3 Lessons Learned From My First 3 Out-of-State Deals

It was March 2016, I had saved some money from my job in New York and I had been discussing with my parents, who at the time lived in Puerto Rico, the possibility of them moving to Florida. "If I buy a house close to my sister in Florida, will you move?", I asked. They replied, "Absolutely!".

Since I had absolutely no experience in real estate, I decided to do some research on how to buy a house and if my parents paid the mortgage what tax benefit I could receive, if any. I ended up buying "The Book on Rental Property Investing". While reading the book, I kept seeing references to a BiggerPockets website and community. After finishing it, I decided to take a look at the website. That's where I found out that other people my age (27 at the time) where buying multiple properties, starting real estate businesses and achieving financial freedom. Needless to say, I was determined to start this journey. 

A few months later I found a house with the help of my sister and decided to buy it. It was a 2br/2ba condo in Lakeland, Florida. At that time I had no idea what an HOA (Homeowners Association) was, how the mortgage process worked, what were the closing costs, etc. This brings me to the first lesson I learned:

Lesson learned: No matter how much you read about about real estate, your first deal will be scary (or thrilling), but it will be a huge learning experience. 

Deal details: 2br/2ba condo
Purchase Price: $102,000
Financing: 30yr Conventional Mortgage with 20% Down
Monthly Rent: $1,100

After buying the house I told my parents to please move since I had the house vacant. They hadn't planned anything, since they didn't think I would go through with the deal! Surprisingly, those were great news for me as I wanted to rent the house. The agent that helped me buy the house was also a property manager, hence I decided to hire her. To keep the story short, here are a few things that happened before I rented the house:

• She was showing the property with no electricity and didn't even bother to let me know
• The online post didn't have pictures, and took a while to fix it

Lesson learned: No one will care about your property more than yourself

On the other hand, when investing in out-of-state properties, seeing how a property manager works, learning about their standards for tenants, and seeing their lease agreement can give you a lot of insight into the laws and the market. 

Since the house was doing well I decided to buy a second house, the one next to it which came into the market a few months later. For this one I decided to handle the property management with my sister. I went through the same process: asked my parents if they will move if I buy another house, they said yes, I bought it, they didn't plan for it, I decided to rent it. 

Deal details: 3br/3ba condo
Purchase Price: $110,000
Financing: 30yr Conventional Mortgage with 20% Down
Monthly Rent: $1,200

Finally, 6 months later, I found a beautiful one bedroom condo in Orlando. My parents went to see it, fell in love with it, and moved to it after I bought it. After they moved, they decided to handle the property management of the other two houses and our journey officially began. 

Deal details: 1br/1ba condo
Purchase Price: $94,500
Financing: 30yr Conventional Mortgage with 20% Down

In a matter of less than 3 years after I bought my third, property prices in some areas of Orlando experienced a significant appreciation (my 1br has already appreciated close to 40%). At that time (2016) I thought I was going a bit too fast and decided to slow down. Huge mistake. Which brings me to the third and final lesson for this post: 

Lesson learned: Never give your money a vacation. If you have the resources at the moment, find deals, and go for it. History tells us that there is a bigger chance you will regret waiting.

Shortly after, my wife (back then girlfriend) bought her first long-term rental, and then we bought two more properties for short-term rentals in the Kissimmee area and we are looking forward to continuing this journey, while sharing these experiences over coffee.