Buying 20+ units outside CA. Streching the dollar......

[George Bruton]

Hi Everyone,

I'm looking to invest in multi-family properties within the range of 2-5M.   I currently live in Southern California and have been searching for opportunities here but find that many deals are overpriced and make it a challenge to cash flow.   With that said after reading on this site and others, many contributors discuss deals in midwest and east coast that have very low door rate vs California.    There was a post I was just reading about investing in Indy and buying 4 plexs for under $300k.   I could only dream of finding that type of deal here.

I can pick up an 8 unit property near the beach for $2.9M currently.   If I take that $3M to Dallas Tx.  I found a 38 unit property for less than $2.9.  I understand rents would be lower on the Dallas opp. vs the Beach opp. but I would be making it up with units.   Clearly, there are big investors here in the California markets so there is money to be made.   But what would be the business case to stay and invest here vs outside in states where you get much much more for your $?     

I apologize if this is a basic question and I did try searching the forum with no luck.

Thank you,

George

[Greg Dickerson]

George,

I wouldn't focus too much on price per door. The bottom line is NOI. You want to buy the most income you can get for the dollars spent.

You can find great deals in SoCal but you need to look at a lot of them and go direct to seller. The closer you get to the beach the more it becomes a value and appreciation play not income.

If your going out of state it’s best to go big to make it worth while. You can also partner with an operator or invest passively in a larger deal.