Posted about 6 years ago

Out of State Investing? Here's how to get started (w/Pictures)

I'm an out of county investor - living in Korea and investing in Florida.

From time to time I get asked questions about how I went through the due diligence process to find a property while living and working overseas in Korea. I decided to write this post to help others in my situation. Although I write this as an international real estate investor, I realize that the information can also apply to the many out of state investors here on BiggerPockets.

Are you looking to invest from out-of-country in US Real Estate?

If so, I'm sure you have lots of questions! I know I did when I first got started.

One of the FIRST QUESTIONS anyone asks when they are considering international real estate investing is: Where should I invest?

Normal 1486948420 International Investors Can Invest Anywhere

This was my thought process

Where should I invest when I can invest anywhere? As someone investing in US real estate from Korea, realistically I wasn't going to visit my properties very often - it's too costly to do that. So I had, in a sense, the entire country to consider!

Of course, it was natural for me to consider areas that I was familiar with. Since I grew up in California, it made sense to start with California - but it didn't make "cents" (sorry.. that was a bad joke ^^). Basically, California real estate was out of my price range for my first investment. I wanted to invest in an area that had the following characteristics:

Criteria for my first investment

Financial Considerations

  • High Monthly Rent to Purchase Price Ratio (the closer to 2% the better)
  • Market Monthly Rent close to $1,000
  • Out of pocket money under $25,000 (that means all in cost - I was investing with a partner so that meant we'd have $50,000 total to purchase with)

Sidenote on setting your criteria:

By the way, it's sometimes 'hard' to come up with these types of considerations on your own. I'll let you in on a little secret.. I 'borrowed' someone else's.. why re-invent the wheel? If someone else has a system that's working, why not just copy what's working for them (at least for your first investment)? So I went to my favorite website for learning about domestic real estate investing in the United States - BiggerPockets.com - and I started reading different forum posts. I focused on the Success Forums - Here's how you get to those forums:

Normal 1486948440 Biggerpockets Forum For Real Estate Investing

I went to a forum that seemed relevant to what I wanted to do. It's constantly being updated, so just look and see what 'success story' seems closest to your own to start with. Here's an example if you're interested in buying a Single Family Home (Residence) aka SFR as a rental property:

Normal 1486948493 Success Forums

Normal 1486948530 Success Topic

Take a look at the people who are posting in the forum and look for someone who seems to 'know' what he or she is talking about. Click on their profile:

Normal 1486948561 Profile

On some people's profiles, you'll see a Goal.

Normal 1486948616 Real Estate Goals

Another example:

Normal 1486948664 Another Example Of Real Estate Goals

Some will be very general and might not help. But others might have a very specific goals. That's how I figured out my goals - by copying someone else who was interested in similarly priced properties!

So don't let not knowing your goals stop you from starting. Just start with someone else's.

Back to the story: After figuring out how much money I wanted to spend and what type of investment I was looking for, I now had to set about finding the right 'market' to buy in.

How can you possibly narrow down an ENTIRE COUNTRY to a few states and cities to examine in more detail?

Thankfully, there are many ways to do this.

Choosing a City to Invest In

What characteristics do you want in a city or area to invest? Let's start with the basics:

Normal 1486948697 Finding The Right Place To Invest

  1. Increasing Population - It's pretty obvious but if the population is decreasing and people are leaving, they're leaving behind housing and increasing supply. Don't want that. Instead, you want to invest in a place where population is growing.
  2. Increasing Employment - People will be attracted by jobs. Figure out where the new jobs are. Figure out where the new companies are setting up shop.
  3. Employment Diversity - If there's only one major source of jobs in town, what happens if that company decides to leave? Instead, you ideally want an area that has a diversity of employers.
  4. Desirability Factors - There are certain characteristics of a city that will always make it a desirable place to live. That might include: weather, transportation systems, natural beauty, etc.

So do you have to spend hours looking at each city and Googling these different factors? You could and I certainly did some of that. But you can probably get a way with narrowing down your search by doing some general searches such as "The Best Cities to Live In" or "The Most Affordable Cities to Live In."

Now that you have a sense of general 'macro trends', you can start to drill down into each area.

Real Estate Factors to Look At

After you identified a few markets, you can look at a few real estate related metrics. Here are some different metrics that I looked at:

Normal 1486948738 Real Estate Market Going Up

  1. Median Income vs Median House Prices - What has the historic median income of a particular area been? What has the historic median home price been? What are current median income levels? What are current home prices like? If traditionally median home prices have been three times median income and now they're currently selling for five times median income, it might indicate a 'bubble' has formed in that area and you want to proceed very carefully.
  2. Path of Progress - In what direction has development traveled? Some interesting photos to look at are nighttime shots of the USA. Look at where the lights are clustered and in what direction they seem to be moving. See if you can get historic shots of development in the community. Is the area you're wanting to invest in the "path of progress"?
  3. The 2% Rule - One very simple metric to look at is whether the monthly market rent in an area can command 2% of your purchase price.

So for example:

If you buy a house for $50,000 and the expected monthly rent is $1,000 / mo,

then when you divide the rent by the purchase price, you get 2% -

$1,000 / $50,000 = .02 (2%)

The closer you can get to 2% (or in some cases above), the more likely you are to cashflow. PLEASE KEEP in mind that this is a very simple metric to do quick calculations. Neighborhoods that tend to get 2% rent to purchase price ratio also tend to be riskier neighborhoods to invest in - more crime, higher vacancy, more difficult tenants.

