All Forum Posts by: Shashank R.

@Shashank R.

I own 9 units every one out of state and in 3 different locations in that state.  Im from that state, but none are in my home town.  I focus on the property manager first.  I spend as much time looking for the PM as I do the house.  you have to deal with the PM the entire time you have the house.  maybe longer if you own multiple properties.  They are in charge of your 100K investment.  They pick your renters, collect your rent, evict your renter and control your maintenance people.  They can make you a lot of money or put you in the poor house.  find your pm first.  what good is the best rental in the state if the pm mismanages it??  I wont buy a property if I don't have a good manager in place FIRST.  After you find the PM then let them help you with some of the other stuff.  some times they even know a land lord looking to sell.  They know the local realtors and what rents they can charge.  It takes a lot of time to set up your team when you are buying out of state.  There's insurance people, the PM, a bank and loan officer, a realtor, and maintenance people, a home inspector to name a few.  Find a good PM and they can help you find these other members of your team.  The realtor can help as well.  out of state investing is very slow at first.  Don't get in a rush.  once you have your "Team" in place then you can look for a house.  Once I have this team and have bought a house or 2 you build a trust with them if not then you replace them.  Always inspect the first couple houses yourself. I have bought 2 sight unseen properties using 2 different teams in different cities.  You can't tackle out of state investing by yourself.  You have to learn to read people and at some point trust them.  With their help the actual purchase of the house is a lot easier.  Out of state investing done in this manner has worked well for me, and I feel completely safe.  Its not for the feint of heart tho.  RR 

 So then, if you look at it that way, then your choice is between an out of state market that doesn't appreciate as much with no cash flow until you scale up or a local real estate market that appreciates more with no cash flow until rent increases ... then, if you can find a value add deal you have a local real estate market with short term cash flow and forced appreciation and long term cash flow and market appreciation and the kicker which is more control over your investments. I sure know which one I'd choose. If you already lived or wanted to move to one of those out of state markets, then my answer may be different ... if you were already an experienced RE investor with established, proven systems and could safely deploy those same systems out of state to more or less instantly, then my answer may be different ... but as a newbie with little or no experience, then my advice is to start in your local market.

 One thing I can pretty much guarantee you is, you will make less profit investing in all the states you mentioned.. plus Illinois, Michigan, and Indiana. Why? San Francisco, San Diego, and San Jose have had the highest overall profit over the last 10 years, also the last 15 years. Profit = cash flow + capital appreciation.

Another thing I can guarantee you is, you will have more stress and headaches dealing with a property far far away from where you live.

When you say "good deals can be had in those states", let me point out, good and bad deals can be had in EVERY state, and every neighborhood :)

@Shashank R. I love impossible questions!  Just kidding, kind of.  I don't think you'd go horribly wrong either investing locally or out of state.  If you're going to be an absentee landlord you always stand a chance of a PM ripping you off.  And I wouldn't bank on 8%, I'd use 10% and you'll want to ask if there's a leasing/releasing fee as well.  The last place you want to skimp on is going for a 'budget' property manager.  As for your plan, those $50K properties will not qualify easily for financing.  Most lenders want a $50K or $75K minimum loan amount so you'll have to think through that as well.  I do think that one thing that can make like a little easier (investing out of state) is that you can get a newer property in a (relatively) better area for the same money.  So if you're worried about roofs caving in you can look in a place like Georgia, maybe a nicer suburb of ATL, and find a newer build.  That might make you feel a little better than investing those same dollars in a dicey part of Oakland and a home built in the 50's.  I'm just making random things up but I think you get the theme.

Here is what's going to be your problem: travel expenses. Let's say you do but that property for $100K and put $25K down (75/25 LTV) and make 10% cash-on-cash return every year. So that's $2.5K in profit that *should* go into your pocket. Now look up what a round trip flight to ATL costs from the Bay Area, renting a car, hotel room, food, etc. I visit my out-of-state properties twice a year. If you do the same, guess what just happened to your $2.5K profit? Poof! Gone. Spent on visiting the great state of Georgia.

So while I don't want to discourage out of state investing you really have to think through *all* of the associated costs.  The cost analysis done above was total fiction but I don't think it was an insane calculation.  My personal perspective is that out of state investing it's really tough to do if you're buying 1-2 low-dollar properties.  It just doesn't pencil out at the end of the day.  Now if you want to (and can) scale I think it makes total sense.  You'll take it on the chin while you're building your portfolio but eventually you'll be (essentially) spreading that plane ticket cost across 10 properties instead of 1.

Hope this helps. 

Hi all,

I live in San Diego and have 85 front doors in NE Ohio, soon to be 109 front doors.  I started investing in this area in 2014.  I have traded in pricey San Diego single family for much higher cash flowing 8 single family and 6, soon to be 7 apartment complexes.

Feel free to ask me any questions.  

Swanny

I was in the same boat, after some time and research I ended up choosing Indianapolis. Currently sitting with a duplex saving for the next property. This deal was 90k for $1250 a month in rent from both sides being rented.  My plan is to buy one a year. 

What criteria are you using to make your choice? Do you have some PMs in any area that you would like to work with?

I was in the same boat, bump up your budget or take a loan get higher caliber property. I went out of state because I couldn't close a deal to save my life in Oakland. In Oakland I was looking at near 500k, HOA fees, and maybe 2500 a mo in rent. My out of state property was under 200k and rents for almost 1700 (Not the best performer, but far from "bad").

Some areas are easier than others to research as they've been pretty well discussed, while others are more tricky and car change quite a bit so best left to locals. 

Last thing to consider is taxes/laws. Some states have lower taxes and are more landlord friendly. 

If you want to know more in depth feel free to PM me and we can chat... it was a interesting experience, wish I did it sooner.

I am biased, not just for Georgia, but for making money and good cash flow without huge investments.  In my town of Athens, it can be tough to find deals right now, but not based  on plenty of conversations I have had with other California people.  There are tons of condos and houses in the $90-120k price range, and you get $1000-1200 per month rent. Some have higher HOAs that run $120-180 per month, but these are in A+ communities.  Just recently there were 3 duplexes listed and under contract quickly for $87-$93k. They rent for $1000-1200 a month.  I am an agent and investor looking for these deals and helping other investors buy them all the time.  That's my 2 cents for Athens, Georgia, The Classic City, home of the Georgia Bulldogs.   PM me if you need some help and want to make some easy cash flow.