Out Of State Investing 101: Establishing Trustworthy Connections?

[Cody Evans]

Hi BP,

I am making my first moves onto picking a market to invest out of state in cash flowing properties. The down payment I will be using is 20k. I think having a trustworthy team of realtors, property management,etc is paramount. How do I even begin establishing a relationship with these people and what can I do ahead of time to pick a reliable teammate. Also what role is the most important and should find first for my team (realtor,property manager, lender, contractors etc)? If anyone could recommend any of these organizations to me it would be greatly appreciated as well.

[Jay Hinrichs]

I would say your undercapitalized.. to do what your trying to do with 20k in cash is going to be pretty tough.

your explaining the BRRR method and that involves usually paying cash.. and or if you need to get HML to buy and get reno money there goes your buying below market as your holding cost will be significant add to your purchase price then add on your refi costs and it could easily be 10 to 12k extra just for financing.

Not to mention the risk of getting royally screwed by some low hanging fruit wholesaler who talks a great game has a lot of posts on BP and gives you a dud.. LOL..

I would rethink this whole equation..

If your anti turn key thinking they charge too much then .. FIND and great broker and simply buy some mom and pops house that they lived in for 30 years in the market you want to be in .. and put it in service.. do a home inspection make them fix the honey do's and let your broker find you a deal.. then hand over to a competent PM.. take special note when you do home inspection on the major componants like heat and air  roof .. plumbing electrical..  try to find listings were these are update or near new.. if you do that its not mandatory to buy a completely fresh reno.

Plus most turn key companies simply don't have 4 plex's they deal in SFR's you may find some that work the really rough areas of the mid west and sell low end duplex's but those will eat your lunch over time.

I think you should step back and reassess.. 20k simply is not enough cash to go out and make this work.. at least IMHO