Southern California and Midwest Investors

[Josh Thomas]

Hello all! I’ve been observing in the background for a few months I wanted to finally reach out with an introduction along with seeking some advice.

I'm current living out in San Diego where I purchased my first property with a VA loan in 2017. A small 2/1 to get my feet wet with hopes of renting this property in the future as my neighborhood is having a lot of growth! I've been interested in real-estate for a few years but it wasn't until I found BP in early 2019 that I realized there were resources out there which could actually help me make some things happen!

SO, as we all know, SOCAL isn’t ideal for hitting the ground running when it comes to building your portfolio. Obviously out of state investing is huge in this community and everyone has their preferred markets. The Midwest is clearly popular for those of you who are seasoned as well as those of us like myself who are starting out. Being from Ohio myself and having family and friends who still reside in Akron and Cleveland, this location seem like a no brainer!

With that said I'm currently out of the country for a few months and my goal is to be armed and ready to actively pursue my first deal within the next six months. Having a fair amount of money in savings I feel like I do not need to be ultra-focused on generating funding in these markets (a large starting barrier removed). I am however experiencing some paralysis on where to direct my efforts next... Although theoretically I have some boots on the ground, I have zero connections to anyone actively investing in these markets. I have not yet settled on a specific location or property type although starting with small multi has always been the first thought. I know Cleveland has been hot for a few years but there must be some of you out in the Akron area? Looking at the MLS in all the various Cle neighborhoods it seems like every property is marketed towards anxious investors like myself... Is over saturation of concern?

Upon my return to the states I hope to have the opportunity to build some relationships with those San Diego based investors who are crushing out of state. Now it’s all about picking a strategy and positioning myself to make my first deal. Any advice on where to direct focus is greatly appreciated!

[James Wise]

Originally posted by @Josh Thomas:

Hello all! I’ve been observing in the background for a few months I wanted to finally reach out with an introduction along with seeking some advice.

I'm current living out in San Diego where I purchased my first property with a VA loan in 2017. A small 2/1 to get my feet wet with hopes of renting this property in the future as my neighborhood is having a lot of growth! I've been interested in real-estate for a few years but it wasn't until I found BP in early 2019 that I realized there were resources out there which could actually help me make some things happen!

SO, as we all know, SOCAL isn’t ideal for hitting the ground running when it comes to building your portfolio. Obviously out of state investing is huge in this community and everyone has their preferred markets. The Midwest is clearly popular for those of you who are seasoned as well as those of us like myself who are starting out. Being from Ohio myself and having family and friends who still reside in Akron and Cleveland, this location seem like a no brainer!

With that said I'm currently out of the country for a few months and my goal is to be armed and ready to actively pursue my first deal within the next six months. Having a fair amount of money in savings I feel like I do not need to be ultra-focused on generating funding in these markets (a large starting barrier removed). I am however experiencing some paralysis on where to direct my efforts next... Although theoretically I have some boots on the ground, I have zero connections to anyone actively investing in these markets. I have not yet settled on a specific location or property type although starting with small multi has always been the first thought. I know Cleveland has been hot for a few years but there must be some of you out in the Akron area? Looking at the MLS in all the various Cle neighborhoods it seems like every property is marketed towards anxious investors like myself... Is over saturation of concern?

Upon my return to the states I hope to have the opportunity to build some relationships with those San Diego based investors who are crushing out of state. Now it’s all about picking a strategy and positioning myself to make my first deal. Any advice on where to direct focus is greatly appreciated!

 Welcome to the forums Josh. Saw Cleveland's on your short list so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. If you are worried about over-saturation there are tons of other turnkey markets out there besides Cleveland. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.