  • Rents close to $1,000 or higher - One expense that you might have heard mentioned is 'capital expenditure' or 'reserves.' Over time, the appliances in your house and the roof will have to be replaced. Based on some conservative estimates, capital expenditures can run up to $250 per month. Given this fact, your investment has to produce enough income to safely save for these events that will happen down the road. Here's one article by Ben Leybovich that takes a closer look at capital expenditures. Be sure to check out the comments to see the general discussion on these numbers. And one more article on capital expenditures by Brett Lee.

What did I do?

So based on all of the above, you can see that narrowing down a market can take a long time. I wanted to give you a bigger picture of factors to consider before introducing how I was able to find a city to invest in.

Normal 1486948764 Checklist 628x363

  1. The 100 Page Report I looked over - Although I considered most of the above factors, I narrowed down my choices by looking at one main thing - metros that had not yet recovered from the 2008 Crash. I reasoned that eventually the market would recover and therefore prices of houses in these metros still had room to move up. I came across this report which listed the Top 50 Metros in the USA that had still not recovered from the housing crash - A Tale of 2000 Cities. I looked at the Top 10 and I did more due diligence on each of the cities listed. I liked Jacksonville, Florida, because of increasing employment and population trends. It also had desirability (weather, nearby river). It also had a good median income to median home price ratio.
  2. Normal 1486948795 Jacksonville

I had never visited Jacksonville (or Florida, for that matter), so it was time to 'get to know the neighborhood.'

How to find a subdivision

Real Estate is very local. So how do you go from a large metro to a specific neighborhood to look for investments? Here's what I did:

  1. Zillow.com - I first used Zillow.com and typed in the zip code. Based on my original financial criteria, I set filters that would allow me to look for areas that had homes for less than $150,000. By doing this, I could get a sense of where the 'nicer houses' were and where the 'rougher neighborhoods' might be.
  2. Normal 1486948829 Screen Shot 2015 09 21 At 10

    1. Google the subdivision - Now I needed to find out the name of the different subdivisions within Jacksonville. I googled "Jacksonville Zip Code Map" and "Jacksonville Subdivision Map." (If you're not able to find the subdivision, then try using Zillow. Type in the zip code and choose a house in the area. Zillow will often list the name of the subdivision it's located in.)

    2. Normal 1486948866 Neighborhood

    3. Normal 1486948889 Other Info
      1. Now I knew the names of places to focus on. This is key because I could now call up property managers and real estate agents and ask about specific neighborhoods. You will sound much more professional if you call someone and say something like: "I'm looking to invest in SFR rentals in Riverside that cost less than $100,000 and rent for more than $1,000 / monthly. I particularly like houses near X and Y street. Do you have anything for me?" rather than, "I'm an out of state investor. Where should I look to buy houses?"
      2. Desirability, Price and Path of Progress - Before making phone calls, I returned to Google once again. This time I started googling different subdivisions to find out more about the areas. One of them - Murray Hill - seemed to meet the criteria I was looking for. First, price: it had homes that were under $100,000 and that seemed to rent for near $1,000. Second, desirability: it was located 10 minutes from downtown. The average commute time in the US is about 20 minutes. Murray Hill also seemed to have a bit of an artistic feel to it based on its historic architecture and culture that included one of the first gay clubs in the US. It was also a highly walkable city. Third, path of progress: Murray Hill is located next to Riverside which had already undergone lots of development. So based on those three factors, I now wanted to get confirmation on what I was hearing. But how could I get unbiased opinions?
      3. Networking - I turned again to BiggerPockets to network. I typed in - Murray Hill. I looked for other investors in the area and I found a few. Time to introduce myself and ask a few questions. Here are some of the messages I sent and some of the responses I received:

      Normal 1486948936 Screen Shot 2015 09 20 At 11

      Normal 1486948947 Pasted Graphic 11

      This went on and on for over 300 words!

      As you can see, there are local investors who are very willing to help out other investors. I, then, used the information I was gaining to contact local real estate agents and property managers - to see if I could get more confirmation on what I was hearing from investors.

      In addition to the steps listed above, I also did the following:

      Rent

      1. Rent Comparison - Obviously, you need to know how much rent you can expect to earn from your property, so it's important to check out the market demand for rent. Below I list many tools you can do use to find out what local rent prices are like. Personally, I use Craig's List & Zillow more than any other tool.

      Normal 1486948981 Pasted Graphic 2Schools

      1. Schools - I clicked on a few homes in Murray Hill on Zillow and looked at what their assigned schools are. I then checked the schools on GreatSchools.org. I looked at the details of the population (school scores / ranking, lunch programs, etc). This is to get a better sense of the community. Who lives here? What can I learn about the community? The schools scores weren't great.. but that's also somewhat expected in neighborhoods where prices are low.

      Normal 1486949018 Finding Schools On Greatschools

      Crime

      1. Crime Rate - I held my breath as I typed in Murray Hill's zip code into spotcrime.com. If I saw too many violent crimes, I knew it would be a pass. What I saw is that there were pockets of crime on certain blocks. I also googled "Murray Hill crimes" and looked at local online Jacksonville newspapers to find out more about crime and community. Interestingly, I was able to identify potentially riskier neighborhoods by just looking at the crime maps.

      Normal 1486949046 Using Spotcrime To Perform Due Diligence On A Real Estate InvestmentTime to make some phone calls

      I wanted to confirm what I was hearing based on my research. So I decided to next reach out to property managers. I wasn't sure what to expect. A stranger from out-of-the-country calling out-of-the-blue to talk about houses to invest in? I thought surely people wouldn't give me the time of day.

