Local or out-of-state for first time (multi-family) investor

[UV Singh]

Greetings BiggerPockets Mates!

I really value the BiggerPockets community and the human wisdom and partnerships available here. I am a first time investor with a decent amount of cash to put down for my first investment property. I am fortunate to be able to invest a decent pot of my life savings (+1mm) cash in investment real estate.

I am a W2 employee and would like to partner up with a strong local team where ever I end up investing (Mortgage Broker, Title Co, General Contractor, Property Manager). My plan is to deploy capital now if there are deals worthy of jumping into, taking 1-2 years to stabalize and make the property run efficiently, and then give up my W2 job to do a whole lot more of the same. 

I am located in the Bay Area and of course multi-family is insanely expensive here. Would you advise that I look else where for my first deal or 2 - possibly else where in California (Sacramento, Los Angeles, San Diego) or Texas (Dallas, San Antonio, Austin) or Florida (Orlando, Miami)? 



With gratitude,
UV Singh

Bay Area, CA

[Nathan Grabau]

If you have the capacity to invest in your local market you are going to be better off, especially in the Bay Area. It is going to be really hard to beat the long term prospects of Silicon Valley, especially as we go into another start up super cycle powered by AI.  

[Anthony Torri]

Hi!

This is always a tough choice. My advice would be to really think about where you want to settle down in life or where you will be for a long period of time. I say that because I suggest managing your first property yourself. 1 or 2 is not overwhelming and the lessons learned doing so will pay great dividends to your future of invetsing.

Of course it is possible to buy out of state and find a good property manager, but no one will care about your properties and their performance than you. When you know how long it takes to turn a unit, how much it costs, and how quickly you can fill a unit, you can spot easily when a property manager is slacking on your property. You will only be aware of these costly situations when you have been in them yourself. 

Also, growing a portfolio in 1 area first is beneficially in many ways, so try to really think about a place where you want to own many properties.

Lastly, think of your investing goals. With a good W2, you likely don't need a ton of cash flow. I would take advantage of that and try to get into those higher price point area that have strong data supporting their faster appreciation growth.

Personal tip: Take into consideration the landlord culture of CA vs TX.

Call or text me anytime if you want to brainstorm different options further: 203 751 3262

Follow on Instagram @creative_property_solutionsllc

[Michael Dumler]

@UV Singh, this thread is going to get blown up by OOS folks haha. The answer always is, "it depends". More often than not, I advise newer investors to acquire deals in their backyard. That being said, I understand the California market can be a challenge. With +1mm in liquid assets, have you thought about syndications? This investment method is just about as passive as it gets from my understanding. If you're interested in building your own portfolio, understand it's going to be more active than you think. Moreover, is house hacking an option in your market? All being said, if you do decide that OOS investing is the best avenue for you, I have a great team here in the Atlanta market that can introduce a unique high performing investment strategy. If you're not familiar with rent-by-the-room investments, I'd be more than happy to hop on a call. Furthermore, if you have any real estate-related or ATL market-specific questions, feel free to reach me anytime via cell or email (contact info is listed in my bio). 

[Dan Portka]

If you're considering elsewhere in CA, why not stick to a more affordable area near where you are? You're not going to find much cheaper in LA or SD. I invest both locally here in LA and OOS and can tell you the convenience of being able to drive to the property is well worth it haha

[Lawrence Potts]

I would advise that your first deal be close to your backyard. Maybe within 30-45 minutes of where you are? But the experience you’ll gain from being in that close of proximity is very important that will help you when you go out of state. I think it’s wise to look out of state but to start in your backyard is just as wise and a better way to start. I am not familiar with your market though, so it’s up to you to determine. Going out of state requires A LOT of upfront work: boots on the ground, building your team, understanding that market like it’s your own market, etc.

Get a hold of @Grant Schroeder, he’s an awesome investor lender for CA that can help you out. He started with house hacking too and now has a very efficient portfolio. Work with him and go over your financials. That will help you determine if staying local or going OOS will make sense.

Hope that helps!

[Tyler Gibson]

Quote from @UV Singh:

Greetings BiggerPockets Mates!

I really value the BiggerPockets community and the human wisdom and partnerships available here. I am a first time investor with a decent amount of cash to put down for my first investment property. I am fortunate to be able to invest a decent pot of my life savings (+1mm) cash in investment real estate.

I am a W2 employee and would like to partner up with a strong local team where ever I end up investing (Mortgage Broker, Title Co, General Contractor, Property Manager). My plan is to deploy capital now if there are deals worthy of jumping into, taking 1-2 years to stabalize and make the property run efficiently, and then give up my W2 job to do a whole lot more of the same. 

