Long Distance Rental

[Julian L.]

Hello all -

I am 31 years old, originally from Fargo, ND and currently living in Los Angeles, CA. Needless to say, the real estate markets are completely different here than back home. I've been saving up for a downpayment for a place in Los Angeles for years, but have recently had the idea of investing in some properties back home to generate some cash flow, instead of using my entire down payment on a small dinky condo in LA. 

I currently make $95k at my full time job in LA and have about $150k to invest - currently in mutual funds. In addition to my mutual funds, I have $20k in a emergency fund and $75k in a retirement fund. 

I've been eyeing a 4-plex, that is asking for a total of $265,000 and generates $2600/month. According to my calculations, if I put down $130k after I pay a property manager, mortgage, taxes and insurance, I still have $1200 left over each month. 

My plan is to save $500 out of the $1200 for maintenance and pocket the additional $700 each month. 

Is this the best use of my savings or should I continue to wait until I can buy something in LA? What would you do in my shoes? 

[Jonathan Cope]

@Julian L. 

Your approach seems thoughtful. 

Being deliberate is wise whether this is your first purchase or 100th. 

Begin to build an inventory of useful vendors to support you and your property. 

For example, plumbers, electricians, a back up property manager if your first one flakes, attorneys, etc. 

It is best to have such an inventory readily available whether you are local or not. 

I self-managed three places in New Jersey while on foreign assignment in London, UK. 

The quality of our places and tenants allowed this to be fine. 

I replaced hot water heaters via email and phone calls. 

It is all doable if you find a property and tenants that partner with you. 

You might want to look up some of @Brie Schmidt's forum content. 

She owns a portfolio of out of state property and is thoughtful about its management. 

Good luck,

Jonathan

@Brie Schmidt