First time investor with 60K to invest, OOS vs Local?

[Bhavin Doshi]

I currently own a home in California and looking to invest for first time in a rental property. Although I have been told that managing a rental property close to where you live is a better choice, it is extremely unaffordable to buy a rental property in the area I live. I am very tempted to look OOS but not sure how to go about it. I have about 60-70K to invest and my goal is to get some cash flow as a passive stream of income. I have been interested in several markets like Raleigh-Durham-Research Triangle area, Austin-Dallas area, Phoenix, AZ due to their future prospects but not able to decide on how to zero in on one of those. Unfortunately, I don't have any close contacts in any of the above places above. Can someone please guide? Thanks for looking at this post. 

[Don Pearson]

@Bhavin Doshi My thoughts may run very counter to the BP norm - especially given (i) I am a sponsor and syndicate deals, and (ii) the majority of the advice on BP does not address other investable channel, such as the equities markets (yes, the stock market).

I'm specifically keying in on your self-proclaimed lack of experience. With all due and absolute respect - you've never invested in RE (outside of your own home), you have no team/contacts, and I would question your ability to discern between a syndication offering up a home-run opportunity versus one that's been underwritten with sky-high and unachievable expectations - many of the latter are marketed in such a way that your sold on glitz-and-glam as opposed to project fundamentals. Don't get me wrong, there are plenty of highly qualified, competent, and trustworthy sponsors out there. You just need to be cautious given the lack of TRUE transparency in these investments.

So my thoughts: 

A) Stash your cash in some low yielding account while you gain the knowledge, build your team, work to understand what makes one project or sponsor better than others, understand market drivers, etc. Put together a list of intelligent questions - find people that answer those questions in a manner that's in line with your own goals. Place your bets, trust, and confidence accordingly.

B) Take your cash and open up an investment account dedicated to REI. Identify those asset types you feel have the best opportunities for growth and are in-line with your objectives (I personally like domestic cold storage, self storage, last mile distribution, multifamily, senior housing, bio sciences). You can Google which publically traded companies specialize in each asset type and invest in those companies as you would any publically traded investment. Most offer a dividend in the low/mid+ single digits with the prospect of price appreciation. Publically traded also means they have higher regulatory standards for reporting and much more transparency than 99% of the private syndicators out there. Your due-diligence with these investments is akin to reading through a company prospectus versus a deal specific operating memorandum. Your maintenance responsibilities are to read/understand the companies' quarterly/annual reports and decide whether their results/prospects are worthy of your continued investment. Oh yeah, and your invested cash is significantly more liquid than most syndication deals.

There are sooo many ways to participate in REI. Go find what works with your style and goals and build one day at a time.

All the best in your REI efforts. Don't let FOMO find you in a regrettable position. Go get your knowledge on.