I am located in the Bay Area and of course multi-family is insanely expensive here. Would you advise that I look else where for my first deal or 2 - possibly else where in California (Sacramento, Los Angeles, San Diego) or Texas (Dallas, San Antonio, Austin) or Florida (Orlando, Miami)? 



With gratitude,
UV Singh

Bay Area, CA

 When you say Multi-Family what do you mean? 5+ commercial or 4- residential?

[UV Singh]

Hi Tyler,

Im Open to either. Wondering about the returns and management details for an OOS investor like me. Obviously wanna manage risk exposure / not try lifting more than I can carry. 

[Lucia Rushton]

Quote from @UV Singh:

DFW will continue to be a strong market.

[Jordan Moorhead]

San Antonio is a good spot!

[Travis Biziorek]

Hey man, I moved from SF proper to Walnut Creek in 2013 then from WC to Detroit Metro in 2017.

I bought 12-doors in Detroit between 2019-2021 and then we relocated back to CA this past August (Central Coast).

I still invest in Detroit. Nothing beats it IMO. And I help others get started finding the right deal and plugging in with my network now.

My portfolio does $16k/mo in gross rents with half that being net cash flow. Happy to chat.

[Rob Lee]

Dallas-Fort Worth will continue to grow. We have tons of companies and people moving to the area!

[Osazee Edebiri]

Quote from @UV Singh:

Greetings BiggerPockets Mates!

I really value the BiggerPockets community and the human wisdom and partnerships available here. I am a first time investor with a decent amount of cash to put down for my first investment property. I am fortunate to be able to invest a decent pot of my life savings (+1mm) cash in investment real estate.

I am a W2 employee and would like to partner up with a strong local team where ever I end up investing (Mortgage Broker, Title Co, General Contractor, Property Manager). My plan is to deploy capital now if there are deals worthy of jumping into, taking 1-2 years to stabalize and make the property run efficiently, and then give up my W2 job to do a whole lot more of the same. 

I am located in the Bay Area and of course multi-family is insanely expensive here. Would you advise that I look else where for my first deal or 2 - possibly else where in California (Sacramento, Los Angeles, San Diego) or Texas (Dallas, San Antonio, Austin) or Florida (Orlando, Miami)? 



With gratitude,
UV Singh

Bay Area, CA

 Hey UV,

Welcome to BP. I am here in San Jose as well. I would say that most people go out of stay because they lack capital to invest here in the Bay. Since you have capital and are looking to do this over 1 to 2 years you can build a portfolio here in the Bay. High income earners here can scale their portfolios which will grow greatly over time. If you go that route, you would just need to determine what investment strategy you wish to do. IE, Long-term vs Short-term, etc. 

We can discuss this more, let me know.

[Anthony Edwards]

SEEKING CASH JV PARTNER. TO USE YOUR CASH I AM WILLING TO RELEASE TO YOU 60% OWNERSHIP OF ALL EQUITABLE DEALS. I AM SEEKING BUY-AND-HOLD INVESTORS TO PLACE ON MY TEAM. I WANT TO PRODUCE RESIDUAL INCOME FOR US

[Scott Scoville]

Hey Udaiveer, I'd love to jump on a phone call and hear more about your real estate goals in Sacramento. I work exclusively with investors in the greater Sacramento area. I'm also an investor myself and have a well established team in the area. Feel free to DM me. Have a great rest of your weekend.

[Gordon Cuffe]

@UV Singh I am a investor in the Sacramento area and mortgage broker. I have also invested out of state in many states. I can tell you that Austin is no longer a cash flow city. You might still be able to get cash flow in Dallas and San Antonio. The key is getting people in the area you invest in that you can trust. I have been ripped off by contractors and property managers out of state. Miami is very expensive so forget that city for cash flow. You might get cash flow in Orlando still. If you want to find out about a hidden gem of a city in Texas that you can still get good cash flow it is in Abilene Texas. People from Dallas and Austin are selling and buying in that small growing city. You can find other cities at 100k in population and growing in other states also. 

[Tyler Gibson]

Quote from @UV Singh:

Hi Tyler,

Im Open to either. Wondering about the returns and management details for an OOS investor like me. Obviously wanna manage risk exposure / not try lifting more than I can carry. 

 Returns will vary but I will say that 5-20 unit multi in Central Florida is very competitive. Property management fees run 8-10% depending on the company you hire. Let me know if you have any other questions always happy to help.

[Wale Lawal]

@UV Singh

While buying out of state rental property does come with some risk, investing the right way helps to minimize those risk while maximizing the overall returns of your property portfolio:

Key reasons for investing out of state include increasing cash flow and portfolio diversification.
Affordability, matching markets with investment strategy, and property affordability are three advantages to buying real estate out of state.
Turnkey rental property and a local property manager help to reduce the risk of investing outside of your home state.
Three of the best places to find out of state rental property are the local MLS, Zillow, and Roofstock.

All the best!