      Instead, I found property managers to be very helpful. They confirmed some of the things I was hearing from the local investors so I was gaining confidence about investing in this area.

      Boots on the Ground

      Okay.. congratulations! You've figured out where to invest. It fits the criteria you're looking for. So now what? How do you go about actually buying a property? And how do you go about actually managing your property?

      After talking to my real estate partner who also lives in Korea, we came to same conclusion - ideally we should partner with someone on the 'ground' in Jacksonville.

      That's a whole another process we needed to go through - finding the right people to partner with.

      In my next post, I'll focus exclusively on how we found the right partners to invest with.

      Also, I realize that I'm assuming you know how to figure out the financials behind a rental property. But I'll also review that in an upcoming post as well.

      And now, here is a list of internet tools international real estate investors can use to do online Due Diligence and Find the Right area to invest in:

      Networking

      http://www.biggerpockets.com/

      If you’re going to invest from abroad, chances are you’ll need some type of connections with people in the area you want to invest, either real estate agents, property managers, partners, etc. A great way to build those networks, and maybe your first step after you decide on what type of investing you want to do, is networking through BiggerPockets.

      http://www.meetup.com/

      Go to Meetup.com and check for local networking events to join. If there are none, then I suggest that you make one. Starting and organizing a meetup helps you gain access to a lot of experienced investors. Here's an post I wrote on BiggerPockets about how organizing a Meetup has helped me learn, gain access to investors and form partnerships!

      Looking at Properties & Finding Property Prices

      http://www.zillow.com/ (I usually start with Zillow to learn about the prices of nearby houses. Zillow can also help you identify the names of the subdivisions.)

      When I first started out, my goal was to know the price of every house on each block of Murray Hill using Zillow. I started to create a spreadsheet of this info but realized I probably didn't need to know all of that info to invest.

      What I did was put up a huge wall map of the Murray Hill neighborhood. I did this old school and basically used Google Maps to capture a square area of a map and print it out. Then I taped all the squares together. In the end, my map was about 6 feet high by 4 feet wide and took up most of my study room. I wish I had taken a picture of it but my wife took it down since I wasn't using it anymore (and it kept coming down ^^).

      I labeled the streets / blocks with stickers and then went house by house to find out what I could about a neighborhood. I got through a few blocks and then realized that networking with people on the ground might be more 'efficient.' But I did get a much better sense of the area.

      Normal 1486949082 Creating A Spreadsheet To Perform Due Diligence

      Sometimes doing things like this are inefficient.. but it gives you a much more detailed picture of things and gives you more confidence to move forward!

      http://www.redfin.com/

      http://www.trulia.com/

      http://www.realtor.com/

      https://homes.yahoo.com/

      Foreclosures - I haven't regularly used the following

      http://www.hubzu.com/

      http://www.auction.com/ (might be blocked in your country - it is in Korea)

      Finding out more about the general demographics of an area - (Unemployment, Population, etc)

      http://www.bestplaces.net/

      http://www.city-data.com/

      http://census.gov/

      CAFR - Comprehensive Annual Financial Report (This report compiled by an auditor of any area. It is paid for by the city. It will give lots of detailed information about an area. The link will take you to an article on how to use a CAFR by Brandon Hall of BiggerPockets.

      Here's an example of a CAFR for Jacksonville, Florida. Note: I didn't use a CAFR before my investment because I didn't know about them at the time.)

      An article on BiggerPockets by Chris Clothier on Buying out of State. (Chris is a managing partner for Memphis Invest, one of the largest homebuyers in the the US.)

      Realty Trac - Large Scale Demographic Trends

      Also you can google questions like:
      jacksonville florida home prices to median income

      jacksonville florida population growth trends

      Allison Leung of BiggerPockets, also discusses many Market Trends.

      ** New **

      One trick I've tried recently with areas that I'm researching is viewing the City Council Meeting Minutes. Some of the smaller towns (I'm looking to invest in Mobile Home Parks) actually write out the comments of the public and list police arrest records. It can definitely give you a better sense of the area's 'culture' and 'issues.'

      Here City Council Minutes for Duval County, Jacksonville.

      Comparing Rents

      A key to finding the right area to invest will be knowing what you can expect in terms of rent prices. Here are a list of sites you can use:

      Craig's List - To figure out the right Craig's list to use, I just type in a Google search such as: "Craigs List Jacksonville Florida" and then I click on the link.

      http://www.zillow.com/ (If you look at "Price History", you can sometimes see the rental history. One thing I like about this - you can see when a property was listed and when it was 'delisted', giving you an idea of how long it was vacant. You can also see if the prices were dropped or increased, giving you a sense of demand.)

      http://www.areavibes.com/

      http://www.zilpy.com/

      https://www.rentometer.com/

      http://www.padmapper.com/

      https://www.rentrange.com/

      And here's a pretty good article on BiggerPockets about researching rents - The Ultimate Guide to Fair Market Rents.

      Maps

      Let me add a section on 'tracking' your data and using maps.

      Use the "My Maps" function of Google Maps (you need a google account). Choose the option to 'create a new map' and name it for the area that you are researching (ie. Jacksonville, Florida). Then, enter the address of houses you're are looking and add notes about them. You can also add in nearby amenities (ie. the nearest Walmart, McDonald's, Big Box Retail, etc.). You will slowly create a map that helps you understand the area better.

      Normal 1486949117 Pasted Graphic 81

      Also be sure to use Google's Street & Earth Views to tour the neighborhood.

