All Forum Posts by: Sara W.

Out of State investing is worth it if your market is expensive, or if there is a lot of competition with offers and low inventory. If you hold a well paying W2 job, its worth exploring out of state because the risk is not too high and you can find a home for under 100k which can cash flow

OOS is a great way to start but you definitely hit that scalability issue after 5-15 homes.

@Sara W.

I have made a career out of out of state investing and supporting out of state investors. Def worth it. Need the right team and support but again... worth it.

I agree completely with some of your concerns. I am currently in a situation where I can't do a regular OOS investing due to where I am living at the moment and have recently teamed up with a TK company and am working on closing on a property. 

I was a big advocate of just investing in stocks and satisfied with owning one property but have just switched gears into wanting to own more rentals in order to create cashflow. I understand that your concern about only generating 8-9% ROI on a property is not attractive at all and usually if you just stick with blue chip stocks you will outperform that. but take into account the equity you're building on the house every month. i kind of look at it as getting paid dividends each month. even though you aren't generating cashflow, you're technically not losing money on the property.

Thank you John! I totally understand your point on appreciation. However, I am very conservative on my ROI calculation and don't usually want to factor in the appreciation in my deal as the market can change and if the property is not generating enough cash flow to sustain itself I might not be able to hold it long enough to see those appreciations.

@Sara W with my Idaho units when we bought we where about about 20% IRR without appreciation. It was around 12% CoC plus some loan pay down and tax benefits. with appreciation it has been much higher. I will also say that I haven't gotten any there in about 3 years and there has been very high appreciation so the type of deal we got is probably gone. It was at 1% rule when we got it but now they are selling closer to .7%. Even with about 15% rent increases. With appreciation it is much high as we have had over 60% appreciation in the 3 years and we did a high level of leverage. I wouldn't invest in LTR's if there is no appreciation play the yield is just to low for what I can get. I very low 2% yearly appreciation increases the return by 8-10% and if you are willing to-hold 20+ years then it would be unwise to not include it in your calculations. I would suggest only putting calculating the worst 30 year period for your market in the last 100 years as what you calculate for a prediction.

I think the big question worth asking is how involved do you want to be in your real estate portfolio.  You can invest in syndications and be completely passive and make good returns.  Or you can be hands on and build your own portfolio and make similar returns.  If you do plan on taking the passive route I'd suggest investing with a proven syndicator and not in one of the massive funds like Crowd Street.  Happy to answer any questions you may have regarding investing in syndications.

Hi @Sara W. You got some great advice from several folks here.  I would recommend you check out this insightful recent forum post to help with this decision.  Though it doesn't hit your question head-on, I think it could be helpful:  https://www.biggerpockets.com/...

Best Wishes! 

I would say the benefit is year 5 versus year one.  Absolutely through syndications and other means you can hit 8-12% a year in returns and when you are looking at buying properties it seems as if you are doing a lot more work for the same return, so why do it? Because you are not buying a property for its year 1 return.  You are buying it for its year 5, 10, 15, even 20 year return. Don't get me wrong you don't want to buy a bad deal, and you don't want to buy and just bank on appreciation, but often that okay deal year 1 will be a great deal in 5 years. 

Easy example is the house I bought 2 years ago, 2 years ago it was a fine deal not bad, not good, just a base it.  Now it has appreciated about 33%.  If anyone could buy my house for what I bought it for 2 years ago they would in a heart beat.  So the reason you go through the trouble is because of the long term benefits.  Hope that helps. 

Invest where you are comfortable and have “ working” knowledge.   Most out of state investors end up becoming absentee owners who want out of their situation. Because what sounds great on a forum, become nightmares to many.

 I recall when these type forums were touting Michigan (Detroit) as a great place to invest.  And I know a number of people—from Arizona and California—-that acted on that information.  Most did well.  But they were the ones with either working knowledge of that area or friends/family from that area.  Those that were following the crowd got burnt.  

The issues they faced from bursting water lines, heating units failing, extreme wear/tear on roofs etc.  issues they had never experienced in their locales.  Caused them more headaches than the property was worth (cashflow, appreciation).

All of these investors loss more money than they could have made by being patient and investing where they lived. 

Thank you for sharing this. This is one of the reasons why I am a little hesitant and why I don't understand how TK solution can be better off than investing in some real estate funds and RE notes. Because the profit margin is so slim in TK, any major repair will wipe out the entire year's profit. And even if one property cash flow, I will need to get a lot of those properties in order to accumulate to a sizeable monthly profit because one property sometimes only generate a couple of hundred dollars in profit.