    OP
    Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes
    12y

    @Derrick Craig 

    Thanks for the great tips!!

    @Anna Shaver 

    Thanks for the criteria list. How long have you been investing for? I plan to buy and hold long term. What is your overall strategy, since you are also in CA?

    @Chris Clothier 

    Wow thank you for the great, great post. Lots of information. I am wondering about your opinion on houses. You advise against those as first purphaces, and I am assuming so are condos. Are you suggesting duplex/triplex/etc. for first purchases?

    1Reply
  • Anna Shaver
    South Lake Tahoe, CA · Member since 2014 · 111 posts · 37 votes
    12y

    @Jerry Poon

    I have been investing for about 18 years and watched California's market go up and down over time.  At first it was because we could keep the property when we moved up and then because I like having assets grow without work on my part.  I use property management with the exception of one that I manage.  Because of the area we are in has been uneventful.  We would like to retire early if possible and our real estate has kind of been in the background but I am now looking at it as a potential for a revenue stream.

    0Reply
  • Jerry Poon
    OP
    Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes
    12y

    @Anna Shaver

    Do CA properties have enough cashflow to justify the work put into them and do they help you towards your goal of early retirement? If not, is that why you are looking out of state?

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  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    12y

     Sorry for any confusion.  I was talking about the order that you use as an investor to make your investing decision.

    Look at these factors in this order (in my opinion):

    1.  Housing market (MSA) - you want growth and key industries
    2.  Partners (companies/individuals you will use to assist you)
    3.  Investment properties (houses, condos, multi-family, commercial)

    My point was do not be seduced by good looking houses, low price points or any other factors property related.  Always, always, always start with your market research which I outlined in my post and then locate a reliable partner that you trust (including visiting them in person) and THEN look at properties with that company.   

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  • Jerry Poon
    OP
    Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes
    12y

    @Chris Clothier 

    It makes a ton of sense now. Forest first and then trees. Thanks for clearing it up.

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  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    12y
    Originally posted by @Jerry Poon:

    @Chris Clothier 

    It makes a ton of sense now. Forest first and then trees. Thanks for clearing it up.

     No problem.  All the best to you as you head down this road.  Seeing that you are from California and asking some questions of other California investors, be sure to look up @Aaron Mazzrillo on here and read his commentary on California investing.  He is proof that you do not have to go out of state simply for the sake of going out of state to invest.  I think he is heavily invested in the Inland Empire and Riverside areas and often for the same prices and returns investors pay for out of state.  Read his comments on the site to get a different view on California than what you get from a lot of other commentators.  You may still decide to decide in other areas and a lot of investors do, but get educated first.

    The keys to success are education, patience and then action. In that order.  The more you know and the more time you are willing to dedicate to making good decisions, the better off you will be no matter which way you decide to invest.

    Good luck - Chris

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  • Paul S.
    Investor · Valparaiso, FL · Member since 2014 · 374 posts · 76 votes
    12y

    Make sure you do research and know what you are getting yourself into.

    2Reply
  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    12y

    @Jerry Poon I'm not trying to brag, but Raleigh NC is the best place to live. Just sayin'

    http://business.blogs.starnewsonline.com/18011/businessweek-raleigh-is-no-1-place-to-live-in-u-s/

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  • Anna Shaver
    South Lake Tahoe, CA · Member since 2014 · 111 posts · 37 votes
    12y
    Originally posted by @Jerry Poon:

    @Anna Shaver

    Do CA properties have enough cashflow to justify the work put into them and do they help you towards your goal of early retirement? If not, is that why you are looking out of state?

     I have only invested close to home.  The first property cash flowed in the beginning until we took money out to buy more.  It does cash flow now but not much.  We have bought with the intent to have the properties appreciate over time with very low out of pocket.  The goal was to make extra payments and then have the income for retirement or to roll them into multifamily. Lots of people put money into retirement accounts every month and don't think twice about it.  We figured if it was a very small amount each month it was fine.

    The properties have appreciated nicely and we are happy with it.  Going forward to buy more we could invest in properties within an hour where the costs are lower but the areas are not very good and so I am looking at other options.  I enjoy the benefits of higher quality tenants and will need to look elsewhere for a lower price point.

    0Reply
  • Karen Schimpf
    Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes
    12y

    @Jerry Poon

    Some lenders will not lend if your property is not located in the same state you are located.  You will need inform the lender upfront before filling out an application.  You do not want to waste valuable time trying to get your loan closed when the lender decides they do not want to lend because you are not in the same state.   Good luck!

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