Your Step-by-Step Guide to Buying Out-of-State Investment Properties

this is the bigger pockets podcast show 5 15. what do i do from there that that's what i really am confused because like i like looking at the markets i like doing this mathematical analysis but where i keep getting stuck is like all right let's say i pick tampa what do i do next well tampa's a funny market because i'm looking to start investing there myself you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com your home for real estate investing online what's going on everybody this is david green your host of the bigger pockets podcast here today with my co-host mr dave data scientist meyer dave how's it going today it's great man i'm happy to be back on the show so soon yeah we call you a data scientist but you're more like doctor strange you're like a superhero that happens to use data like magic to conquer the enemy of uh financial destruction and achieve financial independence wow that that is quite a compliment and i think i'm going to put that either on my job description or if it will fit on my business card ahead of the bigger pockets conference i'm going to try and get it on there maybe you can make that your voicemail when people call you just so they know who they're talking to i think they'll hang out before the end of it but i could try well dave and i are here today to break down some data for you guys to help make better decisions on where you should be investing and what type of investing you should do we get into quite a few actually i think like nitty gritty details that should be really good for investors would you mind sharing dave a little bit about what you think some of the best parts of today's show are yeah so i mean just so everyone knows basically we're talking about how to invest out of state it's something i've wanted to do for a really long time i've been investing for 10 or 12 years now but i've always invested in one state and i'm really interested in picking david's brain so that's basically what i do throughout the show we talk about you know the different ways you can make money in real estate we talk about how to balance those different ways of making money based on where you are in your life and where what your personal goals are and we talk about really interesting stuff about metrics and like how to identify which markets actually fit your strategy and then of course like how do you actually pull it off like how do you get an agent how do you get a property manager and how do you do all this and i just have to say david like i learned a ton from you doing this and it was a lot of fun doing it as well so i'm excited for everyone to hear what we talked about well i appreciate that it's kind of nice being able to be on the other end of the mic instead of asking some of the questions i'm getting to answer them and that's always fun you did a great job awesome man well should we let people uh listen to it yeah and everyone be sure to listen all the way to the end of the episode where dave and i are going to list four questions or four things that real estate investors should be asking or looking into that many people are neglecting i think you'll get a lot of value out of that so if you like the show please share it with your friends subscribe to us on youtube so you can be notified when there's new shows and let us know in the comments what you thought without further ado let's get into it mr dave meyer what's going on it's good to have you on the podcast with me today thanks man i'm back you uh can't get rid of me these days yeah but i like that because you're the data guy and you always want to have a data guy on your team right that one person that comes along and says hey what you're doing makes sense or this is a terrible idea we should abandon ship right now and go the other way yeah i could definitely serve the nerd roll i'll just like validate anything that you said or point out anything that's just horribly wrong it makes me think about in those like superhero movies they always have a droid or something like c-3po that will say this plan has a 11 chance of being successful i'm not sure that i love being compared to c-3po although i do like star wars that's a good point but i actually think that that's a really good way to look at it like i like to look at an investing plan or any sort of plan and assign a probability to it so it probably is a good comparison and for those who don't know dave meyer is one of the ogs here at bigger pockets he is a data scientist so he's the person that can look at numbers facts objective metrics and help determine if what we're looking at doing or what we've been doing is something that actually makes sense there's a lot of data people don't realize that bigger pockets has on some of this would you mind actually dave for a second just sharing where people can find some of this stuff is it still through bp insights yeah sure so um we're going to start publishing this more on the blog and you can see it through bp insights but a lot of what we do is take market data like rent and sales data that's going on in the market right now and run some analysis we do some visualization so if you are trying to keep pace with everything that is going on in the super hot housing market which is pretty much everyone right now uh we are trying our best to get all that data out to you so you can make good real estate investing decisions there um so you can go either search my name or bp insights on biggerpockets.com or on youtube the biggerpockets youtube channel you can find that as well awesome so what do you think we should talk about today so i would like to hijack this podcast a little bit because as you said i'm the data guy and i also should mention that i'm a real estate investor and have been investing in real estate for 11 years so even long before i worked at bigger pockets but i've always done it in denver that's where i live for 10 years about two years ago i moved to amsterdam so i'm living in europe and i want to be investing in today's market like i feel like it's a good opportunity to buy but i have never invested out of state before and since i have you here captive and you are the expert obviously people probably know this but you're the author of long distance real estate investing i would love to sort of learn alongside everyone listening today about how you would basically teach me how to invest out of state yeah it's either that or teach you how to doubt are you up for that that sounds great how about we start with the real estate but then go to yes that's a good point right first build some wealth and then we'll teach you how to dougie i guess where do you start like i i am a real estate investor i like i understand the basics but like i'm sitting here looking at this map of the united states i'm like what do i even do like i could keep investing in denver but i'm curious if there's other opportunities out there for me and what the best use of my time and money is so first off you're asking the right questions this is where every investor should start the mistake a lot of people make that i see is they say what's the best market to invest in and what happens is you end up falling prey to whatever clickbait article is telling you these are the top five cities to invest in or what everybody else is doing sometimes you follow the herd so some influential person could even be through bigger pockets says i'm investing what like three years ago was huntsville alabama i mean everybody was going to huntsville huntsville huntsville huntsville and then you get a lot of people that are complaining saying there's no deals out there the market's too hot well you just followed the same path that all the other people were going in so of course there's no deals left and who's to say that huntsville is the best for you that's the right question is we want to be understanding based on where i'm at in life what is the best market for me to invest in and be similar to a football team that says what's the best play to run is if you just run the same play over and over and over depending on what the yardage are where you are in the game are you winning or losing what players do you have at your disposal like even where's your momentum you're going to call plays differently so while that answer is going to be a little bit more complicated that's why we're going to take some time to unpack today how we determine what the best markets would be does that sound good let's do that that