OOS investing. What states outside CA are good to invest in?

Question

Hello!

I hope you all are doing well during these times. I made it a goal for myself each day to practice running numbers in order to finally take action on deal analysis. If any of you are currently investing out of state from California, what states are you currently looking at and what criteria did you guys develop in order to choose that market?

And about how much capital would be a good start for a down payment if you didn't purchase the property fully with cash? I felt $25-30k was a good cushion to start out with before I look into other ways to creatively finance the rest. Thoughts? I'm saving up as much as I can right now, but due to the whole COVID situation, my reserves aren't building up as quickly as anticipated so I've been feeling in a rut lately.

Any advice on building a team out of state would be helpful too! (in terms of who to look for, how to network when I'm slowly saving up, what questions to ask etc)

Account Closed · Answer

Hey @Rochelle Duong,

I'm biased for Oklahoma City, but what we have here is cash flow property with a linear appreciation. We don't experience strong appreciation, but we're known as a safer investment for most. If you're into rehab work, you'll be able to broaden your scope on a lot of properties.

Other areas that I have heard were interesting is San Antonio, Kansas City, Phoenix, Dallas, and Little Rock.

You'll want to look at job growth, appreciation, cash flow, average DOM, would be some indicators to look for.

It's going to be difficult in a competitive market to buy on a loan because you'll be against a lot of cash offers. It's not impossible, you can try to look at owner financing/lease options, but the rate they want is usually higher than what you would get from a bank.

Good Luck!

Nathan Gesner · Answer

Have you read "Long Distance Real Estate Investing" by David Greene? That would be your first step to build a foundation of understanding. Then refine your knowledge with questions.

Look for a state that is affordable, has reasonable laws and courts that fairly support Landlords, and a growing job market. A lot people are investing in Kansas, Tennessee, Texas, Alabama, Florida, and many other states. I would say most of the mid-western states are worth looking into. You may want to look into an area that you enjoy visiting so you can occasionally travel for vacation and check on your investments (tax write-off). So if you like music and Nashville is your scene, maybe that's an area to invest in.

You don't have to invest in big cities. The larger areas may be saturated with investors and good deals are hard to find. 30 minutes up the road to a town of 15,000 may present more opportunities.

Alex Olson · Answer

@Rochelle Duong KC is great. Great, diversified work force, no single sector of employment dominates (a good thing for times like these) and it is a growing progressive city. Plus it cash flows and the urban core and A suburbs appreciate really well. I know from being an investor and an agent.

Whitney Hutten · Answer

@Rochelle Duong My faves are KCMO, Indy, Huntsville... but I think the better question to be asking is how do you analyze the markets you are interested in so you know a good market when you land on it.  Look for markets that are growing in population, jobs, job diversity, median home values, income and are decreasing in vacancy and crime.  Stack your investing cards in your favor!

Mike D'Arrigo · Answer

@Rochelle Duong

A better question is what markets are good. States are made up of many markets--some good, some not so good. The answer really depends on your goals and objective. If you are looking for cash flow, I would recommend the Midwest, We like Kansas City and Indianapolis in particular. Both not only cash flow well but they have strong economic and demographic trends. I look primarily at population growth, job growth, labor participation rate and incomes.

Jean Marx · Answer

Hi Rochelle -

Do you have connections in any out-of-state markets that align with your criteria and goals? We used to live in Little Rock, AR about ten years ago so that worked well for us. We know the area well enough to give us some advantages like having a general idea of where we'd like to focus or stay away from before even talking to a realtor for comparison. It also made it much easier to establish a team because we could get recommendations from people we trusted. Even if we hadn't lived there, the investor friendly realtor we got through a recommendation saved us time weeding people out. It also helped because we had a mutual connection. A lot of people go out of their way when the referral is coming from a friend. I saw someone else mention Little Rock on your thread. If you decide to investigate that market further, I can put you in touch with some of our resources. Just sent me a message!

Jean

CA DRE # 02101116

Stone Saathoff · Answer

San Antonio, TX. Low cost of entry, diverse economy, stable values throughout previous recessions, the list goes on.

Pamela Sandberg · Answer

Phoenix has been a popular destination for California investors - much more affordable than Cali, and it's just a short drive or flight when you need to be here. I've worked with several out-of-state investors. Happy to answer any questions I can!

QuoVadis Gates · Answer

Chicago has a strong market and because it's a staple as one of the most important and populated cities in the country it's pretty trustworthy.

I moved from LA to my childhood home of Chicago started a real estate business and I'd have to say it's one of the best decisions I've made. The rents are similar but property values in Chicago are more affordable then they were in LA.

This place worked for me, good luck on your journey. I'm a Broker now, so If you're looking for deals here, just let me know.

- Quo

NaDean Bowles · Answer

@Rochelle Duong

I have a team if you are interested and several California investors invest in the Little Rock, Arkansas market.

If rehabbing, with the right numbers you don’t need anything down.

25-30k down will get you a few solid rentals in good shape in B/C areas too.

Contact me if you have any questions or are looking for local resources.

OOS investing. What states outside CA are good to invest in?

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