@Pete Tam
Here is my own experience, having started just over a year ago.
Out of state investing is initially nerve racking and scary. You don't know who you can trust, and you are paranoid about EVERYTHING. The most common question you'll keep asking yourself over and over again is, "How do I know I'm not being scammed?"
I was tired of asking myself that question, so finally decided to JUST DO IT! You don't have to get into contract with anyone, but start your due diligence by making a trip out there. If you aren't willing to fly out to meet and greet the turnkey companies, then how serious are you really? Airfare and hotel costs are a drop in the bucket in the grand scheme of things. So, go out there and do your research. Meet the local team and go out on a property tour. Check out properties in various stages of rehab, and get a good feel for the scope of work they perform. I always ask to see a property that's just been recently acquired, and I want to see more than a few finished products.
While you are on these tours, pay close attention to the surrounding neighborhoods. Ask the seller to take you into a bad part of town so you can compare. Ask the turnkey company to show you a heat map of the areas they buy into, and the ones they avoid. If you want to get a headstart, research these neighborhoods prior to your trip out. Also, take a lot of notes and photos while you are out there.
If you see anything you don't like, walk away. There are too many sellers out there, so don't get into contract with one if anything doesn't feel right. Check your gut...
And don't feel like you have to limit yourself to just one market. If you are going to buy out of state, no matter where you buy it's going to be FAR AWAY from you. This isn't necessarily a bad thing. No single market will have everything you are looking for, anyway, so why not diversify geographically to mitigate risk? Go here for cash flow, go there for job/population growth. Go elsewhere for appreciation, etc. That way you don't put all your eggs into one basket... or turnkey company. When I buy stocks, I don't only purchase companies headquartered in a single state...
Once you've done your research, I've found that closing an out of state rental is pretty straightforward. Definitely a lot easier than buying locally since you won't have to deal with buyer/seller agents. Since I'm in California, it's also nice being able to buy without having to engage in bidding wars!! :) Most turnkeys work with preferred lenders, so I've always just gone ahead and used those. The preferred lenders know the routine, and I'm guessing this makes the whole process go a lot smoother. In one market I invest, the systems are all in place, and I've never even run into any appraisal problems... They have all the appropriate comps targeted... Again, if the cash on cash return makes sense for me, I don't care how much the turnkey companies make, or even if the appraisals are "rigged" somehow.
Anyway, I think you should take baby steps when starting out. Do your research first. If things look good, plan on making a trip out there... If things still look promising, start with buying one property. Get your feet wet before you back the truck up...
After one year, I will say that my experiences have been very positive. As many have stated, it's ultimately the PM that you have in place that will make or break you. The PMs I work with are very responsive, and I communicate with them probably twice a week. There's a web portal I have access to so that I can see any expenses/rent payments/owner statements coming in, and the status of any repairs, work orders. It's all very transparent, and so far I haven't been nickel or dimed for anything... But agian, just one year in, so we'll see how that adjusts over time...
So far, no scams and I've been collecting rent checks every month. :) Surprisingly, the pro formas provided were reasonable, and actual returns have been pretty close... In one market, I'm actually seeing higher than advertised (rent came in higher and the utility bill lower). But again, just year one, so we'll see if/when the honeymoon phase ends... I'm cautiously optimistic...
If you or anyone wants more specifics, let me know, or PM me...