sounds great okay so the first thing that i like to talk when i'm when i'm dealing with clients that are coming to the david green team for us to help them find investment property is we want to create a framework which would with which they can understand what we're trying to do and the best one that i know of is the spectrum so we talk about everything is in a spectrum on one end of it you have something and on the other end of it you have something else okay so you could live a life where you work out every single day and on the other end of the spectrum is you're comfortable and you never work out at all you can't have a great physique and never work out at all you're giving something up in order to do it so we typically [ __ ] yeah wouldn't it be right that's and that's actually how people get sold things is that the guru selling this program tells you you can have something on this end of the spectrum but you can have all the joy of the other side right remember like totally there are always traders yes like i remember in the 90s they had stuff that was hey put this like shock thing on your abs and you can lay there and watch tv and wake up with a six-pack when you're done like it's working out but it's not hard okay and the reason i point that out is that's how people get your money is they look for the part of us that just falls prey to whole oh i just have to take one course and i can make hundreds of thousands of dollars flipping houses and that's all it is so nothing works that way a few of the trade-offs we make in real estate will help us understand where we should be investing so the first would be on one end of a spectrum you tend to have cash flow on the other end you tend to have appreciation now this has often been presented in the past like appreciation is risky and cash flow is safe or better so you should always go towards cash flow and i think at certain times in history that is true just like at certain times in the football game you might want to run the ball instead of throw the ball that would make sense there's some less risk inherent with running instead of passing but at the same time you don't get yards as easy and so if you're losing that might be the worst strategy ever and i'm just i'm just using this as an example to highlight that chasing cash flow is not always the best investment strategy for everybody that's out there yeah i i totally agree with that sentiment i mean i just to continue the football analogy i really believe in sort of like taking what the market is giving you and in football you call it like taking what the defense is giving you right and so like sometimes if the other team has 11 people on defense and they're putting 10 people in the box to stop the run and you just keep running and running and running like it doesn't make sense and that is in some ways not everywhere but i feel about cash flow right now like people are saying like i need a one percent rule deal like that doesn't exist in the vast majority of places in the us finding any sort of positive cash flow is is tricky right now but that does not mean that there aren't opportunities you could throw the ball like you could go look for appreciation like you said there's this whole other side of the spectrum that is available to people and i hope people start to understand that and appreciate appreciation wow that was it that was quite a pun but i hope people do start to recognize that it is a really good way to make money because that is something that i was hoping to talk about today because i sort of see it the same way as you do that might be the best way of describing this that we could have possibly come up with that is exactly right that feeling of the defense has stacked the box but i am going to stubbornly keep running the ball and if i just run it enough times eventually something will happen is the same feeling you get when you're chasing cash flow and there's not a lot of of uh solid investment properties that will cash flow all right now i want to give a caveat what we're not saying is be reckless what we're not saying is well if they're stacked in the box just throw a hail mary every single time and hope it works out we're not telling you to buy bad properties because you can't find cash flow what we're saying is like you said look for ways can you pass the ball for short yardage that is very similar to a run with a similar risk profile but you're throwing it away from the defense so what i see right now part of the reason there's not a lot of cash flowing properties there's i think there's a couple reasons that we should get into the first is that private equity groups and hedge funds are buying a lot of those properties that cash flow they're borrowing money from other people at a cheaper interest rate than you probably can get dave because they're doing it in such huge amounts and then they're going and buying cash flowing properties and using the difference to pay back their investors and then they're just making money off the loan pay down and maybe a little bit of cash flow left over and then the appreciation that they get from the property so your competitors are bigger and better and stronger than you are when it comes to that space chasing these cash flow properties another thing is that there has been so much appreciation in so many markets that you get a lot of investors sort of at like my profile that are selling properties and 10 30 running into bigger ones and so if i've got a property that i'm gonna make say five hundred thousand dollars on and i'm gonna pay capital gains taxes on that if i can 1031 into something smaller that doesn't cash flow as well but avoid paying taxes on five hundred thousand dollars if i just get a three percent return or a two percent return that's a win because i saved all that tax but you on the other hand who have no tax savings a three percent return looks horrible and this is something i see a lot of people beating their head into the wall why would somebody pay that much for that house this is just crazy it's only crazy because you're looking at it from your very narrow lens of where you are in life and you're not seeing that they're in a different situation than you so a lot of these properties that used to be very solid cash flow the price has gone up because the demand for them has gone up because of people 10 30 winning up into bigger properties and so that's just right you're running into a stack box when you're going after those types of deals another thing is that what we tend to find i've talked about this before is that rents that are low tend to go with properties that are price low and as the pr as the value of the property rises what you can charge for rent rises to but they do not rise equally they are they're uneven at a certain point the value of the property continues to increase while the rent levels out or sort of inches forward and the reason is if you were able to keep pace with the rent forever the rent and the price then the person paying the rent could just buy the house for cheaper than what they're paying for rent and most people that are renting are doing so because they can't buy houses but if you were able to pay like seven thousand dollars a month in rent you're probably going to be able to buy a house right like the things that keep someone from buying a house aren't aren't present in a person who can pay 7 000 a month for a 700 000 property and then their mortgage drops down to like you know 4 000 and so it's cheaper to own instead of instead of renting and that's something just people don't realize as the prices of this real estate has continued to increase rent cannot keep up so the amount of properties that are left over that will cash flow are smaller because a lot of them have graduated out of that does that sort of make sense so i'm describing it no absolutely i that is a perfect point because i actually have some data that i was just talking to someone about the other day that backs this up so there's this popular metric but people probably heard it called the rent to price ratio you've probably heard of the one percent rule it's basically you just take a month of rent you divided by the sales price and it's like an excellent way to estimate cash flow and that metric their enterprise ratio has been declining since 2011 and so people think like the this hot market where cash flow is hard to find was brought on by the pandemic and everything associated with that and that has accelerated it for sure but since 2011 