Real Estate Investor · Austin, TX · Member since 2008 · 12 posts · 1 vote
A light bulb recently went off in my head and I am very interested in everyone’s feedback and personal experience.
As Im getting priced out of the Austin rental RE market I’ve been contemplating purchasing in other areas like Dallas, Houston, and San Antonio. One thing that has been stopping me is figuring out how to manage (landlord) a property away from my immediate area. Well today I discovered that my goal is not to be a landlord my goal is to invest in real estate, and landlording is not investing. I am willing to pay someone else to landlord (i.e. property manager) and just stick to what I enjoy … investing my money.
So my question for those of you who have successfully invested in out of town areas:
1) If you have a few markets to choose from as I do, how do you go about analyzing which one to hone into?
2) After you’ve chosen a market do you enlist the help of a realtor to provide you with neighborhoods to consider?
3) How do you overcome investing in an area you’re not familiar with?
I want to make sure I make an informed decision before jumping in. So any advice, contacts, resources and online tools you can share are appreciated.
I'm glad you've come to the realization that you should NOT be managing your own properties. The management should be left to a professional property manager that understands tenant screening, qualification, and tenant relations, not to mention all the State laws that you may not be aware of. I tell my clients to let someone else do even if their property is next door to them. In the long run you'll be better off, less stressed, and make more money!
Answers to your questions:
1) My short answer to this question is: Focus on the market that makes the most sense. More specifically, you want to consider things like employment/unemployment, the overall job market, migration trends (in/out), housing market trends such as price movement, inventory and foreclosure activity. The economics of the market will give you a good idea of it's health and future growth (or lack of).
Since you're considering three Texas markets (Dallas, Houston, and San Antonio), coincidentally the same three Texas markets we offer to investors, your decision making is a little easier in that they are all great markets with very good fundamentals. My favorite at this time, and preferred by my investors, is San Antonio. It is one of the fastest growing job market with an unemployment rate under 4%. (Keep in mind that all three are good for various reasons; just stick to good neighborhoods and properties and you'll do well.)
2) You have several options here:
a) You can find a good wholesaler that you can trust to work with, although this option involves the most work.
b) You can find a real estate agent that is an investor themselves, or at the very least specializes in working with investors full-time (this is a rare breed).
c) Assemble a team within the market to do your legwork, such a a real estate partner (investor) or rehabbed that you pay to find, acquire, and rehab the properties that meet your requirements.
d) Work with a local rehabber/contractor that focuses on rehabbing and flipping properties to investors.
e) Or you can work with a full-service turnkey provider that handles virtually all of the above, handles a lot of the due-diligence, and walks you through the process step-by-step to help you choose the property(ies) that best fit your investment goals.
3) Refer to #2. :-)
I've been investing out-of-state since 2003 and it's not difficult. There is a right way to do it which can save you time and avoid making the costly mistakes I made. So I suggest you keep moving forward, but don't "jump in" without a guide or adviser walking the journey with you.
Post any other questions you may have... Happy to help.
Hey Martin. I only invest away from my local area, and you are already better off then me because you can invest in other TX cities... I've only invested across the country! (live in LA). I've written a few articles on investing away from your local area and how to work with property managers, find properties, etc. Try this one- http://www.biggerpockets.com/renewsblog/2012/12/22/out-of-state-real-estate-investing/.
Houston is a fantastic market right now if you are trying to pick between them. Definitely a hot spot for investors. Dallas is nice but prices are higher with slightly lower returns.
As Ali mentioned, there are opportunities in all of Texas right now. San Antonio seems to be the hottest of the cities right now, but there is plenty of opportunity in both Houston and DFW as well.
I would certainly use a realtor (or several for that matter). It's also pretty easy to tap into a wholesaler network (if you're ok going that route) from afar as well.
I would try to connect to local REI clubs for suggestions for reputable property managers too.
It's a leap of faith, but not much different than investing in your home town.
Ack! No landlording for me. I'm glad to pay the 8% to 9% for someone else to deal with the tenants. Perhaps one day just to get the 500 hours of material participation. Investing out of state is a leap of faith. I would suggest visiting the area first to drive around and familiarize yourself with the various neighborhoods. As for people to help you out with the areas, property managers, home inspectors, insurance agents, and realtors. Its amazing the information you can get from building relationships. When visiting stay away from the big chain restaurants. Go to the local eateries and strike up conversations. Hang out at the parks, sit next to an old timer feeding the pigeons and strike up a friendly conversation. Visit a local soccer game and see the demographics. All the information is right in front of you if you get off your damn smart phones and pay attention!
Just my 2 cents...
Ali Boone also helps to ping people on BiggerPockets! Thanks Ali for the tips on Kansas City
I'm glad you've come to the realization that you should NOT be managing your own properties. The management should be left to a professional property manager that understands tenant screening, qualification, and tenant relations, not to mention all the State laws that you may not be aware of. I tell my clients to let someone else do even if their property is next door to them. In the long run you'll be better off, less stressed, and make more money!
Answers to your questions:
1) My short answer to this question is: Focus on the market that makes the most sense. More specifically, you want to consider things like employment/unemployment, the overall job market, migration trends (in/out), housing market trends such as price movement, inventory and foreclosure activity. The economics of the market will give you a good idea of it's health and future growth (or lack of).
Since you're considering three Texas markets (Dallas, Houston, and San Antonio), coincidentally the same three Texas markets we offer to investors, your decision making is a little easier in that they are all great markets with very good fundamentals. My favorite at this time, and preferred by my investors, is San Antonio. It is one of the fastest growing job market with an unemployment rate under 4%. (Keep in mind that all three are good for various reasons; just stick to good neighborhoods and properties and you'll do well.)
2) You have several options here:
a) You can find a good wholesaler that you can trust to work with, although this option involves the most work.
b) You can find a real estate agent that is an investor themselves, or at the very least specializes in working with investors full-time (this is a rare breed).
c) Assemble a team within the market to do your legwork, such a a real estate partner (investor) or rehabbed that you pay to find, acquire, and rehab the properties that meet your requirements.
d) Work with a local rehabber/contractor that focuses on rehabbing and flipping properties to investors.
e) Or you can work with a full-service turnkey provider that handles virtually all of the above, handles a lot of the due-diligence, and walks you through the process step-by-step to help you choose the property(ies) that best fit your investment goals.
3) Refer to #2. :-)
I've been investing out-of-state since 2003 and it's not difficult. There is a right way to do it which can save you time and avoid making the costly mistakes I made. So I suggest you keep moving forward, but don't "jump in" without a guide or adviser walking the journey with you.
Post any other questions you may have... Happy to help.
Marco Santarelli great advice on where to start my market research.
Ali Boone your article was exactly what I needed to read.
Thanks for all the Replies!
From past experiences and since I work full time Im leaning more towards a turnkey type approach until such time I feel confident enough to build my own team.
Oscar Perez Oh yeah, yeah, got it. Ha. Yep, pinged you!
Martin Vergara, glad the article helped. I only buy turnkeys myself and for what they offer, they are perfect for me. If you need any help getting connected with turnkey providers, I can let you know who I've worked with and liked and not liked, etc.
But more importantly, I don't know how I missed this before, what kind of plane is that in your picture? I used to fly Piper Pawnees, which that one looks an awful lot like except I'm thinking it may be an ag cat because it looks pretty big (I can't remember how big the Pawnee was in comparison to me). I love those planes, whichever one it is! I flew them banner-towing in Miami for a little while.