Buying in other states! What do you think?

Question

Hello everyone!

I'm new to RE and ready to purchase my first rental property. I've been looking out of state because unfortunately here around Tampa, FL and surrounding areas is getting crazy as far as prices. I've done some numbers and deals don't seem to have positive net cash flow around here for the most part. Sometimes you may find a property on the positive side but it'll be extremely low, less than 100 or so, i would rather have a bigger profit margin since it'll be my first RE investment and this will protect me from mistakes I may make. And with this the question becomes, what do you guys think of out of state investments? Pros and cons?

Cody Mitchell · Answer

My wife and I recently did two out of state BRRRR deals and are really glad we did. Investing out of state I think is a great option if you don't have the capital to get involved in the area you are currently in. In my area in Central Texas, much like you are saying about your market, finding a cashflowing property is extremely difficult. My wife and I still plan to invest here since I think properties here will continue to appreciate at a very high rate, but we invested out of state in an area where our cash has a little more purchasing power and it was a little bit easier to cashflow.

The pros of investing out of state is that it causes you to grow and build a network, you can choose any market you like, and it can make it easier to invest specifically based on your goals (whether that's cashlow, appreciation, number of doors, etc.). Some cons are you are likely going to know the area as well, so you'll really have to study and get good help to prevent you from buying something in the wrong neighborhood, you probably won't be able to just go visit the house in person, and you won't be around physically to address small issues as they come up. With all that being said, I really think that investing out of state is great to do. Just to add something though, if you haven't already, you should look into househacking in your local market. It's a great way to get a property for low down, learn to deal with tenants, and you can repeat it annually.

Mercedes Anthony · Answer

Hi Jonathan, I’m a Realtor in the Tampa Bay Area. Have you tried partnering with an agent? There’s some great deals in the outskirts of the Bay Area like Lakeland, Apollo Beach, etc.

I’ve ton a ton of research and 30% of closings in the Tampa area have been done by investors. Let’s connect and we can chat about some trends I’ve been seeing in the investment market lately.

Ruth Blue · Answer

@Jonathan Paz

This question comes up alot. When we were faced with this our only answer was PRO out of state. There was no other choice.

We lived in CA and it only made sense to invest out of state so we researched and read everything then realized invest Where you know. We used to live in Huntsville AL so we bought some long term rentals there. We would go to Pigeon Forge TN for vacation when my mom was growing up so we bought STR there. We also vacationed in St George UT and could drive there in a few hours so we invested there. You should be comfortable investing where you know. Find people to trust who are mentoring others and know your numbers. Don't be afraid to share also with local PMs. We work with Dietrich Rentals in Huntsville and they are now life long friends.

Joshua Messinger · Answer

Hey @Jonathan Paz!

With the right systems in place and the right team members, you can run an OOS operation very easily. The hard part... Creating those systems and building the right team around them of course. Make sure to handpick each member of your operations so that you know things will run seamlessly and remember that this is YOUR business so you will need to play a large role in everything when first getting started.

If you have any other questions don't hesitate to reach out!

Live Free,

Josh

Guy Gimenez · Answer

Finding good cash flowing properties on the retail market is always more difficult because, well, they're retail properties. That's why most investors locate their cash flowing deals off market. And once you go outside your core market your cash flow will often be eaten up by management fees, third party vendors whose work you can't oversee, etc. Is it possible to invest OOS and still make money? Absolutely. IMHO, it's not a good idea for a newly minted investor to do so because there are so many opportunities for the investor to be taken advantage of which makes it easier to lose precious capital.

Nathan Grabau · Answer

I am invested in the Ames, Iowa area and have gotten 10%+ CoC returns. I like the area because it cashflows but is no experiencing negative population growth like lots of Ohio or Michigan. In my mind I do not want to invest in an area where my number of customers is decreasing. My real estate agent in Ames is also an investor with a few hundred doors and a property manager which makes the process sooooo much easier. Send me a DM and I can get him in touch with you.

I have also been very happy with the tenant base. No issues with tenant turnover over the last year across 11 doors.

Linda Labbe · Answer

we are in Canada and invest in the States because of the numbers one has to have solid teams on the ground to do this and a system and know how to run numbers,,, more then willing to share what we have learnt over the years if anyone wants to chat

Buying in other states! What do you think?

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