home prices have been rising faster than rent just like you said to the point where you know it is hard it just squeezes cash flow like you are going to be able to earn less and less in that scenario but on the other hand it's great for the people who own the property even if they weren't making that much cash flow because the right their property value is just going through the roof yes now that is what we should expect to see at a point in the market cycle or the economy where we have a very strong healthy maybe i don't know if healthy's right word because we flushed a lot of cash into it right sort of like you put a lot of methamphetamine into this body of our country so maybe it's not the best thing but you definitely feel the energy right so that's kind of what's going on right now if you rewind back to 2010 what we found was the opposite okay it was not a good economy the value of homes was lower and the rent was higher so rent stayed high because all these people lost their homes they needed somewhere to live so landlords never had to decrease the rent and you couldn't buy a house you had to rent for a lot of people because they lost their home and they had no credit so rents were very solid but the price of homes the value of them was low because not as many people could buy them the economy was bad there weren't a lot of people that had solid jobs so here's what i noticed a lot of people like me that got in around 2009-2010 or maybe just got interested in real estate investing that's when you kind of got into the bigger pockets world you your baseline was set for what is normal at what was actually one of the strongest cash flow markets that you ever could possibly see the first house i bought i didn't know what cash flow was i literally just knew i'm the rent is higher than what my bills are but i didn't understand roi i didn't know it was supposed to work that way i didn't know anything and i bought a house that was three years old maybe two years old all i had to do was run a vacuum over the carpet and it cash flowed 300 a month it was like a 2 600 square foot almost brand new home that never happens you cannot find that in today's market but that was normal they were everywhere at that time so i was going into market where cash flow was in my favor it was a very it was like uh the rules of the game dictated that running the ball was much easier to be successful at so everybody was running the ball you took it for granted we've now kind of come full circle we're in an opposite market there's tons of money out there uh when we go through a pandemic the government is pushing more money into the economy people are be are getting money from the government to pay their rent there's a lot of factors like when did our back that's making things go better and that means the value of these assets are going up now you throw into that we haven't been building them for the last 10 or 11 years hardly at all and so there's a lack of supply while demand stays steady or goes up as population continues to grow we have a shortage of inventory all these things together make real estate much more valuable but the element of real estate that cash flows gets harder and harder to find so you kind of have this dichotomy going on where it's better to own real estate it's going up in value you want it but it's not going to provide cash flow like it used to and you kind of got to make peace with that yeah so that is that's sort of what i'm trying to deal with because on one hand i'm like i could pick anywhere to invest in the entire united states right now because i have to there's i can't be close to my deals and so my option is like there are markets out there that's still cash flow like there definitely are so do i'm trying to figure out like should i go and do that because i think cash flow might even get harder to come by in the next couple of years so like should i lock in some cash flow now while i can or should i just ride the appreciation wave that's been going up and probably will continue at least in my mind is probably at least over the long run going to keep on a pretty solid trajectory so let's have like a philosophical conversation about the nature of cash flow let's let's go like okay like what was what was the character the oracle in the matrix right neo goes and talks to him if you own a property day for 30 years uh do you think that you would be able to remember or even tell what the cash flow was on year one no way i've owned properties for two or three years and i can't even there you go and if you looked at the money that was made over the 30 years from 30 years of potential cash flow plus appreciation plus loan pay down plus if you refinance it and buy more properties right it starts to get more complicated all the ways you're building wealth how much does that year one cash flow even impact what goes on over the full 30 years there you go it's similar to having a football team that's going to play a full 16 games or whatever we play now 18 games or whatever the first play of the game is the only thing everyone's thinking about for the full preseason but it ends up having a very small impact on your entire team's success that very first play that's kind of what year when cash flow is like we're all looking for it right out of the gate we want that cash flow right away but if we look at how much impact that actually has on our financial success it's tiny compared to what it's going to be in three to five years so one of the things i like to do is zoom out and say all right if i'm buying this property right now what is the rent going to be in three years in five years in 10 years based on what we've seen and if that looks super healthy and i don't make money more much money or even say i lose money for the first year in the second year the third year i break even the fourth and the fifth year i start making money if i'm going to hold it over 30 years the only question left for me to ask myself is can i afford to hold the house for the two years that it's losing money that's where the no cash flow thing was really getting people in trouble because in 2005 2006 2004 they were buying houses assuming they would appreciate they could not afford to hold them long term it was like a hot potato game they had no way to get that potato out of their hands and it burned them well that became cash flow is king you got to have cash flow because then you won't lose your house but what if the rest of your life cash flows really strong what if you're saving 10 grand a month because you have a great job does a property that loses 200 a month is that risky when you're saving 10 000 a month right like i've often ex no no i've explained to people like if you worst case scenario you go get a job as a barista somewhere once a week and in a month you can probably make the 200 bucks that you're so worried about that property losing so you won't pull the trigger on buying the property it is a much smaller risk in many cases than what we want to look at so what i like to do is look at all the ways that real estate makes me money so the first thing i'll say is there's five main ways that i see real estate earning wealth one of them is cash flow that's the difference between what you make every month and what you spend the next is appreciation and that would be the property going up in value over time naturally with inflation however there's an appreciation element to cash flow that no one talks about and that's really big right these properties that i bought in 2010 or so you know the rent was 1100 1200 now it's like 2400. it's a very big jump for what they make now versus before then there's depreciation and that's going to be the money that i do make from cash flow is shielded by uh the the value of the property no not the value of the property going down but the the it's like a tax term an accounting term that the usefulness of the property is slowly going away so the money that i do make is taxed at a much lower rate or not taxed at all because the depreciation the property brings then there's loan pay down which a lot of people don't realize but it's like a for savings account in a lot of ways if you can delay gratification you're actually making a return on your money just from paying off your loan and then there's forced equity that's where i can make the property worth more not by waiting for naturally occurring things like inflation to happen but elbow grease and a rehab or doing something to improve the value of the property so when