Out of state investing during this time - So cal

[Account Closed]

Looking to get going with the investment game.

I was originally looking in so cal but the more and more I look for the deals they’re becoming harder to come across.

I have a STR here and would like to diversify with a multi unit/duplex/apt unit but haven't found anything besides in central CA.

Been looking at Ohio, WI, Texas, Florida and a few. Really would love some additional information/insight on the best markets for So cal investors to get going (in terms of cash flow/facilitation/best COC returns). If any of you have recently invested out of state with a turnkey company or without I'd love to hear your experiences and advice.

Also I’d be open to having a partner/investment group. Have about 75k cash to invest and want the most cash flow possible.

[Marcus Auerbach]

@Account Closed before you get too far down the as ally of as many as possible, for as cheap as possible in order to "beat the 1% rule" there is a lot more to it you should investigate and understand. This is a multi dimensional problem, rent to value is just one dimension. I have been a buy and hold investor for over 10 years - here are some thoughts.

In most markets property values are distributed in a bell curve, with the median marking the largest volume. In Milwaukee the median is about $175,000 for a single family home. The further you go to the left on the bell curve the lower the condition of the property, the quality of neighborhood, income and demographics. The further you go to the right, your needs for down payment increase significantly and your cashflow tends to go down.

Before you pick your type of asset, you should spend some time thinking about who you want to target as tenants. What are they doing for a living, do they have a professional career or not, do they depend on welfare, do they have kids and does the school district matter to them? This goes deeper than A,B,C,D classifications. Knowing who you are going to rent to will define the features and even finishes you are looking for in the property. Amongst other things this will impact your PM expenses and then there is also the headache factor.

The other thing to think about is long term capex. This is probably the #1 mistake I see on posts where people ask to doublecheck their numbers. They are very concerned about getting the estimate for the water bill right, but have given little consideration to capex items like a new roof, new plumbing, a new kitchen, windows or driveway. 

Using a percentage for capex is flat wrong, because a new water heater costs the same, regardless if your rent is $600 or $1600. A lot of new investors will milk a property for a few years, collect rent and being ignorant to the increasing amount of deferred maintenence. Until they get to the point where it can't be ignored anymore, because it is raining into the house etc.

If cash flow is your only source of income, it is very likely that within a few years capex will exceed cash flow. Just to give this perspective, a full rehab in Milwaukee is typically about 50k for a SF and it is necessary every 40 years. So now it depends where the property is in this cycle: has the timer just been reset, or has it beeing in service for 40+ years?

Food for thought! Hope this helps.