      Normal 1486949144 Pasted Graphic 71

      Normal 1486949157 Pasted Graphic 61

      Property Taxes and ownership records

      One thing I wanted to know before I bought my first SFR was more about the owner. I wanted to construct a history of why the owner was selling. So I started by looking up who the owner was through the County Assessor's Website.

      Duval County Assessor's Website

      I learned who bought the property and then I started to research other properties the owner had purchased through a records search. I compiled all of this into my own history. I used a combination of Google, Facebook, and Public Records to find out what I could. I found out the owner had owned multiple properties and was trying to sell them all at once. I also found out the owner's current address to get a sense of how far away he was from his properties.

      From that information, I found out that one of the owner's had lost his medical license. So that gave me some more insights into the circumstances surrounding the sale of his properties.

      Normal 1486949193 Owner Info

      I don't think this is all necessary. But my main focus was to make sure there was nothing 'shady' going on - make sure the owner wasn't someone who didn't have the right to sell the house. Also, I thought that more information might benefit my bargaining position as well as help me figure out what the owner's real needs were.

      So that's it for now! I'll be adding more articles on Partners and Financing coming soon. Also, I'll add another article on Systems & Tools to help make this process as efficient as possible.

      Did you find the information helpful? If so, add a comment below!



      Comments (68)

      1. This is a great article with lots of helpful tips. Thank you


      2. I was recently asked about this article I wrote a while back - "Looking back now, is there anything you'd change or update?"

        What a great question!

        So let me start with an update:

        * I bought this property at the end of 2014. At the beginning of 2014, the goal I set with my real estate investing partner was to purchase a property before the end of the year (while living in Korea). We closed on our property about three days before the end of 2014! 

        * Difficulties getting it tenanted:

        - We wanted to replace windows but the windows we needed were difficult to locate.

        - The contractor we used to help make the minor repairs ended up not being reliable and had to be replaced.

        - We used a Property Management Company that wasn't experts in the area (my partners used them to manage other properties in nicer areas).

        - We had a squatter that broke into the house and may have stayed there for a few days (when it was empty).

        All of this lead to the house taking longer than anticipate to tenant. It took 3-6 months (I forget the exact timing). I think if we had been more focused on getting it done it wouldn't have taken that long. However, once it was tenanted, it's remained occupied for pretty much the entire time.

        Lesson Learned:

        * Use a property manager that really knows the area and the type of potential tenants

        * Stay on top of your contractors

        * If you're house is sitting vacant, it might be that the rent is too high. We lowered the rent.

        Cap Ex Issues:

        * I wrote about the unexpected cap ex issues we faced - https://www.biggerpockets.com/blogs/6526/44014-the...

        (A pipe burst from the sidewalk to the house. We split the cost with the city for repairs)

        * During a hurricane, a tree fell and damaged the roof. I think the repair was about $700.

        Disposition:

        * We are now planning to sell the property. The best thing we did was bet on the right neighborhood (and find great partners). The property has appreciated and we think we can get double what we've paid and put into the property. I'll repost after we sell.

        What would I have done different?

        * Looking back on the post, I'd say the most important things I did were:

        - Choose the right area to invest at the right price (note on that: I wish we had purchased a few more properties! But hindsight is always 20/20.)

        - Choose the right partners. Over the course of 4 years, we've had a great relationship with our partners. Everyone is professional but we also have shared values and communication styles so that makes everything easier. At some points we were sure if we wanted to sell or hold on - and those discussions, not matter how well you get along, can be tricky to navigate. So partnering with people you get along well with helps when those issues arise (and they always do).

        - Know your EXIT! One common mistake I've see partners make is not thinking about the END. I get it - at the beginning of a partnership or project, everyone's focused on how the upside, operations, and so there's often not a enough time spent thinking through - "So how does this end?" While you may think you'll end up owning a property indefinitely, things change. In our partnership, during our time holding this property together: A baby was born, two partners moved from Korea to the US (me included), one partner married. Lots of 'transitions' and life events. As your life changes, so too do your priorities. You may want to sell while your partners want to hold. You may want to raise rents and look for better tenants while your partners want to keep rents where they're at and not deal with the headaches. 

        One thing we did was anticipate the most common potential exit strategies and what might come up as a result:

        * 1 or more partners wants to leave the partnership

        * How to buyout their stake and what happens to those shares

        * Whether shares could be sold to another person

        * How to value shares if a partner wants to leave

        We had a framework in place in our Operating Agreement so when these issues arose, we could refer back to the document for guidance on how to resolve these questions. 

        Other than that, I don't have a lot to add. i think most of the information still holds up. The 2000 Cities document might no longer be up to date but the premise of looking for an area where property price to median income level is a good broad filter to apply.

        Let me know if there are any questions... and if this guide has helped anyone to invest in an out of state market, let us hear how you're doing! 


      3. Thanks for documenting your due diligence process Daniel. This was an excellent article!

        Take care,

        Philip


      4. Hi @Daniel Ryu

        I know this is a somewhat older post now, but how did you figure out accurate operating expenses when looking at properties remotely? 


        1. @Corey McKinney

          Hi Corey! Thanks for posting to the comments. 

          When it came to operating expenses, I used a ratio - about 50% of rent.

          This was a 'starting' point to get a sense for what I thought cashflow might look like.