you consider that there's five ways you can build wealth from real estate the the one-way cash flow sort of in takes on a new context that it's not the end-all-be-all of real estate investing yeah that makes a total a a lot of sense um and i think that there's this like interesting dynamic between all of those and you know i i have a pretty good sense of what matters to me right now in terms of that but like if you were new and just getting into real estate investing it's kind of like overwhelming to think about these five different variables and you know do i care more about appreciation do i care more about loan pay down do i care about cash flow and cash flows easy to think about because it's like you know it's like getting another paycheck it sounds really exciting where the other ones are delayed gratification so how would you balance these things better like is there a better way to think about than just like cash flow first everything else later or is there you know what would you recommend to people for in terms of like how to balance these five different ways of making that's such a good question and in sticking with our football analogy there are times where a team will run the ball to try to get the defense to stack the box to open up the passing game okay there are times with investing where you will start off with one strategy to open up doors for you in other areas to adapt to a different strategy and that is where the where you have to start when you're trying to figure out where should i invest what type of property should i invest in don't ask yourself what's the best ask yourself what's the best for me so uh with we know that there's a spectrum of cash flow versus appreciation what we want to try to figure out is like all right what market am i going to invest in and what are the strengths and weaknesses of that specific market that that makes a lot of sense so for me um you know i i have been investing for a while and i have a thesis like what i want to invest in is really that like appreciation i think is going to be really strong for the next couple of years but at the same time i want to come close to even with cashflow like you said like if it's slightly under i don't really care i'd love to make a couple bucks a year just as a cushion in case anything goes wrong and that's sort of like how i'm balancing these things so um i guess once i know that like i know that that's my ideal goal that suits my part of life like i'm not trying to retire right now so i don't care that much about cashflow like is now the time like should i be looking to pick a market at this point well the you just said something very insightful that we should make sure we highlight and it's in general cash flow is most necessary when you're in retirement when you're of working age and you have a career and you don't hate it and you're okay to work that job for that person cash flow is much less important you don't need it as badly you will need it later in life or you're going to want it later in life okay and what i've found is the concept of delayed gratification is very applicable to real estate so most of the time if you look at what creates the most wealth it's appreciation and i know that's a bad word to a lot of people because it sounds well you can't guarantee appreciation but i just want to challenge that a little bit okay you can't guarantee appreciation can you guarantee cash flow okay people say well i don't know if the value of the property is going to keep going up it might go down i don't know if the rents are going to keep going up what if they don't well how do you know that they're not going to go down if if you don't know that they're going to go up can you be sure that they're going to stay the same none of this is guaranteed there is no safe place that if you just go after cash flow you know you're going to be all right and what i've found is if you can delay when you cash out on that property you'll make more money in the long term so what i like to say is on one end of a spectrum you've got cash flow on the other end you've got appreciation long term wealth building how close to the appreciation part of that spectrum can you get without extending yourself so far that it's a risky financial situation for you so what you said dave was very clear like i want to be breaking even or making a couple bucks i'll push it all the way to appreciation but i don't want to get into negative so now we can kind of figure out well which markets work for what you're describing there where can you get a property that will have strong appreciation potential but also not like beverly hills you'd be losing a lot of money i think your appreciation would be great but you're going to go buy a mansion that's going to cost you 20 grand a month and you're going to rent it out for 12 grand a month you're going to be coming out of pocket quite a bit but over 20 years what's that mansion going to do for you right it's just are you at a point where you have 8 000 a month to throw away real estate no you don't so that on the far end of that spectrum we start moving back towards the cash flow side um so what i would say is if you want to figure out which market you should be investing in the first thing you look at is what is making markets appreciate all right one of the things that makes the market appreciate is supply and demand so we want to look for areas that have a limited supply naturally or by any other means so some of the things that i look for in i talk about in long-distance investing would be like geographic barriers okay so austin texas is sort of like has a river on one end of it that stops them they can't build any more houses past the other side of that river and all the properties within the downtown side appreciate much more than the properties outside the river because people have to sit to commute in across the bridge sometimes you'll see barriers that are political grant cardone mentioned on this on the bigger pockets podcast that he invests in liberal areas because they are much less likely to approve new building permits which means that the supply stays sort of limited by political uh influences so an area like maybe kansas i would not expect to be appreciating a whole lot because there's so much land they could just build more houses the supply and demand ever gets out of whack versus like berkeley california where it's very difficult to build anything it's very liberal it doesn't have a whole lot of light available to it there's some geographical limitations because it's sort of in the hills um that property is going to appreciate a ton am i making sense with that so far oh totally yeah it's like there's just constraining half of the uh equation of supply and demand i grew up in right outside new york city and i just when you said that i thought instantly of manhattan like it's this tiny little island and all of the land is already taken up so like the only way you build more in manhattan is by knocking down that something already exists and building something bigger on it which is super expensive it takes forever and that's why homes appreciate for 10 years before i moved to amsterdam i lived in denver and you may have heard of you know it's a smaller town but boulder colorado they have some of the strictest building rules in in the entire country they have moratoriums on growth and so think about that a lot of people want to live there they're desirable places to live um for a lot of people and you just aren't that many houses that is like the perfect recipe for things to go up so got that number one is like barriers to supply essentially like places where they can't just build their way out of uh rapid appreciation those are perfect examples and i like the way you phrase it you've taken out half of the equation by barriers to supply just like if you're a defense in a football game if i stop you from being able to run the ball and you have to pass it much easier to defend right so the other half of that equation on this line would be demand now if you have lack of like manhattan could end up not appreciating if nobody wanted to live in new york so if the government over there runs their economy into the ground they chase everyone away businesses don't want to be there people don't want to work there then manhattan real estate becomes less desirable what made it desirable is the combination of the lack of supply with the amount of money that you can make in manhattan because that's where some of the best