Newbie Question-rental property

[Teresa Buchanan]

Hi. I'm new to Biggerpockets. My intention is to buy rental income property. I live in the SF Bay Area where re is prohibitively expensive for most, including me. I own my primary residence here but was thinking about buying rental property in other parts of the country with up and coming markets. Is it unreasonable to buy something 1000 miles from where I live and have a property mgmt company handle the day to day? 

[Sam LLoyd]

I was in the exact same situation 10 years ago.  I bought a 4plex in another state with a partner, and lost many many thousands on it over the next 4 years.

I think there were two main reasons I lost so much on this deal.  1st:  I was new to real estate investing.  I had read many many books, I had my calculators up and running, but I just wasn't being realistic with maintenance and vacancies, and the whole process.  Maybe if I had brought down the purchase price because of what I know now, it would have been a wash instead of a loss.

2nd thing:  People.  This is very very important.  My partner was the one that visited the property, and picked out the management company.  So, if you're working with someone that has income (and can prove it) producing property in the area instead of someone who flies across the country and know as little or less than you do... you'll do better than I did.  If you find a management company that doesn't wait six months, and then ask you if want them to get a unit ready to rent... you'll do better than I did.  I ended up finding a different management company that did make an effort, but it still wouldn't make money.... too far down the death spiral.

Summary:  Yes, income property in other states can be great, IF you have experience and/or are working with good people.  That being said, though I don't live in a market as expensive as the bay, I have been able to find deals and make things work locally with the more I know.  It might take a while, but depending on what your goals are, you could wait to save that down payment/build credit... wait for the market to be favorable... and practice looking at deals until you find one that works in your own area.

I hope this helps