          Many expenses you can know upfront:

          * Insurance (can call and ask for a quote)

          * Taxes (can look up online - be aware that this can go up if you're purchasing in 'disclosure state' where the price you paid is known. Call the Assessor's office and ask them, "How are property taxes assed for new purchases? Is there an automatic increase?" You'll learn a lot from talking to them.)

          * Property Management (around 10% of rent)

          * Landscape / Groundwork (ask what the current owner is paying - you might not have to pay for this by the way. Depends on the competition.)

          The big variables will be:

          * Setting aside for Cap Ex

          * Repairs and maintenance (R&M)

          * Turnover costs (when your tenants leave)

          Those are a bit trickier since you'll need to know something about the mechanicals, roof, etc. However, if you have an inspection done, you can get a sense for when those might need to be replaced. (I included a few links about cap ex in the article)

          With R&M, there will also be some variance depending on the type of neighborhood you're buying in and what type of tenants you have. With R&M, your likely issues will be plumbing or small fixes that occur. Your property manager will probably coordinate that for you - or you can try to contact some guys locally to use for those types of recurring issues.

          That's one of the reasons why I wanted to be as close to $1,000 in monthly rent as possible - so the property could absorb those costs and still cashflow.

          You can also use the seller's info to get a sense - the seller might not include work he/she has done on their own.. so be on the lookout for "missing items."

          In general, if you're in a decent area and you screen well for tenants, you shouldn't encounter anything too unexpected. Have some reserves ready, of course, and make sure the house isn't falling apart ^^

          The big unexpected expenses for us were:

          * Pipes burst - $1,700 repair for us - city paid half the bill. It was the pipe leading from the street to the house.

          * During a hurricane, a tree branch fell and damaged the roof. 

          * Took a while to get our first tenant. Probably had the wrong Property manager - the company wasn't experienced with that neighborhood

          * We wanted to put in new windows to enhance curb appeal. However, the windows that we were trying to match (we weren't replacing all of them), were difficult to find.

          However, because we bought at a discount in an area we felt hot good potential, all those costs have easily been absorbed by the increase in value in the houses. 

          As they say in real estate, you make money when you purchase!

          Let me know if you have other question.


      5. I updated the pictures on this blog post. I hope everyone can see them.

        As an update to the property - The property has probably doubled in value (won't know for sure until we sell it), but the macro research about property values proved to be very key to finding the right area. I can definitely tell when I look at properties that are for sale now - prices are a lot higher. It's been tenanted for a year continuously after about 5 months trying to rehab and find a tenant (we ran into contractor issues.) The tenant just renewed for the year so we'll have 24 months without a vacancy. 

        We had some tree damage caused by the recent hurricanes in Florida - however, nothing major. 

        And as for me, I used this experience as well as other courses / education to get consulting work for a private equity group. I now apply similar skills that I used when writing this post to analyze real estate deals as a consultant and I get paid to do it! 

        I did all of that after the age 40 having spent 20 years in a non-real estate related field - education and without any formal education in the field.

        So if anyone's thinking about making the plunge into real estate investing, I just want to encourage you and say that you'll be amazed at what you can accomplish as long as you have focus and a plan!


      6. Hello Daniel,

        To echo everyone, this is a great post!!!! I gained a lot of information about investing out of state and Jacksonville specifically. However, the pictures are no longer available.


        1. Hi Thanh!

          Yeah.. I'm not sure why the pictures no longer show up... I'm not sure how to fix that.

          But I did post it here as well: https://jeanluc-leese-g9u6.squarespace.com/article...

          Hope that helps. And thank you for your kinds words!


      7. Hi @Tuan L.

        Thanks for following up about the post! I'll be honest - I never wrote that post... But I did write a book about it ^^ Not sure if that's better or not??

        Anyways, I'll send you a link. The book covers both that partnership as well as other partnerships that I've been able to 'network' my way into. I'll send you a link via PM.

        If you're not interested in purchasing the book, then you can always PM me back with specific questions you might have. 

        Hope you have great weekend plans!

        Dan


      8. @Daniel RyuThanks for the very detailed post. I am looking for your next post on you found a partner in Jacksonville but I couldn't find it. Can you please include the link in your comment and tag me? I appreciate it!


      9. @Gareth Mahon

        I'm glad it was helpful. Feel free to reach out anytime!

        Investing from overseas can be a daunting task so it's good to have a community of support. 

        G'day! ^^


      10. Hi Daniel,

        Outstanding article. I'm an Aussie investor who invests out of state in Australia, and am looking to get into the US market now that the financial landscape has changed here. Thank you for the interesting insights and thank you for sharing your valuable IP.

        Cheers

        Gareth


      11. I'm not sure why the photos are not showing up in this article anymore. I just realized that. But if anyone wants to see the photos, I've posted the same article with a few additions on the end: 

        https://jeanluc-leese-g9u6.squarespace.com/article...

        When I get a chance, I'll fix this one up. 


      12. Hi @Ron B.

        Actually the deal I struck with my JV partners was atypical. It was not the 80/20 - but that was what I had heard from a few others. I got a very good deal with my partners and I knew I was lucky to get it ^^ Incentives were strongly aligned. (In my pre-investing checklist, two factors I wanted checked off - Incentives aligned and Public visibility / reputation).

        Thanks again for the comment! Sorry I can't tell the exact details but I think between what I've posted and what you've posted, people can get a general sense of what to look for. 


      13. Daniel,

        Thanks for the detailed explanation and the recommendation for meetup. I will check it out.

        It seems you are doing pretty well with the property and location. Good job with the selection and good luck! As for the schools, I think it makes sense given all the other aspects you had to look into.