jobs were similar to like the bay area in california where i live the reason that real estate is so expensive here is because you make so much money here the wages are really high a lot of people don't realize nurses nurses in this area make 100 an hour so they can afford that higher priced home so what we want to look at are what factors would um limit the demand for an area so the first one to me is always going to be employment obviously people want to live in a place with fun stuff to do they like nice weather but even more important that they want to live near where they work so is this an area that is drawing business is this an area that has seen wage growth what type of industry is moving here okay so if there's a if there's a certain city that is growing but it's growing entire manufacturing i wouldn't expect to see rampant wage growth from an industry like that and the opposite might be the tech industry so some of the hottest markets in the country if we were to look at the last five years and say what's appreciated the most austin seattle san francisco san diego um huntsville where else what am i missing here denver boise yeah it's like all of these all these tech they're all tech hubs and that's because tech companies move there and it doesn't matter that they're tech companies it matters that they pay a lot of money tech companies can raise a lot of money from private investors then they can pay really high salaries they're attracting the smartest talent and so wages go up and when wages go up you can afford to pay more for a house so if you can afford to pay it and you want it and there's not very much of it the price of it is going to go up so we want to look for cities that we have a stable or a growing economy like that actually matters so one of the reasons detroit has just been struggling for so long was that their economy was based on the automobile industry and when that fell apart they got hurt really bad um hollywood has typically done really really well but a lot of that's because movie stars live there people that work in the entertainment industry that make really good money executives for these companies live in hollywood well a lot of that is moving to atlanta they're actually filming movies in the atlanta area instead and if that continues i would expect to see some of the demand for hollywood could go down a little bit and the demand in atlanta would start to go up so the the first factor on the demand side that i would look for would be what is the the job market what's the economy doing in that area nice that's great so it's funny because for bigger pockets insights and a lot of the content i write for bp and youtube like i use statistical methods to predict depreciation and rent growth and these kind of things and all the stuff that i've found from a math perspective really aligns really closely to what you're saying like wage growth employment growth um and the one thing i did want to add is just population growth just like places that are growing and more people are one of the things that um really sent at least from a mathematical standpoint like tends to drive up appreciation um so i'm glad that we see these the same way because i think that um you know these are people always say that appreciation isn't predictable like you said they're not you know it's not guaranteed of course it's not guaranteed but that doesn't mean there aren't factors and indicators that you can look at to try and figure out where it's going to and i think the list you just gave is a perfect example of that and the other part of the demand spectrum after the jobs you just mentioned its population growth where are human beings moving to because as more people go there demand will naturally go up so i don't know if i don't have any data to support this and i don't know if anybody does but the three things that i look for in the area the first is climate because you could get a 60 000 house somewhere but if it's miserably cold or something not many people want to live there so warmer areas i think over time tend to draw more of the population to them the second piece would be the tax laws and right now this is huge so you see a lot of californians that are fleeing california because we keep hearing about we already have the highest uh state income taxes in the country they're wanting to raise it even more so i think they tried to bump it up to 18 this last go round and it the it was voted down but the next time they'll get closer the next time they'll get closer eventually that's going to happen so if you're being taxed 40 45 on your federal tax and then you're also paying 18 on that you're now looking at more than half of your income is being taken in taxes so you're making all this great money in california but you don't keep any of it a lot of californians are moving to states that have no or low state income tax so texas florida tennessee are some of the biggest ways we've seen appreciation happening and it's not any surprise that those are all states with no state income tax and positive climates that's a really good point i i you know the climate thing is like something i can never put my finger on but you always see the sun belt like whenever i do these analysis i'm looking like the most popular places it's like arizona obviously southern california but texas idaho i mean colorado people think it's freezing but it's beautiful weather pretty much year-round that's a really interesting point that i've never really considered you don't hear a lot about north dakota south dakota minnesota michigan right like you're just not hearing about rampant appreciation in those areas no no i you said cole that i thought you know i went to school at the university of rochester in upstate new york and it's like basically right next to buffalo and i mean those are actually really good cash flow markets they tend to be but they are freezing like i just can't imagine people all of a sudden deciding that they want to live in a freezing climate but well and the people who are living there probably are there for some purpose other than leisure okay they're going to school there's a business there it's cheaper right like there's some reason that they're there but if you're trying to find appreciation you're trying to track the money and the money's not going somewhere that they don't have to be like they're going to places where they can afford to go and for leisure reasons totally so we've talked about this this uh appreciation that's my main goal but for a second because i know there are people out there who do want to focus on cash flow um if you were looking for a cash flow market i have some things written down but i'm curious what do you look for if you're looking for a cash flow market is there anything that can sort of predict cash flow prospects your first and best metric is your price to rent ratio so the closer i get to the one percent rule the more likely they are that they're going to cash flow and rather than trying to track where has the highest rents because you're gonna see beverly hills show up for highest rents it just also has you know 50 million dollar properties that they're getting those what you should look for are the lower priced homes so if you find the area that has houses in that like 70 to 130 thousand dollar range odds are the rents in those areas are gonna be very close to the one percent rule i i honestly i think it's a great proxy it's super easy to figure out too like you just look at the median rent and look at the median home price um and then like you said like taxes seem to be pretty important like if you're getting taxed less cash flow can be better i also think similar stuff that you said to appreciation is like income growth and wage growth like if people are making more money then rent is naturally going to go up um and so i think that they overlap um and that's probably a good segue because like these are these metrics like uh wage growth employment growth supply and demand is sort of how i've been looking at markets and so i've been seeing um you know i'll just list off a few like when i look at the spectrum and i'm like oh maybe i should go to more on the cash flow side i do see things more in the midwest um sort of uh i guess upstate new york is like rochester buffalo detroit um when i look at the other end of the spectrum it tends to be the west coast like you were saying california but then the ones that i think show positive aspects for both or places like tampa for example um that