Does anyone invest out of State?

Question

Hey All,

I've been lurking for a little bit now but now that I've got my pre approval for 400k conventional 3% down. I've really started to look at multi family properties here in Washington and I just cant find anything that has a positive cash flow or even break even which I might be ok with. I thought about some turnkey companies since that would be the easiest way to invest in out of state. Its an interesting idea to me, but my initial gut feeling says the cash flow might be ok but it wouldn't appreciate or really contribute to overall wealth the way I would like.

So now I'm really considering an out of state investment that would better utilize the cash I'm putting in. I'm pretty new to the real estate world. Learning everything I can for the past month so I would truly love some help and advice! This has been some of the most fun I've had learning so I'm excited to be here!

Camrin Roczey · Answer

@Lawrence Morgan

Curious...are you using a property management company for your out of state rentals? Or managing them on your own?

I’ve been considering turnkey rentals for out of state cash flow as a way to get my feet wet with investing.

Lawrence Morgan · Answer

I started earlier this year with a rental out in South Carolina and currently working on a small multi family down in Alabama. It definitely has its challenges but homes are a lot more affordable and will cash flow. I started by going into forums and seeing what people were saying. Then just reaching out to agents from there. I would say you’d want to check out the Midwest or the south eastern part of the country.

Lawrence Morgan · Answer

@Camrin Roczey I’ve been using a property manager. The first month was 50% then it’s been 10% a month since. They found and placed the tenants, any maintenance request they send to me for approval, they would allow me to to handle myself if I lived closer or get my own person.

I had to do a few repairs and chose to buy new appliances upon purchasing it. Otherwise it was rent ready. I think turn keys are a good idea for out of state investing.

Dara Sin · Answer

@Brand Seet I think you might need to talk to the lender again. For conventional 3-5% down, you need to live in one of the unit for at least a year (unit range 1-4 units).

I’m in the same situation (newly approved for conventional loan and couldn’t find anything) and missed out on a few deals because it’s a 5 units or I can’t be physically there.

Good luck finding deals :)

Chris Williams · Answer

Lawrence's advice is on the money here. There are plenty of places where 400k will go further than in WA (though overall the state's not bad). Columbus OH, Dallas TX, Tampa FL are all such areas...with many more.

If you do want to invest in WA, what about the Spokane area? I've heard it's doing pretty well.

Bjorn Ahlblad · Answer

@Brand Seet when we lived in California we invested OS in Tumwater Wa and Shelton Wa. We bought properties that were completely ready to go and got hooked up with a local PM. Doing things that way saved a lot of headaches. It is hard to oversee a rehab from 1000 miles away. Two years ago we retired, sold our California properties, and moved to be on the water in Shelton Wa.

OS investing can work well, we had some basic rules. Be able to get non stop direct flights; stay in your time zone; buy ready to go properties; always use a realtor; find a great PM.

Art Mimnaugh · Answer

@Brand Seet as I think @Jeff Dzado was alluding to you may want to double check the 3% down for OOS investment as that loan product I have only seen for Owner occupied but I could be missing something.   For most traditionally financing OOS expect 20-25% down as a requirement.   Although another option would be to see if you could find a local property that could qualify for a 203K loan which would also allow you to roll up the rehab costs.   I am not familiar with the WA markets but just some ideas.

Cheers,

Art

Jeff Dzado · Answer

I'm looking into Idaho. I've lived there before, so that's less of a barrier for me.

Also, your 3% down--is that 3% down conditional on you living in the property...?

Bjorn Ahlblad · Answer

@Brand Seet I do not recall how we picked our realtor-might just have been blind luck-in any event she referred the PM.

Tom Ott · Answer

OOS is a great way to invest! Many look towards Midwestern markets where prices are low!

Does anyone invest out of State?

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