        The arrangements with your partner as far as I understood was that you put in all the capital and he/she takes care of the execution part and then you split the profits 80-20. This seems a little different than what I have read on BP. The most common I have heard is that partners pay 70%(out-of-state partner)-30% (local partner) of the total cost and split all profits and equity 50-50. This forces both partners to have significant skin in the game and aligns the long term goals of both partners. Although, I guess the 80-20 arrangement works well too depending on the partners. 

        Thanks again for taking the time to answer my questions. 

        Ron


      14. @Ron B.

        Thank you so much for your praise and for taking the time to go through my post in such detail and then letting me know about it! I'm glad I was able to help.

        I'm currently in Irvine, CA. I've been attending some FIBI meetups - they've all be great so far. I'll be helping to organize the FIBI in Culver City. Our meetup hasn't been active due to some venue renovations, but we should be up and running again in June. I'm excited about getting that group going and working with investors just starting out as well as those with much more experience than myself. http://www.meetup.com/FIBI-Passive-Income-Investor...

        As for specific questions:

        1. Yep. I found partners through BP. We got to know each other for a few months (although I had a very strong feeling after the first call that they'd be great partners) and we eventually started working together. Note: I didn't push investing together from Day 1. No one is sure at first. So I was feeling out their personality, workstyle, communication and I'm sure they were doing the same for me. I was also trying to demonstrate value and professionalism every step of the way (ie. Always sending follow up notes / emails after our phone calls).

        2. Arrangements - They are the boots on the ground. They handle the oversight of repairs and maintenance as well as overseeing the property management. How you structure a deal like this will depend on the value you each bring to the table. But generally, what I've read: 80/20 equity split with the out of stater bringing all the money and the local sharing in the loss, if any. You can also do an arrangement with preferred return to the investor and some type of split after that return has been paid out. The more value you bring to the table (ie. bookkeeping, financial analysis, operations, etc.) then potentially the closer to 50/50 you can get. Again, will depend on the experience level of your partners and what everyone feels comfortable with (if anyone wants to jump on this thread and talk about the type of deals they've seen for out-of-state investors, feel free!)

        3. Work standards - Partners in Jax take care of that.

        4. School ratings - While low, it's also relative. For the area, it wasn't bad. Also the demographic we were thinking would be our tenant were young couples who didn't have kids. I would have loved a great school district but based on the demo & price, I thought it was an acceptable risk. As it turns out, more than the school district, layout of our house has been a bigger issue. It's a 5/2 but the layout is not super attractive.

        5. We inherited a tenant. Lost them at the end of the contract but they got in at way below market rent because the former owner was going through a short sale and tried to get what he could before he lost the house to the bank. Our current tenants - so far, so good. Knock on wood ^^ A higher tenant class would be preferred but considering our rent to purchase price ratio, we're doing pretty well. If we were dealing with rents at $650 / month, maybe we'd have more problems. I'll keep you posted on that though. 

        6. I'm not sure if I mentioned this in the article or not but the area has really taken off since we invested. The due diligence definitely paid off! I used to see sub-50K houses all the time.. but now I check on Zillow and I see mostly $100K houses. A lot of investors came in the area (maybe I shouldn't have written this article!! LOL.. Just kidding ^^). The area code was also listed as one of the top 20 neighborhoods in Florida in terms of growth.

        Anyways.. thanks again for your contribution. Feel free to reach out anytime ^^


      15. Hi Daniel, 

        Wow! What can I say. That was a really awesome post. Very detailed and thorough !

        I found your post while searching for something else and I am so glad I came across it. I spent the last few hours going through your post myself and it was totally worth it. Like the others above, I am going to bookmark this post and reference it later.

        Like so many on BP, I am also an accursed California (South Bay - Torrance)

        real estate investor - high on aspirations but low on capital - to invest anywhere in CA. So, I am left with little choice but to venture out-of-state ( I am a newbie investor so still searching for my own Murray Hill !).

        I am a little confused from your post though, it seems you found a local partner in Murray Hill with whom you were working, but couldn't tell for sure. Is that how it worked out? If so, I am curious about the arrangement. If not, did you find a local PM to hire people to work on your house or even find tenants. How did you make sure that the work was up to your standards?

        Also noticed that the schools in/around Murray Hill had very low ratings. As someone who have seen how good school districts influence desirability of properties and consequently long term prices and rents, how did you get comfortable with it? Do you foresee any issues with the tenants you may get or higher churn because of it ? As an out-of-state investor, I typically would like to see less churn and higher quality tenants but not sure if that is achievable for rental properties at that price range.

        Thanks again for taking the time to write such a superb post and all the best in your future endeavors !


      16. @Letitia Poteet

        Great to hear! I'm glad it helped. And thanks for sharing your own resources.

        Feel free to reach out anytime if you want to talk out-of-state investing!


      17. Hi Daniel! I am in California looking for the right place to invest out of state also  based on the criteria I have set for myself so this article was timely for me. I have used a very similar method of research so far, including many of the same sites you've shared, but was really glad to learn about additional sites I didn't know existed. I really like the info you shared on maps by subdivisions. Another site I really like is neighborhoodscout.com for breaking out neighborhoods to fine details. Thanks for sharing your process! I have bookmarked it as well.


      18. What a great article on BP. I have consently referred to this article as my main resource tool.  This is a great tool to use for a newbie to out of state investing.  Thank you @Daniel Ryu  for writing this article!!!!!


        1. @Tanya Bridges That's so great to hear that feedback! I hope the content serves you and others getting started well. Keep me posted on your progress.