that seems to be like a good market to me um so i'm wondering like i don't know if i'm really gonna invest in tampa but like let's just say that i've looked at these metrics i figured out because i do think it is good stuff like what do i do from there that that's what i really i'm confused because like i like looking at the markets i like doing this mathematical analysis but where i keep getting stuck is like all right let's say i pick tampa what do i do next well tampa's a funny market because i'm looking to start investing there myself that's when i've actually identified as a place i want to get into right so the first thing i have to ask myself is what is my goal so for me personally my goal investing in tampa bay is going to be to get the best dirt i can the best area that i can and then find a property that will work for what i want i feel like a lot of people do it backwards is they say well i want a property that will cash flow so what market can i get cash flowing right i'd rather say all right i want to be in tampa how do i find a property that will cash flow there it's going to be harder they're not everywhere okay so a couple strategies that i've used for clients out here that will work for me out there buy a really big house with a lot of square footage that has a floor plan that's easily split up into different units uh rent out by the room that's another thing you could do so that means you have to find a place with quite a bit of demand something near a hospital something near a college something near where people are going to want to go another one we could be a short-term rental short-term rentals bring in more income than as than a traditional model typically would but you got to make sure you're buying in a place where people are going to want to visit or they're going to want to stay there so you see how this becomes a little bit more complicated and that's what scares people away is you have to think about a little bit more once i've identified what type like those are my three strategies that i'd be using right there would be a property with a lot of square footage a property i could rent out by the room or a short-term rental now i want to find a person who knows that area who can help me avoid buying into the bad neighborhoods or bad properties and can save me time so i'm not spending my whole day looking at every property available in tampa bay and trying to figure out that market myself so usually your real estate agent is going to be the first person you want to contact when it comes to someone who can like make this process much more likely for you to be successful well that makes a lot of sense yeah i i want to get back to the agent thing in a second but you said something that just sort of like made a light bulb go off in my head you said that like you want to find the best dirt and then find a strategy that works and like that is definitely what i would do if i was investing in denver i would never just be like oh i want to find cash flow and then i'll go to any market like i know denver well and i when i invest in it i know the neighborhoods i want to buy in and i find something that works and i don't know why up until you just said that i was like thinking about it totally different for out of state investing i was like i gotta find the right zip code and then i'll invest in that but what you just said makes so much sense so thank you for saying that um then you know like finding an agent like i'll just be honest my agent is he's a great agent but i fell into that because he's one of my best friends and it just worked out really well that we're both into real estate but like where you know how do i find a good agent and you're obviously an agent and know this really well but like what do i do all right so here's the bad news you gotta look at finding an agent the same way you look at finding a property you gotta assume most of them are the wrong fit and you gotta find the right one okay a lot of people assume every agent's the same i just want to find the one that is most convenient or easiest or will lower their commission or something similar to hey every property is the same you just got to find the one that you can get under you can write under list price and you can get it for the most under list all right expect to put some work into finding the right agent now this doesn't mean like interviewing a hundred of them and grilling them okay it's more do i know what i'm looking for in that agent so when i'm looking for rental property i know what i want right and when i find what i want i am happy to pay over asking price i just put one under contract two weeks ago in uh the east bay california that was listed at 1.8 i believe and i wrote it closer to 1.9 and had been on the market for two weeks so it had just dropped it started above 2 million and drop down well the appraisal came back at more than what i paid even though i paid over asking price okay and the reason that i was able to move on that property that quickly is i knew to me this property is very valuable it's got a ton of parking and i'm going to need that for all the people i'm going to put in there it's got a very high walking score so tenants are going to want to live in it it's not that far away from an apartment complex so if i have a lot of tenants in there the neighbors aren't going to be irritated by that because they're used to an apartment complex being somewhat next to it it's super close to the freeway there's all these things that's very hard to find in a property that i recognize and boom said i'll go for it and not only will i go for it i will go for it aggressively there's like an aggressive patience you have to develop i will be patient for the right property when i find it i will go after with everything i have your agents like that too you kind of got to know i want a person who has knowledge of the things that i'll need to make this work they have rehab and contractor referrals they have lender referrals they know uh how to talk to other agents they can get to the bottom of if you can get this property or not they're not like well let's just throw our offer in and we'll figure it out and you have to know what you're looking for in that person and when you find it you have to be very intentional about honoring their time and making them uh motivated to want to work with you i think a lot of investors make the mistake of like well i'm the person and they should be chasing me but to the agent who doesn't know you you're just another of the 20 leads that came to them that month that wants information from them that isn't going to buy a house yeah that that's such an interesting thing you learn about it's like you assume that an agent wants to work with everyone but like an agent like yourself has so many people probably coming to you that you can choose to work with the people who know what they're doing and think about or like and and are gonna actually act on a property instead of just sort of kicking the tires a little bit um and you know i listen i i i have worked with an agent and i know that on bigger pockets like you can find pretty good agents i should mention that there is an agent finder it's biggerpockets.com agents there's tons of good agents there but i i'm just trying to figure out like what are do you have examples of like two or three questions i could ask to sort of get to the bottom of what you were just talking about so i first off i love going to bigger pockets to find your agent because they're probably listening to the same podcast that you are right now they're they're hearing the same things that you're hearing and they're in they want these properties also now there's this myth that goes around that well aren't we competing over the same properties if your agent has like 10 billion dollars sure they're going to buy all of them they're not going to find one for you but if that's the case they're not working as an agent so no even me i buy a lot of rental properties it it pales in comparison to how many i find for our clients there's always another one i can get for myself in fact i've bought a couple like i'm trying to get one right now in maui that our client has it in contract it appraised for less than what it's worth or what sorry it appraised for less than what he has under contract for and he doesn't want to pay the difference and i'm grabbing that thing if he decides to back out of the deal right so i could have bought it but i would rather get it for the client get his