Anyone done Out of State Rental Investment?
Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes
Anyone done Out of State Rental Investment?
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Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9yI wouldn't trust any property in Tampa or Orlando for $50k. That will be a very high-risk property, either from the property condition standpoint or tenant quality standpoint, or both. Very few markets have properties at $50k that wouldn't be high risk right now. If you are up on how to handle those types of properties, it can be doable, but long-distance would be hard.
I've always invested out-of-state (I live in LA). The key is the teams you are working with- since you aren't there to do everything and therefore have to rely on other people. Those people can make or break your investment.
On a good note, if you are an agent, there are opportunities to make commish on even out-of-state properties you buy!
20 Replies
- New Jersey, NJ · Member since 2015 · 327 posts · 137 votes9yYour area along has a lot of great rental potential like Newark, Elizabeth, Paterson and etc which can be rented to section 8 easy. I don't know why you would not want to take advantage of at least Newark alone which houses are price $40k and less then get in the section 8 and watch your cash flow.
- Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes9y
@Account Closed I agree and I'm actually interested in investing in Elizabeth NJ but I haven't found the right property yet. I've had a few good properties come my way but it gets sold quickly to cash buyers in the area. I was just wondering if it would be smart to purchase a property else where. I have a friend who purchased a $100k condo in Florida and moved there to study for a few years and now he's back in Jersey and he's making good cash flow on it. So this is where my crazy idea came from.
- New Jersey, NJ · Member since 2015 · 327 posts · 137 votes9yI don't mind moving to Florida for a while also, yes your right those are cash only deals.
- Investor · Lee's summit, MO · Member since 2016 · 75 posts · 45 votes9y
I live in California and invest in Kansas City, MO (full disclosure, i lived there a decade ago). The city has evolved since i lived there and many of the areas are no longer the same.
Here are my recommendations:
1. You have to see the property in person - you should never fork over 50k and not put your eyes on the property in person.
2. Meet your property manager in person - have them drive you around, see some other places that they manage and don't be afraid to ask the tenant if they like the manager. That maybe a little awkward but i wish i would have done it at first
3. Before you purchase have a game plan in place - you should know if you are going market rent or section 8, what price point you want and can the area support and so on. You don't want to take whatever is present
4. Visit at least once a year - i go to KC once or twice a year, too check on the condition of my homes. I have 5 there and i can see them all in 2 days. Most of the time I don't let the tenants know i'm the owner however it has come up...its ok if they know you own it but try not to give them your personal info. They will bypass your manager and try to call you for everything...uhh excuse me ma'am i'm paying someone to answer that question lol
best of luck no matter what you do...heard its good deals in Jersey...check those out first
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
there is a whole industry based on buying rentals in other markets... look at Brie Schmidts turn key reviews site.. you will see a 100 companies that all do this
- Carson, CA · Member since 2016 · 6 posts · 2 votes9yHi do you know the Orlando area at all??? I have a realtor in the area. I live in Los Angeles and I am looking to invest in central FL as well.
- Investor · Mission Viejo, CA · Member since 2016 · 36 posts · 20 votes9yI'm new to this so do your own research, but Jason Hartman does the out of state thing exclusively. Jasonhartman.com
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes9y
I wouldn't trust any property in Tampa or Orlando for $50k. That will be a very high-risk property, either from the property condition standpoint or tenant quality standpoint, or both. Very few markets have properties at $50k that wouldn't be high risk right now. If you are up on how to handle those types of properties, it can be doable, but long-distance would be hard.
I've always invested out-of-state (I live in LA). The key is the teams you are working with- since you aren't there to do everything and therefore have to rely on other people. Those people can make or break your investment.
On a good note, if you are an agent, there are opportunities to make commish on even out-of-state properties you buy!
