First Time Home-Buyer/Investing Out-Of-State

[Account Closed]

Hello BP Family! 

I am a first time home buyer positioning myself to buy a SFR, Condo or Duplex. My ideal strategy would be house-hacking/brrrr in the Los Angeles, California area but my current income alone doesn't support the real estate costs in the area. My goal was to take my commissions as a real estate agent and to invest in my first fix-n-flip or to buy my first property to reside in (house hacking) but the time has come to develop a new strategy.

Although I found a cheaper alternative to purchase in Long Beach, CA (250 sq ft Studio; walking distance to downtown Long Beach; 3 blocks from Pacific Ocean: $150k list price; $80 HOA; Tenant in place renting $1,200 a month), I did not qualify for conventional financing. (Ideal Strategy: Buy 2 condo units at $150k each [$300k] and live in one unit and have the $1,200 a month to cover both condo units)

I have reached out to mortgage brokers and none have created a solution as to what was needed from me to eventually be able to secure financing. I’ve been researching hard money lenders but a lot require me to have experience as an investor. I have even reached out to family/friends (which is few) and presented a seller financing option to transition myself into ownership but that fell through as well. 

I love to explore different real estate markets to compare and it’s usually locations I have ties to. (Cartersville, Atlanta, Jacksonville, Chattanooga, Burbank, Glendale) [Seattle, San Diego, Phoenix, Austin, Houston, Dallas] 

I found an abundant supply of properties in Detroit, Las Vegas, Milwaukee and Little Rock around $50k and less. Most requiring buyers to abide by city/state programs for renovating the property - first time home buyers (owner occupied) and investors allowed with guidelines. Most of those properties are in run-down communities. Is this a viable option to get the ball rolling so I can build credibility as a home buyer/fix n flip investor? 

Any insight/tips (formulas, analyzing deals, securing financing) is greatly appreciated. I‘ve also inquired about internship opportunities from contractors/investors to learn the business so a referral is appreciated as well. 

Last thing..at this point in the game, my #1 priority is seeking experience so financial gain for myself isn’t necessary. How could I structure a deal with a private/hard money lender to take a chance on me to flip my first property with the lender receiving most of the profit from the deal? Or what is usually needed from a new investor to partner with an experienced investor? 

Thanks in advance for your responses!

- Japeth

[Tom Wagner]

Japeth, great to hear you are not letting your location slow down your investing! In my opinion, it is hard to overstate how important picking the right city to invest in is. And what the "right" city to invest in depends on what you are looking for. Are you looking for cash flow -- so maybe Cleveland, Memphis, Milwaukee, small towns, etc. ? Or are you looking for appreciation -- so maybe San Diego, Austin, Denver, etc.

I haven't started out-of-state investing yet but to me the sweet spot is a city that cash flows well with the *potential* for major appreciation. Charlotte, Atlanta, Jacksonville, Minneapolis, Kansas City, Columbus and Pittsburgh are a few that come to mind.

Good luck and keep us posted!