Out of state investing: Evaluating strategies: Turnkey / Wholesale / Partnership with local investor

[Matt B.]

Hey BP community,

I am looking intently on doing some buy & hold out of state investing and trying to come up with a good strategy. Some of the options and pros / cons i have been evaluating are listed below:

1) Turnkey -

Pros - hopefully easier / stress free, little $ down (conventional loan, no repairs)

Cons - i have heard sometimes it can not be easier / stress free in some cases… Also properties and repairs may be marked up compared to other options (in other words, not getting the max return on your cash)

2) Buy from Wholesaler. Build a team of GC / PMs

Pros - Cheaper costs, more trust with team members, likely higher cash flow / appreciation potential

Cons - requires more hands on work in location, time to build team, cash purchases,

These may be the extremes of the spectrum and I am sure there are a lot of options in between such as using a traditional agent, etc. I have also been thinking of a way to try and get the best of both worlds through a hybrid type of approach / partnership.. which leads to option / idea 3.

3) Find wholesaler/boots on ground who wants to do buy and hold, but doesn’t have as much cash… create partnership. This creates 2 parties incentivized to do the best thing for the partnership.

Idea: wholesaler finds deals. Both parties put cash in (maybe as the out of state investor I put in more up front, 65/35… 70/30?).  In location investor gets GCs to give quotes, and organizes any needed rehab. OOS investor works to get mortgage, insurance, coordinate w/ PM, etc.  We refinance the property and end up as 50-50 split.  

Does anyone have any thoughts on the feasibility of something like this? I am really trying to get good prices, maximize my money, and build a solid team through incentivized teamwork. Sound like a crazy idea?!? Haha. I would like to hear your thoughts and experiences on if you think it could work… Or if you have tried something like this.

I am looking into the areas of Indy and Kansas City mostly… SFRs and small multis.

Thanks for your input.