First Investment

[Account Closed]

I live in Orange County, CA and I've been scouting the market for the last year and a half. Let me just start out by saying the inventory for foreclosures and short sales dwindled really fast and got eaten alive by shark investors. 

With that said, here is my question; I currently have $500,000 in liquidity and have started thinking about other markets/cities to try and purchase my first investment property, preferably a foreclosure, give it some TLC, then re-list it. For you veterans out there that have already done so, would you ever recommend investing in other states or have you mostly stuck to properties of this type to the surrounding areas of where you live?

There are still deals out there to be had in Orange County however most of the really good ones that can purchased and flipped are in the $700-800 range. This leads me to my next question...

With $400,000 in cash, could one hypothetically still get their hands on a property in the $700,000 range by financing the rest, including remodeling cost? If so, this would pretty much enable me to stay local and take a shot at my first property rather than resorting to other places.

[Lelith Walker]

I would stick to states that are close by rather than states that are across country. There are too many people who take advantage of local people whose mouths will water when they know you are out of state.    You want to be able to keep an eye on people and in some cases a hand.  Even if you have friends and family in those states that are across the country you may not be able to rely on them as well as you think you can.  NO body cares about your investment as much as you do because it is not their money.  If you are going to go across country try to partner up with a local investor who is going to put their money into the deal. 

Give you an example that I am facing now:  

 1.  I hired my cousin to install floors. He told me to get laminate because that is what he knows how to do.  The GC I hired later said that the floor is not good for GA due to the weather.  He promised he would leave the floors that my cousin did in one home and not install them in the other home.  GC also promised to return the rest of the floors for me so that I could get my money back and he would go ahead and install the right floor which is luxury vinyl that looks like wood.  A month or so later the same GC says he cant return it because it takes time and he has been called on other jobs so I have all this extra floor in the house.  I can't ask my cousin to return it because he was not doing a good job and ripping me off.  Now the new tenant buyer says the flooring that my cousin did was not good and he got a bid for $350 to repair what was done.  In some ways its probably good that the floor was not returned because if anything what was left can be used. 

2. When I bought the house it came with mirrors.  The tenant buyer and realtor asks if she will get them.  I ask around and nobody knows where those disappeared to or will admit to them being there in the first place even though I have video and pictures to prove that they were there.

3.  For one month when no one was supposed to be in the house I got a gas bill for $370. Now GA is way hotter than NY. My 3 family in NY where I pay the gas for my tenants is $250.  Why did this happen?  because my cousin decided he was going to live in my house down there while he worked on it.  He is originally from a warm climate and 65 degrees to him is cold.  This was not part of the deal.  

4.  I had a project manager that told me he checked a whole lot of things and even sent pictures and video and so did the subcontractor I used.  I even went down there and visited the property.  Now tenant buyer is saying those things do not work.  I sent instructions on what to do to test but being that I am in another state I cannot be sure if it was done.