All Forum Posts by: Monica Boyles

@Monica Boyles Out of curiosity, what is your logic behind saying that buying in CA doesn't make sense? Are you talking in regards to finding a cash-flowing property or a property with high appreciation potential? What are your goals and what's your current cost of living? Do you plan to stay in your current career for many years? How long do you plan to stay in CA?

I think a lot of people discount buying in CA when in reality, it could make sense if you found a duplex or something similar in a solid area and owner-occupied while renting out the other unit. You will not cash-flow on a duplex if you owner-occupy it, but if your current cost of living is lets say $4K/mo and your all-in cost of ownership of a duplex in SF after a 5-10% down payment is $8K and you can rent one side of the duplex for $4K, then your cost of living has not gone up yet you are now able to access the appreciation of the asset, gain equity in the property via principal pay-down, and gain the tax advantages of owning real estate. This is obviously a simplified example, but that is the general logic I use to make this analysis.

If you are fully sold on out-of-state markets, I agree with @Jonathan Taylor from above. A lot of affordable out-of-state markets are the "siren song" calling to CA investors. Certainly a lot to think through when looking at new markets, but I would start with an area that you are either familiar with, enjoy visiting, or have family/friends. Having at least some connection to the area helps you leverage that knowledge and the network in that area to find a trustworthy team. Plus its always great to have someone you know and can actually trust to drive by on occasion and report back to you.

@Monica Boyles, all of the advice on here is solid. Rather than repeating what has already been said, I will stress something that I feel was only lightly touched upon - property management. 

I see this more often than I'd like, where new investors will buy a property solely based on how it underwrites. If the numbers look good on an excel spreadsheet they jump all over it. Yet they don't put too much focus on the actual management side of it, and end up cutting corners, or engaging a third-rate management company. And sure enough, the investment ends up being a disaster.  

Since this is out of state, and you're not likely to self-manage the property, I'd highly suggest putting a lot of your effort into identifying a solid local management company. One of the important things to pay attention to, since you are looking for a small property, is your building's proximity to other properties that the management company is managing. A big mistake a lot of investor make, especially when when it comes to small properties, is that they rely solely on the reviews, feedback and reputation on the company, and disregard how far away the company is from their property. Since you're likely to pay the management company a percentage of income, the management company doesn't end up making all that much on smaller properties, and they tend to not want to inconvenience themselves and deal with issues as they arise, and in a timely manner, if it means traveling a half hour away each time. As apposed to a management company that is already managing a portfolio of properties within a few block from you, and can hop over at any time. As a side note, especially with smaller properties, another thing to pay attention to, is some companies also tend to play games on the accounting and expense side, to prop up how much they make from the property. So definitely do your research on this.

Good luck!

 Hey Monica

I'll name a few markets for you.  Kansas City, MO, Pittsburgh, PA, Tyler, Texas, Louisville KY.  We've closed loans in all four cities and the cash flow was great, the values were reasonable and the rents were great.  

Stay away from the coasts.  The values are way too high to sustain decent cash flow.

Pm me if you need some referrals of good Realtors or Property Managers in the area.

Good luck on your journey,

Stephanie

 My recipe :

- only purchase STR at the resort destination only so you have no problem with permits etc etc
- purchase with min. 50% down
- have the STR PM in place before you even bid (very important)
- do intel on your competition for actual cash flows.