Getting started with buying

[Jenn Tran]

Hi! 

I'm super new to this and understand the basic concepts, but would like to get more advice, or read more personal stories, before I start diving deeper and committing to anything.

I am a professional living in SF, but as you might know, the housing market is ridiculous here, and I've given up any hope in being able to afford anything here. Would it even be wise to buy at these crazy rates?

Anyway... I'd like to purchase an investment property elsewhere--in a different state, or a different city in California. Right now I've been thinking about: Pasadena (CA), Seattle (WA), Portland (OR), Austin (TX), and Boulder (CO). 

How can I get started? What would you consider to help you narrow down the choices? What variables would you keep an eye out for? Who would you work with in those areas? How do you get in touch with them? Assuming you don't living the city you purchased the property from, would you get a property manager? Why, why not? 

Any advice would be helpful! Thanks a bunch!

[Linda Osborn]

Hi Jenn! Welcome to BP!

I'm going to stay away from the "How to chose where" question since I only currently invest where I live. But I can address several of the other questions. I am also assuming you are exclusively talking about Buy and Hold properties as your potential investment.

Once you decide where you want to invest and what you want to invest in (Single family, multi-family, etc.), the first thing you need to do it put together a local team that will work in your best interest. This should include a realtor who lives in and is familiar with investing in the area you chose, and has experience working with investors...knows how to vet the properties, the tenants, etc. This should also include a mortgage company, or other funding source, a local title company and/or real estate lawyer, and a property management company that is willing to do any small required renovations, repairs and/or improvements (if necessary) at the very least. There are too many examples of non-local investors who are sold a bill-of-goods by "professionals" who don't have their best interests in mind. Your team (especially your realtor and property manager) should be able to help with coming up with the numbers and whether a potential investment is a good buy. However, you always want to be in a position to question and double-check their assumptions. Never rely exclusively on what other people tell you.

Until you get comfortable with your team, you will need to be wiling to travel to the location to meet with, and interview your team and to walk your first several properties with your realtor. Please do not let anyone chose a property for you sight unseen at least until you have a local team you trust. 

If you're going to invest out-of-state, or anywhere that is farther than an hour drive, you really do need a property manager. You need someone who knows the local laws and property codes to market and show your property to potential tenants, vet the tenants, collect the deposit money (which in Texas are required to be held in escrow, separate from the rent money), and the rents (including dealing with late pays or no pays), handle repairs and service requests, inspect the property before the tenant moves in, prepare the property for occupancy & ensure all property codes are being met (safety & security including changing locks, installing/testing smoke detectors, etc.), inspect during their stay, and inspect again after they move out to ensure the property was properly cared for and has no damage. Your property manager should be responsible for responding to emergencies at a moments notice (like water or gas leaks), and fixing issues (like plugged toilets, broken appliances, water heaters, or HVAC, etc.), holding your tenants accountable for regular maintenance (changing HVAC filters, lawn & yard maintenance, checking their smoke detectors regularly, etc.)  The list goes on and on. Unless you have nothing else to do with your life, I highly recommend you get a local property management company!

Hope this helps. Feel free to reach out or PM me if you have any other questions!