First property: Use Out-of-State network, or build a local team myself?

Question

Hello everyone!

I'm very excited to get tarted on my real estate career started! By the end of next year I will have saved about $50k for a down payment plus some reno budget. I plan on using the BRRRR method.

I live in Jersey City, NJ, and the home prices are very high in this area. The upside is I can manage the renovation much easier, and for my first reno, it will be much easier to have a local property.

Another option is to invest in Salt Lake City, Utah because my best friend lives there and owns his own Property Management company. He has connections to trustworthy Agents, contractors, CPA's, and lawyers, and of course, he would manage my property(ies) for me. The home prices are also much more affordable, and from what I am learning, the Salt Lake City market is getting very hot, especially considering the Salt Lake City Winter Olympics in 2034.

So, do I find my own team and invest (at least to start) in North Jersey, or do I use my friend and his contacts and invest out of state? I'm leaning toward SLC, but it does worry me to invest out of state.

(By the way, 50k is my starting point. I plan to start searching for properties when I have 50k, but likely will have more reserved by the time I close on my first property. I know I'd likely need more if I decide to invest in Jersey).

Thanks for all your help! I'm excited to hear what you think!

Kevin

Danny Gonzalez · Answer

@Kevin ForsellThis is a contrary opinion but I would in 2024, with the technology we have accessible, investing OOS is totally doable.

Here are a few ways to ensure success:1) Find the right team. This going to be crucial to your success. You'll want a great Realtor, contractor, and Property Manager.

2) Ensure you have enough liquidity. Things will break, tenants will move out, and sometimes you'll have to deal with evicitons. Be sure you have liquid funds to be able to withstand these expenses.

3) Study the market for yourself. You might have a good team, but ultimately it's your investment. Visit the town, meet the people in person, walk the property. That one day trip will be well worth it.

If you can find good deals in Utah, I would go that route. We live in a ultra connected world. Don't be afraid of investing OOS, it's totally possible. We help people all of the time invest in OOS.

Best of luck!

Drew Sygit · Answer

@Kevin Forsell why not start trying to develop your local team while your friend helps you look for a deal in Salt Lake City?

It may take several months to find a deal in either location, so you've got nothing to lose but time, yet a lot of experience will be gained.

Nicholas L. · Answer

@Kevin Forsell

out of state BRRRR is going to be an extremely difficult way to get started. can you find a market within 1-3 hours, and start looking there? expect to put some real time, effort, and trips in... hours and hours and days and days. if you're not willing to do that... I'd do something different. BRRRR is a grind and you can't do it using Zillow and email.

here's what you will have to do to be successful:

-you will have to find the sweet spot BRRRR deal - a house that is distressed enough for the seller to sell below market, but not so distressed that the rehab is impossible. these deals aren't on the MLS, and they are tough to find. how will you find one? everyone wants this deal.

-you will have to find a contractor that can start work reasonably soon after you close, but is also affordable and high quality, and is also going to prioritize your project even though you're far away and not checking in. how will you find this contractor? everyone wants this contractor. maybe your friend has contacts but no one in SLC is going to manage your project like you will.

-you will have to manage your rehab - make sure everything needed is done on time and on budget, and if anything is outside of the scope of work of the main contractor(s), you find someone to do it, in coordination with the main rehab, and without delaying your project.

-and - no one is going to take any responsibility if any of the numbers are off. if the ARV is off - that's on you. if your estimate for the rehab is off - that's on you. if it takes 6 months to rent once you're done - that's on you.

hope this helps

First property: Use Out-of-State network, or build a local team myself?

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