CA resident investing out of state

[Auryana Faramarzi]

Hi BP - For those of us who live in CA and cannot afford to invest in-state, we are now looking to invest out of state. And For those who have done so, where would you recommend we look for rental properties? I’d personally like to be somewhat “nearby” my rental property to self-manage but I know that may not be very realistic.

I’ve considered states like AZ and NM - markets are by in both places (as we’re seeing across the country). Positive cash flow is the goal, but I value appreciation just as much.

I’d love to hear people’s experiences, esp those from CA, investing out of state. Thank you all in advance for your help.

[Account Closed]

I would think long and hard about your goals and why this is the best way to accomplish them. Buying one or two houses in the midwest or south, especially at todays prices, will not generate any real cash flow and no, you cannot manage them remotely. With the returns on rental properties so low, I personally dont think they are worth the risk and hassle any more unless you plan to scale to a large number of units and spend the time, energy and money to set up systems and processes to manage them efficiently. This is a lot easier said than done. Buying one local property even if cash flow is zero to negative today will probably yield you a better long term return. Or just buy into a syndication or put it in an index fund. 

All those options are better than buying OOS properties in overheated markets today. Just my opinion but I have owned and sold a number of such OOS properties. And I would never buy into the market at todays prices and rent ratios knowing the true expenses of owning them.