Investor · Denver CO, USA · Member since 2016 · 107 posts · 27 votes
Hi everyone - after a year of research and a couple of deals that fell through, i wanted to share that i FINALLY purchased my first out of state buy-hold property. It's a multi-family commercial building in Kansas City.
25% down, 6% interest rate, 25 year am, 11% cap rate, with 48% cash on cash return. My numbers are based on net return and include principal & interest loan payments, insurance, estimated taxes, utilities (i have to pay them), and property management. There will obviously be ongoing and differed maintenance as well.
I'm sharing because i want new members / new investors to know that if i can do it, so can you. I'm just an average guy with a day job like most of you. Stay motivated and positive people. On to the next. Happy Monday everyone!
@Account Closed, yes i did walk the property. I also hired a professional inspector. It's a B to C neighborhood. Property is old with good bones, livable but there will be deferred maintenance that the cash flow will be able to handle.
@Jeremy Clarke Congratulations! Sounds like an amazing deal. Wish you provided the address and a snapshot of the buy and hold numbers. I like to compare the numbers to the numbers I'm seeing in Illinois.
Let us know how things go, good or bad.
I thought about doing out of state investing but doing it as my first investment is intimidating. I hope you have trustworthy people working for you on the ground at Kansas. The only person that will truly care about the property will be you unless you partnered up with someone with equal equity. Other people will most likely just see it as a job and can do alot of things behind your back when your not present.
@Jeremy Clarke Congratulations! That's awesome. I'm looking to fo the same but from Toronto, Canada. I'm reading David Greene's book on long distance investing currently and will probably take out a HELOC on my places here in Toronto to use down south.
When looking at different cities to invest in, what stood out to you about Kansas city?
@Jeremy Clarke congratulations on your out of state purchase! Seeing other investors make it happen keeps us motivated as we work on taking the leap also!
Hi @Warren Fanaken, thanks for the note. In terms of where to look, i think you have to first determine your goals. Being a buy-hold investor, the midwest is a great place to invest because the barrier to enter is much lower than other parts of the US. You also have to look at the whole picture...how much are taxes in that state, are utilities insane, what can my average rents be per door, what is crime in the area like, etc. Also for me, i wanted to be able to go visit my property easily. I can be in KC from my front door to airport in less than 4 hours. Past that, i'd say it's all about picking a marketing and making connections. This isn't the only good market for what i'm doing, however i have made some nice connections and i feel the people i'm working with i can trust.
@Jeremy Clarke Thanks for the info, Jeremy. I haven't started narrowing down cities yet but those are some great points to consider. It will take a little while I imagine but having a 4hr travel time is a good measure to have as well, so if you are ever needed, you can make the trip out there relatively quickly.
I'm also debating if I should buy in cash or try to get a mortgage, which is harder to get for Canadians, so I've got a few doors to knock on still but it's encouraging to see people making out of state investments so often now. Good luck with everything!
Looking forward to when you announce your next deal
@Warren Fanaken, my opinion is a little cash in hand is always good to have. Obviously if you have the cash to buy without a mortgage and have extra then, good for you! You've been doing something right.
A lot of the baby boomers who invested and are now selling their portfolios are selling packages of properties with owner financing. That way they can spread out how hard they get hit with taxes. If you didn't want to pay all cash, i think that may be another option if banks give you a hard time for being from the great north.
@Jeremy Clarke buying re portfolios with owner financing would be great. It would save a lot time cause ideally it would come with a team. As long as they're a good team of course. I'll keep that in mind as I start looking at different cities. Thanks Jeremy!