Where to invest best out of states?

[Alicia Shen]

Hi everyone! This is Alicia from Los Angeles. I am a new real estate investor. I would love to invest out of states. Where are the Best place to buy right now? ( July 2021) And why?

[Account Closed]

The very worst thing you can do as a new real estate investor is to invest out-of-state. While prices are lower in other states there is a good reason they are low. The rental income is lower and when rents are kept low your properties don't appreciate in value as fast. Investors make their big money from appreciation and rental income barely pays the bills and does not keep up with appreciation. When you are not hands-on and you hire a management company you automatically inherit all sorts of additional expenses that will put you out of business.

I just sold almost all of my 28 homes in Las Vegas because I had a great management company, but we can't expect that management companies will inspect the homes the same as a homeowner and the tenants destroyed almost every property I owned where it cost me $6,000 to $12,000 to clean and repair and that was by doing the work myself with two of my employees.

Another problem with out-of-state investing for you is you can't trust anybody you deal with. Every broker will tell you that every property on the market is great for you. Nobody represents you. Not even your own broker.

When it comes to repairs out-of-state you will get burned. I had a home in Idaho where my management company called me at 8 pm, told me the furnace was broke and the temperature outside was 5 degrees. The management company told me the house needed a new furnace for $6500. I told the management company I was a HVAC contractor and I would drive the 850 miles from Los Angeles and be in Boise in the morning to repair the furnace. Five minutes later, I received a phone call saying the furnace was repaired and working fine for $350.

Even though prices in California are high you will still find that the most money can still be earned in California. Even if you don't make as much as you would like in California you will still be better off by reducing the losses you inherit from not being hands-on and by not having to trust others to make your decisions. 

Never ever trust someone else with your money. Stay away from Turnkey properties and stay away from syndicated properties. Never invest based on a broker's or friend's advice. Don't invest until you can do all the math and projections by yourself.