is it really risky investing in out of state rental buying cash?

Question

hey guys!im a newby in the real state world and im decided to start investing cash properties out of states since around LA the numbers are not viable.my question to all you guys is,how risky could it be investing out of state, buying the properties on cash, running the right numbers?thanks!

Joe Splitrock · Answer

There are countless California investors who lost everything investing out of state. I know the theory is with feet on the ground and the "right people" you can be successful. The trouble is the "wrong people" often look like the "right people". That is where the risk comes into play. I am not saying you shouldn't invest, but maybe using a bank that requires appraisal on your first deals. That way a third party is involved in the transaction. Travel to the location and put your own feet on the ground.

No doubt there are many success stories, but for every success story there is someone who failed. Just makes sure you are the one who makes it by being overly cautious and trust but verify everything.

Stone Saathoff · Answer

I'd always recommend having someone you trust as boots-on-the-ground in the area you're trying to invest. If you have nobody there you are opening yourself up for massive risk potential. That being said I feel you can build relationships even with people from afar. I've formed several fruitful relationships with out of state investors, we just talk on the phone super consistently. One of the LA investors I work with just purchased his 2nd rental property around the Lackland AFB area in San Antonio via cash. It's possible, just build great relationships.

Bjorn Ahlblad · Answer

@Andoni Garcia I used to invest OS (cash) when I lived in California. To me there is no increased risk investing with your own cash, or the bank's money. Your neck is on the line either way, unless you are using non recourse loans-but still you have to succeed-Right?

The risk is not knowing how to underwrite a deal; or running out of cash and being forced to sell.

BTW our daughter (EU) moved to Spain about 7 years ago, got her Master's degree in Seville, and decided to stay. She currently lives in Barcelona and loves the lifestyle. Why not? Spain is such a great country. All the best!

Andoni Garcia · Answer

@Paolo De Leonhello there!! thanks, yes I had read the long distance investors book, its pretty cool actually.

Theresa Harris · Answer

As long as you buy right and have a good team in that area, it isn't really any riskier than buying a property where you live.  I have a few rentals in other areas and manage them from a distance with the help of local people.

Paolo De Leon · Answer

Hi Andoni,

Yes, definitely you can do out-of-state investing. Have you heard of the book called Long-distance Real Estate Investing? It's written by one of the BP leaders, David Greene.It's an awesome book and it breaks all the myths/fears about out of state investing.

Also, I am now based in Valencia, Spain! So I'm proof that you can invest even outside the country. I have a rental in Las Vegas.

Oren Kachel · Answer

Hi Andoni! im an out-of-the-country investor,

if you overcome the psychological barrier of investing in a propery without seeing it or being inside it, the next thing to do is to find boots on the ground with someone you can trust , and build your relationship, for an out of state investor it is more important than to find the right market

Stone Saathoff · Answer

Ideally if you're buying a rental here (San Antonio, or Texas in general) and you also have to contend with high income taxes in your state of residence, you want to be comfortably beating the one percent rule. Do-able but it helps to explore all avenues.

Andoni Garcia · Answer

@Stone Saathoff it shouldn't be any problem if we connect with right people right? at the end we all are trying to succeed.how is the rentals in Texas? I`ve been analysing few options down there but the hight taxes are keeping me away from Texas.lol

Andoni Garcia · Answer

@Bjorn Ahlblad that's great! your daughter made a great choice! lol well, im happy to hear that you say that. because I just keep reading of people saying not to invest out of state. but for me is the only way that I have to start since here in La its overprice. and im gonna have to start somewhere right? meanwhile im trying to read as much as I can to succeed.thanks for your post!

is it really risky investing in out of state rental buying cash?

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