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes9y
I am with Ali on this one. 50K properties in SW Florida are going to have a set of issues that you won't get with nicer units. Right after the great crash there were NICE properties to be had in that price range. They have all dried up. The least expensive house I have been able to purchase the last couple of years was 70K and that was a bargain. My most recent purchases of nice rentals (nothing fancy 3/2/2 newer homes) have been 120K or more. My most recent was just under 140K and it has a 8.2% cap rate. Everything is inflated no matter where you buy. Given the choice of buying where I live or buying absentee it is really no choice: where you live. Give that up and you lose almost all control. If you do want to look in the Tampa area I recommend my friend @Jeff Copeland. Top notch guy, honest, and professional. I would also consider Cape Coral. It is a great area and Ft Myers/Cape Coral had over 26% rent increases over the last year. Things are looking good for owners of properties in the area. I have held off on raising rents drastically with quality tenants. Don't want to scare them away! However, a 3%-4% bump yearly is needed to offset rising costs. If you want access to MLS here in SW Florida send a PM.
- Property Manager · Orlando Kissimmee, Daytona Beach & Cocoa Beach · Member since 2016 · 331 posts · 166 votes9y
I agree with @Ali Boone. Anything for $50k is too risky. We are property management company in Central Florida, and I am broker. If anyone likes me to email a market analysis, I will be happy to do so.
- Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes9y
I would completely disagree .. I see properties all day for under 50k in central Florida .. I'm closing on one at the end of the month ..it's a 3/2 1300 sqft built in 2001 .. It needs a estimated $12.5k worth of rehab ( that's the big difference as I am doing most of the rehab or you could double that price most likely ) but anyway I'm only paying $36,400 plus closing costs so all said I should be into it for $52.5k with a arv of around $85-90 in a good rental area ... There are 2-3 more houses like that for around the same price in that area .. So they are out there it all depends on what area your looking for. I know of about 4-5 townhouse units that are selling near me that would be great rentals and they are all in the same complex now a couple are asking 65k-70 but they won't get that quickly because the other ones are $40-60k all need min updating and all are 2 bed 2.5 bath w/ 1 car garages that currently rent from $700-900 month .. So like I said it all depends on what your looking for .. Although that being said , It is very hard to invest in a out of state properties without having a boots on the ground or partner to help you .. I currently have two investment partners that are out of the area . They provide the funds and I do most everything else , of course we deal with fix and flip investments but plan to go into some buy and holds soon.. I wish you the best and please make sure you do your due diligence before making any investments ..
God Speed ,
Michael Short
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed your missing the point.. your doing value add.. so your buying 80 to 90k house....
average out of state investor can't do that they need a functioning home day one ... and a functioning 50k home in most markets brings uber tenant risk.. just the way it is.. Not all markets but most if not all Major markets that are say over 500 k in population
- Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes9y
@Jay Hinrichs I understand better now, he is needing to buy ready to rent homes or condos which the townhouses are near me although only one is under the 50k and that us a price not advertised ( it was offered to my son in law who happends to be the guys neighbor ) the rest are around $65k asking price. But all 4-5 of them could be rented right away, although I would update them to bring out the maximum rental potential . I also found out that the complex is considering putting in a club house and a swimming pool which they currently don't have either but do own a large lot across the street that is currently used a a dog park by some residents . If I was buying hold properties I would certainly look into these townhouses they are quite spacious .. If Anyone wants the address and I could get the phone number to the owner for the inside price unit , I'd be happy to give them to other investors just colleague request me .. I don't want anything for the info.. We all got to stick together .. Thanks for the clarification Jay..
God Speed ,
Michael Short
- Rental Property Investor · Dallas, TX · Member since 2015 · 243 posts · 70 votes9y
My success in out of state investing is boots on the ground at the out of state location. My partner and I own properties in Lubbock, Texas. He is there. I am in the Northern California Bay Area. We share the roles and responsibilities sometimes according to the local need, for example construction oversight by him. Banking, back office, utilities management by me.
- Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes9y
@Michael Short, Hello, finally I can see something real to give to all the Newbies on BP from Florida. Can you run down the basic numbers, without the alphabet soup letter abbreviations and show everyone what those townhomes would make you in positive Cash Flow per Month after all the Costs, please. They are in a complex, so there are Condo fees. The Complex wants to put in a pool and Club House with what money? A special assesment? Take the $40 to $60K sale price as worst case at $60K to buy the 2/2/5 Condo with 1 car garage. At what interest rate for how long of a Mortgage? This is not an Owner Occupied, First Time Home Buyer who gets all the best rates down to 3.17% at LendingTree etc. What do Investors have to pay to buy an out of State investment property? Minimum updating means how much for cleaning, carpet and paint etc. Here in Tampa I can't rent for less than $800 for a 2/2.5 in a bad neighborhood and make any money. So, let's say you can get $900 a month for the rent. Do they have to give you First, Last and Security Deposit to move in, with a JOB in the area for at least a year or two and making more than just $10 an hour working two JOB's to pay the rent etc? How much would the out of State Investor have to pay a Property Manager? What would the per hour rate be for a Handyman that works with the PM be? What would the Principal, Interest, Taxes, Insurance and all the unforseeables add up to per month for the Expense side? $900 a month for the rent Credit side. What is the Profit per month? This should be an example of our reality here in Florida that all the Newbies can look at if you could put it all down in black and white English, for us all to see. Thanks.
- Lender · Orlando, FL · Member since 2009 · 121 posts · 74 votes9y
Carlos: I am with @Michael Short above on this one. Tampa is a great market and we have built a substantial portfolio of cash flowing assets within the parameters you seek. This is all about your expectation, business model and whether or not you truly have "boots on the ground". Without a solid team & system in place it won't matter where you operate. As an investor and lender you must conduct your diligence. We are buying and funding assets daily in this realm. If the numbers work the numbers work, period. We just purchased two properties @ $25k each will put approx $10K of renovation in them and rent out for $850-900 per month and no they are not in the ghetto. Your first move is to reach out to those in the know in the area come down here meet with them see the area and move forward eyes open. This will simply be a matter of personal preference, ability, knnowledge and team strengths. Feel free to reach out to discuss privately anytime. Happy to help and put you in touch with those in the area that can assist you.
- Lender · Orlando, FL · Member since 2009 · 121 posts · 74 votes9y
@Account Closed Way to go!! We are continually training wholesalers, investors, realtors, property managers how to run numbers correctly. Investing 101 "Do the Math". I do not mean to sound pompous or arrogant, but this is why 97% of those that get into this business FAIL. If you can't run numbers and understand all the variables like HOA's etc for condo's and including those factors along with repairs needed now & future etc as part of your calculations you are destined for failure. To all, You do not have to know everything. Surround yourself with those who know what you do not, and can do what you cannot before you put your hard earned money into play, you're better off going to Vegas or waste more of it with the Guru you didnt learn from.....
- Rental Property Investor · Oldsmar, FL · Member since 2014 · 238 posts · 61 votes9y
I agree with @Ali Boone on this subject. A turn key at $50,000 or below is high risk in the Tampa Bay area. Perhaps outside in more rural area could be a opportunity. I just started working with the property management of my brokerage and I am sure most have vendors setup to do all the work and give repair estimates.
@Carlos Rodrigues as stated you are in position to make a over state referral working with a agent on this deal. As suggested in this post. My suggestion is to find the Counties you are thinking about investing in such as Hillsborough County, Poke County, or Orange County for example. Then get in touch with a couple Property Management companies to see what they have to offer to assist you on finding you the property and making the needed repairs.
Good luck!
- Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes9y
@Michael Haynes all great points my friend and yes given the right amount if time I could post all those numbers , from what I heard the board has the money from dues collected to pay the diwn payment for he pool and clubhouse and the extra units those would offset the extra costs for building all three . Not sure abut them raising the dues to either supplement the new build or to help fund it. Once again this is just talk from one of the board members .. Maybe if I can find time I'll do the numbers just to show newbie's and others the more actual costs of ownership . It will have to be after I get back from Michigan which I have to go to for a sick family member , or I wouldn't step foot in that state this late in the year..... Too cold ... Burr... Never could you guess that I'm from there ..hahaha.. I do have to say when posting this there are a couple of things I neglected to think about .. I am not a buy and hold investor yet so some of the points you made slipped my mind when first recommending a deal like that .. That's one reason I'm curious now what the true worst case numbers are .. Thank you and as always I wish you and my fellow investors only the best .
God Speed to you all,
Michael Short
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Yes, I have experience investing both in state and out of state for the last 15 years. My advice: don't do it. There are plenty of different ways to make great returns investing locally and even more plentiful ways to get skinned alive as an out of state investor. The added risks and questionable return above and beyond what you could achieve in your own backyard are just not worth it for a newbie. Stay local.
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