Any out of state flippers?

Question

Hello!

I'm hoping to secure a fix & flip for my next deal and I'm looking out of state (specifically in Oklahoma). This will be my first time managing a renovation out of state so I wanted to find people who have done this successfully

Any advice you have would be super appreciated, thank you!

Some specific questions I have:

1. How did you find your contractor?

2. How did you verify the work was done proficiently?

3. What software did you use to manage the renovation? Or did someone else manage it for you?

4. How did you find the deal/who helped you walk through it?

5. Lessons learned/things to avoid

Thank you again

Jake Baker · Answer

@Mary Ainsworth

For my flipping business, I prefer to use fewer software programs to streamline things. We use DealCheck to underwire and QuickBooks Online for everything related to accounting and numbers.

Mary Ainsworth · Answer

Thanks Christian! Yes your advice aligns very well with what I read in David Green's book on Long Distance Investing which was very helpful. I plan on offering that bonus commission and taking away that commission based on how soon they complete renovation.

I also love the idea of having maybe a 3rd party handyman or something like that to inspect the work periodically, that would be cheaper and that way they have no reason to lie.

I chose Oklahoma City, OK partially because I have a long term rental out there already - a quad that is a mix of long term and medium term units. And I chose to buy the quad out for a couple of reasons

1. The city has good macro economic factors and a strong economy - I looked for cities that were at least better than the national average when it came to population growth, wage growth, median sales price growth, etc

2. I also looked at cheaper markets because I'm just getting started in my real estate investing career, so it's just more realistic for me to go into a cheaper that's more likely to cash flow for now (I want to enter San Diego market eventually, but it'll likely be a few years)

3. It has favorable landlord laws! Unlike San Diego, the laws about rent increases and evictions and things like that are more reasonable for landlords, making those nightmare evictions stories and squatting stories less likely (hoping I never have to take advantage of that but still good to know)

So i'd look for things like that if you can, good luck and do let me know when you end up closing an out of state flip!

Christian Hwang · Answer

Hi Mary. I currently a flipper in my backyard in CA and am in a similar situation where I'm looking to flip out of the state. David Greene mentioned that when he does out of state renovations, he likes to leverage property managers to overlook the construction process. In our situation, property managers won't likely fit into the pie since we are looking to sell the property in the open market.

However, you can always leverage your "rock star" agent who found you the deal (assuming it's not an offmarket deal or from a wholesaler) to check up on the construction every so often. They have every incentive to make sure construction is up to standard since they will receive 5-6% (to be split with buyer's agent depending on state) of the sale price in commission. Another option is to hire independent inspectors or even handymen whom you can pay a flat fee for every time they inspect your house. This can be far cheaper than having an in-house project manager to do this for you.Based off your statement "this will be my first time managing a renovation out of state", it looks like you are familiar with the renovation process. I'm sure you and I both understand that as flippers, having control over the construction cannot be stressed enough. Make sure you put in your contract with the GC some performance incentives to make sure the renovation is done on a timely manner. Let them know that there will be routine quality control checks/inspections so that if your third party inspector finds any issues with quality, the GC will be responsible for paying for the correction.

These are just some theories that I think will help and plan to implement when I operate out of state flips. I hope this helps!

I would like your advice on one thing, however. Having lived in Southern California my whole life, I live in a bubble and am not aware of the flipping market outside of my backyard. The purchase price, construction/labor costs, and ARV are all higher here in California than most states so I already have a high tolerance for risk and have the necessary liquidity to scale. How did you go about finding your next market to flip?

Kerry Noble Jr · Answer

Whatever you do find a independent boots on the ground person that's not tied to the realtor, contractor etc

Any out of state flippers?

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