Viable Returns in So Cal

[Tania Reuben]

I'm formulating my family's personal investment strategy. 

I've been analyzing deals that would be considered good retail buys, and they are no where near numbers that would meet Brandon's Cash On Cash return criteria.  

I'd really prefer to keep our investments close to home, but am wondering if the reality of  the So Cal market combined with very pro tenant laws might make the smart move be to invest in another market. 

I know I can always dig deeper for off market cash buys, I'd like to hear your thoughts, and learn what strategies are working for investors in the IE.

[James Wise]

Originally posted by @Tania Reuben:

That's been my analysis as well... seems like you can find deals that will just cover costs, but not flow... which means they aren't hitting any of the metrics Brandon advises to target. I'm planning on funding this from a self directed IRA, so I do intent on staying conservative in my approach.

Where did you decide to look out of state?  I have some strong contacts in Idaho and Salt Lake, so considering those markets, or Nevada & AZ, because they are closer.

If you do decide to go out of state some of the more popular markets are listed below in no particular order.

• Cleveland, 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

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.
• 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.