      19. This is a wonderful Post Daniel, bookmarked and favorite for later use! Currently looking for out of state deals since California investment (at least for me) does not make sense.  

        Best of luck


        1. Thanks Marty! It definitely took some time and effort but the due diligence has paid off.

          Hope your out of state investing goes well. Feel free to reach out anytime. 


      20. This is a great post, Dan. You leave no stone unturned and all investors will benefit from this highly informative post. You demonstrated very thorough research and proved that it could be done from anywhere. Congratulations on your first foray into the world of out-of-state investing and all the best on many more successful deals to come!


        1. Thanks Kent. I do have that philosophy - that our world has gotten a whole lot smaller thanks the internet. With the internet, we can connect with anyone, anywhere at anytime. Of course there's always risk.. but I think my main goal was to minimize the risk as much as I could and invest an amount that I could afford to potentially lose. Overall, it's worked out really well!

      21. Your article was my great find of the day on BP! Unbelievable attention to detail and I printed this out to hang up on my desk. 

        Also, I just started up a MeepUp in Huntington Beach, so if you're ever back in California and have some free time on your hands for real estate, I'd love to have you come and speak to the group.

        Thanks man!


        1. Hi Julian,

          I'm glad you found the post helpful. I actually am back in CA - not to far from you in Irvine. I went to the OC FIBI Meetup on Monday - Bruce Norris was speaking. In addition to the Seoul REI Meetup which I will continue to organize, I'll also be helping to organize the Culver City FIBI. That's awesome that you've started a meetup. I think it's a great way to increase your networks and meet a lot of interesting people. Thanks for the invite. I'll send you a message about that ^^


      22. Bonjourno Julie!

        Thanks for commenting. I'm glad I was able to help organize some of those resources into one place for you. I applaud you on your efforts to invest from overseas. Speaking from experience, I know it's not for everyone!

        What area are you looking to invest in? I'm currently in CA and looking at opportunities. Not sure about CA though.. Hit me up if you ever want to discuss strategies. ^^


      23. Great article. it is really appreciated. I love all the resources, some I have used, but it is great to have them all laid out in one place.   I am now piecing together my out of country strategy for purchasing RE in the USA. I am from the USA but currently live in Italy, and may be moving even father afield this year.

         I want to buy 4 SFR and / or a small multifamily apartment before June for buy and hold. My goal is cashflow with a possible hold of  about 5 years depending if I need the cash when I leave my job or want to keep the cash flow.

        Thanks


      24. Great story and thank you for sharing. I too am overseas due to the military and am just starting to educate myself about REI. Your story was very helpful and inspiring.


        1. Glad you liked it! Best of luck with your own investing and feel free to reach out anytime to talk, network, or ask questions. ^^


      25. Thank you for sharing  your story. You found so many ways to make the most of BiggerPockets and the community here and we all can learn from that!


        1. Thanks Dmitriy!

          The ROI on being a BP member is even greater than the ROI on my investment ^^

          It continues to pay dividends to this day.. I definitely want to strongly recommend that everyone on this site:

          Don't just read the info - Find people that you seem to connect with and continue to build that relationship! It will lead to all sorts of unplanned opportunities (as it has for me).


      26. Awesome article @Daniel Ryu. You really pieced everything together and presented it in a solid article. Thank you so much. I'm excited to find out how your story progresses. 


        1. Hi Emerald, Thank you for the kind words. It's an article I had thought about writing for a while, so I had time to really piece together my thoughts. The property has gone up since we purchased it. Always good news. So the due diligence really paid off. We've had a harder time than I thought we would with turning over the property - bringing in new tenants. We had some deferred maintenance issues we had to take care of sooner than we anticipated (ie. Putting in a new roof). Overall, things are progressing well and I've gained a lot of new insights from the process. I'll keep everyone posted with my next investment ^^ Thanks for commenting!

      27. This is a very informative article! Thanks Dan! I'm a newbie and currently also living out of the country. I'm also planning to invest in RE from out of the country. But I was wondering, is it possible to do it alone without a partner? Also, how much money do you think is a good start for real estate investing?


        1. Angela,

          I'm glad you found it informative. 

          As far as doing it alone / how much to invest - it all goes back to risk analysis. 

          Personally, I invested an amount that I felt comfortable with since I knew that investing from abroad with 'strangers' would increase my risk. But I had many exit strategies planned out in case things didn't go as planned.

          I'll DM you and we can talk more about your specific situation.

          Thanks again for the comment!


      28. This was a great article!  Very informative.  While currently investing throughout the area here in Milwaukee, we are looking to work in other areas in IL, CO and FL.

        Thanks again for the article.


        1. Thanks Jeff!

          I'm glad you found it informative.

          I might have to add a Part II as I'm coming across more resources to aid in the due diligence process ^^

          Best of luck with your investing and feel free to reach out anytime in the future.


      29. Thanks Tanisha! 

        Let me know if you ever have any questions.

        Take care.

        ps. Comedy Youtube Channel? Sounds interesting!


      30. Great info. I bookmarked this article. 


      31. This article GOLD. Interested to hear how it works out!


        1. Thanks Lance!

          Results so far are good - house is up (according to a real estate agent's opinion - not an official BPO) about 80%. So market selection worked out well. It was a top 20 market in Florida for 2015 in terms of property price increases. 

          As far as renting it out - we're looking at a minimum of $900 / mo -but could get $950 / mo. Maybe in 2 years, +$1,000.

