Long Distance Investing (BRRRR/Turn-key). All Cash, any thoughts?

Question

HI ROCKSTARS!!!

I am a newbie investor making a move on my first investment adventure. Long story short, I live in Hawaii right now and looking into acquiring rental properties in mainland where SFHs under 100k are widely available. I've been talking to some realtors and property managers in Memphis, Cleveland and Oklahoma areas.

My obstacles are getting mortgages because I moved overseas for a year for business start up, came back and had a part-time job for a few months, then got my real estate license at the end of last year.  I am so fortunate that I have families and friends who trust me enough with their own precious money that I have private money to invest.

I had to skip many steps in between from my new business being blocked by monopoly market, to moving across the ocean 2 more times (Okinawa-Montana-back to Hawaii), getting divorced and savings going from 6 figures to almost none. I spoke too much haha.

Anyways

Here are my questions and concerns:

Q. How would you minimize the risk of all in cash investment in time like this? Because my concern on this is losing equity if housing market tanks.

Q. Any other funding methods you could think of if you don't have almost 2 years of steady income history in US?

Much appreciation for reading my post and sharing your bright ideas

Masa

Aloha

Dean Harris · Answer

Im working through a BRRRR right now in Memphis, TN in the 38128 zip. There are certainly opportunities in Memphis and the surrounding areas to find these type of properties! Always trust your source and make sure the ARV is as accurate as you can get it up front.

James Wise · Answer

Best way to reduce risk on an all cash purchase is to go ahead and have it appraised anyway. In addition I noticed Cleveland, Ohio was on your list so I figured I'd drop you a link to The Ultimate Guide to Grading Cleveland Neighborhoods.

Masa Moromisato · Answer

@James Wise

Hi James,

any other areas you could suggest besides Euclid? I'm looking for SFH in B to C+ class areas with hospitals and Tech/IT companies presence nearby.

The realtor I was talking stopped responding out of nowhere haha. So I'm for shopping again

aloha

Masa Moromisato · Answer

@James Wise

Hey James!! Thank you for that Cleveland guide map. I found it highly helpful.

I've been talking to a realtor in Cleveland and trying to narrow down an area to invest. Euclid was one of them

Aloha

Ryan Evans · Answer

Funding is going to be tough unless one of your partners signs on the loan. I've been in a similar situation over the past few years - the moving and unstable work history and I've just been using private money.

I'm guessing you're going for cash flow if looking at the low priced markets. The reason they are under 100k is because they didn't appreciate like other markets, so appreciation shouldn't weigh as heavily on your numbers in the first place.

If you're going for cash flow then you should be in it for at least a few years, in which case any downturn that happens won't affect you unless you sell. At the end of the day that's just the risk of real estate.

Alyssa Dyer · Answer

Q. How would you minimize the risk of all in cash investment in time like this? Because my concern on this is losing equity if housing market tanks.- Invest in a market that typically doesn't take big hits. Don't buy in A class areas that people will downsize from. C class in Oklahoma stayed steady through the last downturn and rent rates stayed steady. Look into what other markets did in the last downturn.

Q. Any other funding methods you could think of if you don't have almost 2 years of steady income history in US? Could you qualify for non-doc loans?

Much appreciation for reading my post and sharing your bright ideas

James Wise · Answer

The Ultimate Guide to Grading Cleveland Neighborhoods will lay out all the grade level of all areas for you. If you want to be near hospitals you should look at Cleveland Heights along with the 44135 and 44109 zip codes of Cleveland.

Tom Ott · Answer

I always suggest looking for a TRUE Turnkey provider to do something like. I would not suggest some company that has "contacts" in multiple markets they claim to know OR if they are just showing you listings off of the MLS. A Turnkey Provider should own the property first, renovate it all in-house, place a tenant BEFORE closing, and then stay on as the property manager after closing. They should not push you off on some "trusted" partner that you have never heard of before to do management.

Try looking at:5 Keys to Turnkey Real Estate InvestingAssessing the Risk of a Turnkey Real Estate Company

James Wise · Answer

I like Euclid. Stable job market over there with Amazon being in town.

Matt R. · Answer

My thoughts are if you are paying all cash you might want to get a very steep discount so that would exclude most turnkeys at this junction. I had a friend who only paid cash when he was buying. He would ask for the list of properties 300 to 400+ days on market and throw out redic low balls. He got everything 30% to 50% off that way. Good luck!

Long Distance Investing (BRRRR/Turn-key). All Cash, any thoughts?

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