Buying First Property

[Kermaury Musgrove]

I am looking at buying my first property, OOS to be exact. I currently live in California and I am looking more in the Midwest and east areas. I am trying to get started as I have been told about getting an LLC, Business license and so on. Can anyone share their first time story? I would greatly appreciate it.

[Becca F.]

@Kermaury Musgrove

My first rental property was renting out my primary residence instead of selling it when I moved.

I agree with Bradley's comment. Out of state investing is challenging. Get to know that market well, the  class of neighborhoods, and don't pick a random Midwest city just based on numbers someone is telling you (e.g it will cash flow x amount $$$). I've closed on 2 SFHs sight unseen in Indianapolis. Video tours and photos look very different from seeing the properties and areas in person. 

If you're going to buy OOS, would highly recommend getting an experienced local investor (someone unbiased, not on the agent's team or anyone  trying to sell you something) to do a very thorough video tour of the property and at least the street before making an offer. Pay them $100 to $150 for their time. And talk to 5 recommended experienced property managers that will give you honest feedback on what homes will rent for in specific areas, potential problems, tenant base, etc.  With the Midwest there are also winter issues and hail damage from thunderstorms that we don't deal with in California. You need a trusted team to do OOS investing. 

You don't mention what part of CA you're located. There's an advantage to being within driving distance of your property. I know other Bay Area investors buying here or close buy but doing value add such as ADUs, house hacking, or mid-term or short term rentals (long rentals at current interest rates and prices will be very negative cash flow). I recommend going to local real estate meet ups and talking to investors. 

About 50% of investors I know don't have LLCs including a few that own several million in properties in CA. If you get an LLC, don't use those asset protection companies (they have ads everywhere) who will price gouge you and try to scare you - they gave me a quote for $14,000 to set up a Wyoming Trust over Holding Company over each LLC (one per property) for 5 properties and this isn't including the annual fees each year... ridiculously high. It's best to talk to an attorney about that.