          The biggest problems have been cap ex and repairs. We projected about $8,000 in cap ex / repairs but we're probably closer to $15,000+.

          That's been absorbed on paper by the increase in value. 

          So the due diligence part on location worked well.

          But we need to do a better job of estimating repairs and pricing and time needed to get things done. We're working on making our systems more efficient and better communications. 

          Thanks for commenting! Feel free to ask any more questions if you like ^^


      32. Great article. Thanks a ton for sharing!


        1. Thanks Frank! 

          I'm glad you found it helpful. 

          Feel free to reach out anytime.

          Dan


      33. What a marvelous article!!! Such an informative! So many useful tips! 

        And what a profound research! Fantastic job!


        1. Thanks Sandra! I'm glad you found it helpful.

          It took a while and a lot of research but it was all worth the effort. 

          I was just telling a BP'er who's visiting Korea about the 'local area map' I printed from Google Maps - one A4 square at a time. I ended up with a 6foot tall map by 4 feet wide. that took up one of bedroom walls. Took me all day to print out, cut, and tape together and then I had to eventually throw it away because it kept falling apart LOL 

          Don't know what the ROI on that was but it felt good making it at the time.

          Feel free to reach out anytime and best of luck with everything!


      34. Very valuable article.  Thank you so much.


        1. thanks Leonard!

          I'm glad you found it helpful ^^

          Feel free to reach out if you ever want to talk out state investing. 


      35. thanks Daniel, your blog just came at the right time. I joined BP 2wks ago and have being thinking of how I and my son will manage investing in Baltimore MD. I was an active investor in CA btw 1999 to 2007.And relocated back home to Africa in 2013. My son just graduated from college in MD and is interested in real estate business. We want to invest in Baltimore area since he went to collage in the area(Morgan University). Want him to be my eye on ground, since I have the experience. This blog will really help us jump start  this business ASAP. Will save this blog for him and for furture references.  Thanks a lot, your are God sent. Cheers...


        1. That's awesome Al!

          And super glad I can help. As international investors we experience a special set of circumstances that's hard to find information on. I'll be publishing a book later on which goes into more details about this and other aspects of investing from abroad.

          In the meantime, if you're interested, we also have a website:

          http://www.seoulreimeetup.com/

          and a closed facebook group:

          https://www.facebook.com/groups/seoulreigroup/

          where you can engage with other international investors.

          We recently had a meetup and we broadcast it live through Periscope. Ben Leybovich was our special guest speaker. The replay is no longer available on Periscope but we do have a replay link for our FB members.

          Anyways, let me know if you ever have any questions. Glad my article can help you.


      36. Thank you Daniel for such an informative blog on out-of-state investing. As someone new to REI and working full-time, I am phocusing my effort into this aspect, to start. 


        1. Hi William!

          Good to hear from you. Working and investing out of state can be a lot of work, but it's definitely possible with the right systems, tools, and networks on the ground.

          I wish you lots of luck and feel free to reach out any time.

          Thanks for commenting ^^


      37. Daniel, this definitely is the article I was looking for! Very detailed, comprehensive, rich of references...I think I will copy you instead of trying to reinvent the wheel.. :-))

        And of course this is going to be bookmarked as I will read it several times!


        1. That's great to hear! I love that it helped. 

          Thanks for taking the time to reach out and PM anytime if you want to discuss things further ^^

          Thanks for commenting!


      38. Outstanding blog Daniel! You really got into the details of how to lock down a market to invest in from Out-of-State (or Out-of-Country in your case). Really looking forward to your next blog. In the meantime, I bookmarked this page to aid in my search for a market. Thanks for posting!


        1. Thanks Mike! Love the feedback ^^

          Keep us all updated on your own out of state adventures!


      39. Great Article Daniel!! I'm exploring my opportunities on RE investments and this was very detailed and helpful. And I like how you shared all the small details including websites/tools rather than just saying "Researched".

        Thank you!


        1. I appreciate your comments! I will continue to put out a series of detailed content like this - right now I'm working on partnering. And after that, I think i'll focus on networking. Anyways, I hope to see you around ^^

          What type of investing are you looking to get into?

          What have been your biggest stumbling blocks?


      40. This article rocks! Do you have any advice on raising capital?


        1. Thanks @Chris Larkins ^^ As far as raising capital... What type of experience do you have? Let me know more about your background and I can give you some ideas. I've 'raised capital' even though I have very few transactions so it's possible but takes some time.

        2. Thanks @Chris Larkins ^^ As far as raising capital... What type of experience do you have? Let me know more about your background and I can give you some ideas. I've 'raised capital' even though I have very few transactions so it's possible but takes some time.

      41. Awesome post Daniel! 

        Very detailed. Thank you for the post.


        1. @Ivan Aceves

          Thanks for the content. I'm glad it was helpful for you.

          Are you looking to invest out of state?

          How's it going so far?


      42. Awesome article!  I'm very interested in starting to look at opportunities out of state and you've provided a ton of great information.  Thanks Daniel!


        1. Thanks Troy. I'm glad I was able to provide some value for you!

          Feel free to reach out anytime. A lot of time 'the unknown' holds us back and just hearing from others who have done it, even if it's things we already know, helps to make everything seem more possible. 


      43. Fantastic article Daniel! I was wondering if you were going to use the CAFR :)

        I'm bookmarking this article for my future reference. Well done!


        1. @brandon hall

          Thanks! You're CAFR article was great and I mention it to everyone who's thinking about investing overseas. Nice to hear from you ^^