I live in Los Angeles, which is very expensive.
I was thinking of buying a property out of state, and wanted to ask people what their experience has been.
Has anyone done this? Has it worked out well?
[ Edited by russell199 on Date 07/30/2007 ]
Buying out-of-state is very common. We've seen a lot of money coming into the Atlanta area from California & NY lately. NYC is doing away with a lot of the tax incentives and investors are going to other markets that are much more affordable/profitable....
try Washington, south Texas, and Carolinas. When you have distance, get a simple, clean deal and a good management company.
I am seeing several investors from CA investing in the Huntsville, AL market primarily because of the high tech infrastructure, lower cost, and the major base realignment (BRAC) which is relocating thousands to the area.
We've worked with dozens and dozens of out of state investors wanting to take advantage of our already 30% undervalued market and foreclosures, short sales, highly motivated sellers and builder sales. We are working with 2 from CA right now. [addsig]
Truth be told, if you want to be very successful, you're going to find that you are going to NEED to buy out of state.......eventually.
Depending on the property you're looking into, the thing you need to think about is this. How much is it going to make me, will it be enough to hire a property manager thats closer, and how can I leverage the property for the future.
If you don't own many properties, I'd definatly suggest trying to stay more local until one, you get a better handle on whats involved in owning real estate, and secondly, chances are if its one of your first, you going to need to be a little hands on with it.
My best client, lives in Mass (where I'm from) and he just started going national a few years ago. Just bought 1,000 U nits in Oklahoma, 250 in North Carolina, 300+ in Indiana so the stuff he's buying, can afford to have a local property manager, can handle having a few vacancies, and still make it cash flow, where if youre looking at buying a smaller property, take 5% of the gross income off the top (management fees) and then think about a 5-10% vacancy, because that what banks will underwrite the note at. Now look at the numbers and does it still make sense to you, or are you now better off staying in your local market for a little while longer, even if it is a little more expensive?