What has been your experience with out of state investing?

[Alyssa Dinson]

Hi everyone, 

I live in California and have been meeting a lot of investors who prefer to invest out of state due to California being so expensive as well as the aggressive tenant protection laws we have here. I have heard both the good and the bad sides of investing out of state and so I am curious to know what other's experience has been?  I have mostly heard about LTRs specifically in Indiana, Alabama, Texas, Michigan, and Ohio but I am open to hearing anyone's experience anywhere. Would really like to hear your thoughts!

[Cliff Benner]

I live in Denver, CO and invest out of state, due to cost. It was challenging to start.

My realtor was not on my side and I trusted her to much, she said the house was fine, her husband did inspections and said it was fine and not to worry, the ARV was double the house value. We purchased this as a BRRRR on a Line of Credit, went to do a few fixes then refinance. We bought it for $90k they said it was worth $90k after $30k in repairs, then a second appraisal said $120k so we could get out of the Hard Money loan by getting a personal loan and maxing out our LOC again. My PM, who did not know my realtor, said the house looked good, nothing needed to be done, and got it rented.

Turns out both were terrible, the house needed new HVAC, AC, windows, Doors, Pipe fixes, Water Heater, electric line, I found all this out after my Tenant Sued us because of the house's condition.

We spent a 9 months of the tenants chasing off contractors before we got it repaired and the tenants out, then the judge granted us all our rent so we finally go that. Got a new PM who made us fix things and walked it with me(first time for me seeing the property), then we finally paid off all but the mortgage and now we cash flow about $400/month. 

Lots of lessons learned and we will be buying there again with our new team, but we now verify everything our team says and we keep an eye on everything more than ever. We are also quick to complain and fire if we have to. 

I discussed this on BP Podcast Episode #610 if you want to hear more.