Newbie from San Francisco, California

[Evan Chen]

Hey all,

My name is Evan. I'm 28 and I live in San Francisco, California. I've been a Bay Area resident for most of my life.

I'm a Software Engineer and recently have been interested in Real Estate Investing. I just finished Buy, Rehab, Rent, Refinance, Repeat and started reading Long-Distance Real Estate Investing.

I'm looking to invest out of state for cash flow since home prices around the Bay Area are expensive. I've been looking into West markets like Arizona and Nevada since they're close to me and the Mid-West/South markets since I've heard that they're great for cash flow but have been having trouble figuring out which city I'd like to start in.

I look forward to talking to ya'll soon.

Thanks!

[Chris Levarek]

@Evan Chen Welcome to BP! Lot of options out there. I actually started my journey reading those same books. As a fellow IT engineer as well, I found the career to complement a lot of the systems needed to make real estate work. Southwest, Midwest, Southeast are typically where properties will allow easiest entry as you detailed. We chose North Carolina as are first entry point and haven't regretted it, even as I live in Phoenix, AZ.

Resources : You can always get some Market Knowledge from sites such as CREXI or even CBRE(multifamily) reports, Zillow, RealPage, etc. I think CREXI does a good job of showcasing each market under their Product/Market Intelligence section for no cost.

Choosing a market should be based on population growth, unemployment, job growth, employment diversity and more. Feel free to reach out and I can share some other links if needed. 

[Darius Ogloza]

Investing out of area requires a significant amount of research, pluck and savvy.  My hunch is that 90+ out of every 100 Californians who try their hand at this end up losing money.  What looks good on an excel spreadsheet often can in reality  prove to be someone else's nightmare that they managed to offload on (an unsuspecting) you.  Homes that look like they cashflow may often have knob and tube wiring, lead paint, octopus furnaces lined with crumbling asbestos, unstable stone foundations, plaster and lath walls, roofs with triple layers of shingles requiring tear-off - all requiring expensive renovations.  Often, local authorities look to out of area investors as a source of much-needed cash and may come down on you for various violations (including, increasingly, stringent lead paint laws).  The harsh weather will often require more frequent roof replacement and exterior damage than you would encounter in a place like Santa Clara, etc.  You may be required to pay for utilities, where not split, and the heating bill may alone throw you underwater on your investment.  

What I have listed here are about 10% of the issues you will need to be mindful of if you go down this path.  

[Emily Beatty]

@Evan Chen welcome to BP! Congrats on taking some of the most important first steps in your investing journey. There’s plenty of great places to invest - I’ve found I do best when I pick a place and decide I’m all-in. Helps me focus and get going more quickly. Good luck!!

[Lawrence Leung]

Originally posted by @Darius Ogloza:

Homes ...have knob and tube wiring, lead paint, octopus furnaces lined with crumbling asbestos, unstable stone foundations, plaster and lath walls, roofs with triple layers of shingles requiring tear-off - all requiring expensive renovations....

What I have listed here are about 10% of the issues you will need to be mindful of if you go down this path.  

You just listed exactly the San Francisco market and I'm still loving it!! You just need to find the right properties to invest in and they don't always need expensive renovations. :) 

[Marlen Weber]

Hi Evan. Welcome to BiggerPockets. Glad you've joined and I'm looking forward to connecting with you on here. @Evan Chen

[Andrew Syrios]

Welcome to BiggerPockets Evan and best of luck investing!

[Andrew Rosenberg]

I'll state the obvious: really focus on developing the right Team(s).  You can be in the best market and still have a nightmare if you have a terrible Property Manager and/or contractor (too many out there).  Internet research, spreadsheets and data analytics certainly have their place, but there is no substitute for the mental/time equity of thoroughly interviewing and vetting investor-friendly realtors, property managers and contractors.  Yes, I know I sound like a broken record.  I think you're right on about Arizona, big fan of Chandler/Gilbert.  Good luck!  

[Daniel Pierson]

Hey @Evan Chen, I live in the Bay as well, and made my first purchase out of state in 2018. It hasn't been a homerun, but it's worked out well and I've learned a ton. While it's good to be cautious, you're never going to be 100% ready, so my 2 cents is to take action sooner than later. Make sure you vet several property managers, go out to visit the area if you can, and get a thorough idea of actual rental comps, not just what's on the pro-forma. Feel free to pm me if you have any more questions. Best of luck!