Need some advice as a first time buyer (rental property)

[Nicolas Escoffier]

Hi everyone,

I'm brand new on this forum. I've been in the US for a bit more than a year now (on a work visa).

I'm interested in buying my first rental, out of state as my current state is CA (and I don't have 500k in cash lol). I'm interested in SFH/Small Apartments/Condo mainly. Duplex why not if it's in a cheaper area. I would say the range for this investment would ideally be between 100 and 200k. I can afford a 20% downpayment for that range. The strategy would be to buy and hold, and ideally have a bit of cash flow from the beginning or worst case scenario, break even. Including taxes, HOA, insurances and especially a property manager cost as I have to make that investment fully passive (no active income allowed in my situation).

I have experience in rental in my home country but as there are many differences (both financial and cultural) I just see myself with that project here as a newbie. I watched and read a ton of things, including a lot from Bigger Pockets, to get familiar with all the ins and outs of the real estate market in the US. I'm currently doing some researches to find which cities could fulfill my strategy, expectations and budget (recommendations are more than welcome :)).

I still have a few areas where I'm not exactly sure:

- first one is taxes for out of state. As mentioned I live in CA. If I buy in another state XX, will I pay all the potential taxes for that investment in that XX state based on its state rules, or in CA based on CA rules, or potentially both / a mix of both?

- second one is about pre-approvals. I understand that it is the best way to have a guarantee while prospecting and to make reliable offers. Though for my understanding it will require credit pulls, which impact negatively the Credit Score (which is already challenging to maintain as a foreigner) so I'm not sure when is the best time to do so.

Is it better to do it as soon as possible to have it (but then if it takes weeks or even months before actually buying, will it require to do another pull at that time for the actual mortgage)?

Or to wait until I have a better idea of the city, property size/type/price and do that at that time to be more accurate with the budget?

And in the case it would be better sooner than later, is it better to ask for approval for an amount close to the budget (for instance pre-approval for 200k if the range is 150/200k) or to the highest possible to have as much margin as possible (for instance 400k pre-approval even if the target are around 200k)?

All pieces of advice and recommendations are welcome, especially people who already succeeded in a similar path and being non citizen / non permanent resident (yet).

Looking forward to read you, start my journey, then share my experiences.

Thanks!

Nick