repeat business make him more money get referrals coming in then i would just grab every single deal offer myself there's plenty that will come around and there's plenty i can grab so don't worry about your agent competing with you what you want is an agent who is interested in viewing real estate from the same lens that you do they know this property is worth less the list price is less than what it could be listed for or this is an amazing cash flow property the reason i want to buy this one in maui is it's in the same complex where brandon's is and it's a very unique floor plan where basically you can take a two bedroom two a yeah two bedroom two bathroom and turn it into two different units a studio with a bathroom and a 1-1 so your rent isn't double but it's close to double because of that the right agent knows those opportunities and sees those angles and says look you should buy this property and here is why so one of the things you should ask is when you're finally like hey you're trying to figure out this is a good fit for you what are some of the ways you recommend for investors to win in this market so if you ask me that question i could be like boom boom boom boom boom here's exactly what you're looking for if you go to one of the agents in my office that doesn't know this that is really eager to work with you they're going to give you a um well a very general roundabout non-specific answer because because they don't know so that's one of the things that i like to start off right right away what what strategy would you recommend another thing i always like to say is do you have contacts that can help me with the rehab with estimates on the rehab okay because if they've worked with investors before and they know this they have had to come across these same problems you're going to have and they've had to solve them so if you ask them they're like no i don't really have any construction uh referrals no i don't really know any lenders that do non-qualified mortgages that could help you no i've never talked to a property manager they don't know what you're trying to accomplish just right off the bat it doesn't matter if they tell me that they know if they don't have any of those contacts they don't know you can also ask them uh can you walk me through how you would analyze a property can we grab one on zillow real quick on the phone and you show me how you would analyze this so if you asked me that i could tell you right off the bat well i look at the neighborhood and then this is a good neighborhood and i can tell right now that if the property cost this much i can run it through my mortgage calculator your payment would be this that means rents need to be right around here uh biggerpockets has a rental estimator that i can go look up really quick and see what the rents are nope this isn't going to work you're not close enough and i don't know everything about everything in real estate but just based on that conversation you can tell i probably have a pretty good idea of how to advise you if they don't even know how to calculate numbers on one then they're not somebody that's worked with investors before wow that was really helpful so just to recap i think the three sort of questions are once you find an agent you're interested in talking to again you can look on biggerpockets.com agents to check that out um but the three questions were like what strategy would you use to win in this market you would ask for contacts which i want to come back to because i think that's a super important thing and the third one was like can you analyze a deal at least as well as i can you know like can we have a conversation about the numbers i'm looking at and you can weigh in on it intelligently and we can like actually have a good conversation about that well that's the right that's exactly right and i throw a bonus one in there is a question i like to ask agents when i'm going to work with them is i'll say like in tampa bay right tell me what most people do for work in this neighborhood that's a good one if they can tell me right off the bat oh they work over here they're they're all software engineers or whatever they know that market they're familiar with it they've sold houses in it they know the demographic of people if i get a uh well you know you know they work that they don't know what to do that would be a nightmare i can't imagine like being a real estate agent being interviewed by you to be your real estate agent you would ask the hardest questions that would be very uncomfortable well what you're looking for is like they can't bs you right you if i say well tell me why i should work with you you can be asked me with a bunch of reasons okay but if i have specific questions that the only way you can know them is if you have done this before then i'm saving both of us that's a great question that's a great point and so do you take the same approach with like the other people on your team because like i feel good that like i can go in bigger pockets age bigger pockets find a list of good agents interview them talk to them but like property managers i feel less confident about for some reason and i mean lenders i think i can find one but like how do you build up the rest of your team because like the management and day-to-day stuff is kind of what really uh is like the hardest thing for me to wrap my head around yeah and it's also the piece that people pay the least attention to it's a big mistake everybody remember playing the oregon trail david are you old enough to play that play the oregon trail you'd go shoot the animals and they'd like go like up like this and all for their legs so you remember the most fun part of the game was shooting the animals right your little pellet moves across the screen really slow so i would go out there and i would just do that the whole time and i'd kill like three buffalo and two deer and a rabbit and it would say david has 9 9 000 pounds of meat he can carry 15 pounds back you can't carry it home yeah like it's so disappointing like you you snag yourself a bear and then you can't even carry it that's exactly right the carrying at home is the property management aspect of rental investing everyone can go out there and take down a deal at some point they can shoot the bear if they fire enough bullets but once you've got it how do you manage it how do you keep it profitable that is the hard part of investing and we never think about it because it's fun to just go out there and hit space bar and shoot bears um and so that's one of the things that i just want to highlight is we tend to focus on podcasts like this on analyzation and finding the deal and creative ways to put it in contract like it's all like lining your sights up with the bear right and timing the shot but once it's down there's like way more work that's that's just the tip of the iceberg is the part we're talking about and when you buy a property in a really bad area it's there's no way you're getting all that meat home you can't change that you're always going to be struggling with that property and what i find is most people are looking for a property manager they can rescue them because they bought in a bad area and it's just not gonna happen they they may be able to help you carry another 15 pounds of meat home but you're still leaving 8 500 pounds or whatever on that bear so the first thing that i do to avoid bad experiences with property managers is i just don't buy in areas where they have an uphill battle it just isn't worth it if you have to do that to get your foot in the door you get in you make some money and then you get out and you get into a better area that would be a strategy that works but you don't want it just like you don't want to on-site kick all the time in football there's times where you might have to do that but that's not a thing you want to be doing all the time so when i'm interviewing them i want a property manager that i will say listen i'm going to run this deal by you before i buy it and i'm just putting you at ri like assured i will be you will be the one who's my property manager i'm not going to say well if you say no i'll use somebody else right i want you to tell me honestly do you want to manage this problem wow that's an interesting approach it's kind of like introducing your friends it's kind of like introducing your friends to your girlfriend and you're like hey what do you think about this person because they're gonna shoot straight like we gotta be around her all the time if