All Forum Posts by: Rob Cee

 There were definitely a ton of people from expensive coastal areas investing all over the country 10+ years ago and a lot of the same resources were available then.  You still had a lot of the same Internet tools in 2005.  I know Marshall Reddick and others have been promoting out of state buying for 20+ years in SoCal.  The key is also someone who has not lived there before, I'm talking someone who just picks a city and starts investing there.  I'm not saying it can't be done effectively, I just didn't have never personally met anyone who has owned the low cost Midwest houses from a distance over the long term.   I would love to talk to some.  Over the longer term you get more of a true idea of what the costs will be like, turnover, fixing up properties, evictions, vacancies, etc...  And what it's like dealing with this all remotely.  For the first few years you can kind of be in the "honeymoon stage".

 Thanks.  I had a post I did on BP about 6 mos ago trying to find one long distance out of state landlord that has owned lower cost rentals in the Midwest for a long time, say at least 7-10 years.   And I did not find one person to step up.  I'm really curious how these rentals work out over the long haul for people who live in expensive coastal areas and buy the older lower cost midwest houses thousands of miles away.  If they work about to be a good cash flow investment providing good income over the long term. You seem to hear abut a lot of people that have been doing it a few years, but rarely anyone 10 years or more.

 I'm curious Tyler, how long have you owned in KC?

 Agreed.  And even better if that person with boots on the ground has no vested interest in the transaction.

 Joe I am sure you have great advice.  All I am saying to the OP is make sure you get 2nd and 3rd opinions from  landlords (with no vested interest in the transaction) that are in the position you will be in....i.e. they are out of state investors who own low cost rental houses thousands of miles away from where they live.   And make sure they have owned them for a long time, and then the OP will get a much better idea of what he is getting into.  

 A real seasoned long term local investor (that isn't trying to sell you properties) is fine too, but better yet if you can find an out of state investor (like yourself) who has owned for preferably 5+ years in the area you want to buy.  Don't just talk to out of state investors that have just started buying a few years ago, they are still in giddy and in the "honeymoon" phase, and you won't get the real scoop.  

Hi Ariel, take a look at a lot of @Jay Hinrichs post on this topic.  He is a straight shooter that doesn't mince words on the low cost Midwest & rust belt stuff.  And also be careful who you listen to on this site and make sure they are unbiased (i.e they are real investors themselves and not selling anything) .  

There are a lot of turn key sellers in cheap areas looking for greenhorns on BP from CA to sell properties to.  Better yet, try to find someone from CA (that is not in the business of selling low cost turn key homes or is not a "shill" for a turnkey seller) that owns low cost rentals in the Midwest, and has owned them for at least 7 years.  They will give you the real scoop after turning over multiple tenants, maintaining the property, etc...

What type of investing do you want to do?  San Diego does not cash flow for rentals right now.  I own rentals in SD but I bought between 2009-2011 when the market was way down.   There was a very brief window of opportunity from late 2008 to early 2012 when certain properties actually cash flowed in Coastal CA due to the over-correction in RE prices. I was shocked when it happened as many thought you would never be able to get a 1% rent to price ratio on the Coast of Cali ever again, but it happened, briefly.  But then prices shot back up like a rocket in 2012 and 2013.

But I'm sure you can do fix and flips in SD right now like you can do in any market at any time.  It's just a lot of hard work, learning, and a lot of competition.

Financing post 2008 is nowhere close to 2001-2007.  Not even in the same universe.  And the easy credit is what caused the severity of the 2008 crash.  

I think at the peak in 2005/2006 almost 70% of loans were stated income, interest only and zero down?  There is none of that going on now.  99% of the loans a full doc, rigorous underwriting, more conservative appraisals.   

All of the loans today are also very low rate + fully amortizing.  This means that borrowers are paying large chunks of principle each year building equity even if prices didn't go up.  Add to this the record numbers of properties bought all cash post 2008.

This all means it will be unlikely we will see a flood of inventory needed for a 2008 style crash.  Not enough motivated sellers.  Also many states have new homeowner friendly rules that delay or near eliminate foreclosures, like the CA homeowners bill of rights.  I have a friend that lost his job and is getting $3k/mo from the state of CA for 12 mos to make his payment!  And he never has to pay it back!

But yeah, I think you could see prices go flat or fall back in some areas.  I'm curious what a big stock market correction would do to the heavy tech job cities like SF Bay, Seattle, Austin.

It is interesting that many of the states with the largest numbers of people leaving per the United Van lines list are some of the most heavily taxed states in terms of the combination of income taxes and property taxes (NJ, NY, IL, OH, PA, CT).   Most of the major inbound states have lower taxes...3 of them having NO income taxes (FL, TX, NV) and ID, SC, OK having low property taxes but mid range income taxes.

I can't believe that VT is a high inbound state:)