she's gonna be your girlfriend right i want my property manager being very honest with me about no i don't want to manage that property you want to be on the other side of the train tracks we want to be looking over there so that's the first thing i do is i just let them know you will be involved in this process because you will be my partner once i take this bear down is this the thing that we want to be cleaning all the time is this meat we want to be eating another thing that i'll do when i'm talking to them is i'll find out how did they build their business now this is very few people talk about this but there's two basic models that people get into with property management the first would be like a franchise model where their goal is to make money in the company so what they're going to do there is they're going to try to get as many doors under management as they can with this minimal amount of employees as possible and they're probably going to have to nickel and dime you for a lot of different uh features they offer to make money that's not what you want what you want is someone who owned a bunch of properties themselves managed it themselves hired people to sort of leverage out their own work and said hey i got a business model here where i got this thing down pretty good i should start taking on other people's stuff and they grew organically so now they're more likely to treat your properties like they treated theirs and the system was developed for their own property and they're not trying to make money out of this business they're trying to build relationships with landlords so that they can get rental property that they will buy too that property manager is going to have a lot more like safe procedures to protect you and they're going to care more about the properties because they have their that was that was awesome honestly like i had no idea what i would even ask these people and i want to just touch on the first thing you said which is so true it's like we focus so much on deal analysis because it's important like you gotta find a good deal but so much once you've become a landlord once you've been investing for a while you realize like so much of investing is running the day-to-day of the property or hiring people who could run the day-to-day of the property and in many ways it is it is as important as the analysis and upfront purchase or maybe even more important depending on how long you run the property so this is really what's what's like bothering me but now i feel like i have some good questions to ask like i i never would have thought of you know just picking one overhead and getting them involved so like they are bought in i love that because like they're on the hook now they said that they can manage this property and like i don't think a good property manager would say they can manage a property that they don't want to so like you know that they're bought in and they're gonna go do a good job for you yeah it's it's sort of like if you if you talk to your bookkeeper like my cpa every time i buy a deal i run it by him first and we talk about would this work for the tax savings that i'm looking for would i be able to shelter my income this way legally um like how are we do i need to start a new corporation to take title of this one or can i put it in one that i already have right like we have that conversation and we make it all even and straight and nice and clean before i buy it and then it's he is able to keep the books for it very easily he's able to track the numbers and when tax season comes it's already taken care of what everyone else does is they just go buy a bunch of stuff and then they go dump on their cpa here's the big mess that i made can you clean it up and then they're always frustrated with their cpa because everything's taking longer than it should we treat our property managers like that too right it's like kind of like my chiropractor i go to jiu jitsu when i get twisted into pretzels and i show up and i'm like i need you to fix me and i'm always showing up saying i need you to fix me don't do that to your property manager let them be a part of that process yeah so that that is awesome i mean i i feel honestly almost better now already i still need to think about what market but now i feel armed with the right question so just to like summarize what we've talked about because i i think i'm at the end of the questions i brought to ask you which is basically like talking about looking at your own where you are in life and deciding like do you need cash flow do you need appreciation once you get there and you figure out what's important to you right now then you can go on and pick a market we talked about some of the metrics there then next step find an agent there there are some good questions you asked next on property management great quests questions to ask there what what am i missing like those are the questions i had are there questions i should be asking that i have not asked you yet as far as what to look for in the area that you're watching to buy out of state like i'm feeling excited now and like i'm gonna pick a market and i find an agent find a property manager but like are there other factors that i'm not thinking about or are those the main things it's it's understanding why that market what works in that market and what that market is designed to do it'd be like if you drafted a running back with a 4.240 just can fly but then you're you're pissed off all the time because they don't block right that's they're not meant to block and it's not their fault that they're not blocking it's when you decide hey i think that miami like that's an area that i think is going to be appreciating massively i think a lot of businesses from new york are moving into miami they're tired of what's kind of how that state's been managed with covid they want to be in a better climate the technology increases we've had have made it so you can work from home there's this perfect storm of you don't have to live in a freezing cold place anymore and be miserable and miami is definitely not freezing cold and so a lot of businesses are going there but because of that you've got guys with just like millions and millions of dollars that will go buy a condo there for 2 million and don't care if it cash flows or not they just know in 10 years it'll be worth 5 million that's as far as their sophistication goes they make their money in the stock market they make their money in other areas so real estate is just like a diversification of their portfolio so they don't look they're not listening to podcasts like this they don't care about all the things that we're looking at if you're going to buy in miami don't expect it to cash flow super great that's what we're getting at so make your strategy tailored to that purpose if you know we're going to tampa and i might break even make a little bit of money in the beginning understand that in five or six years you should have x amount of equity and x amount of cash flow and have a strategy put in place that if i hit more equity than cash flow i'm gonna take that equity in 1031 into a different market that maybe is more cash flow strong at that point right and so if you know hey we're going to run the ball this many times and we're going to open up the defense and we're going to pass it and then if we get to this point we're kicking a field goal but if not we're going to go for a touchdown you're way more likely to win than if you just have one strategy and you just say i'm just gonna keep pounding this one thing over and over and over and they get frustrated all the time so i know that's somewhat of a general answer but when you're saying like hey what more should i be looking for ask yourself is there a ton of land that can be built on top of this already that's going to limit my appreciation does that matter to me or maybe i don't care if it limits appreciation because it's cash flowing really strong is this an area where i'm going to be competing with other landlords for tenants that's the downside of the midwest market that a lot of people don't think about a lot of those turnkey companies operate out of the midwest because they can they can get cash flow much easier to the investors but when you have a vacancy that sits forever and you're lowering your rent to try to draw people to be in your unit that's a lot worse five years from now than when hey it was a little expensive and tough to get into that market but every time i have a vacancy i jack up the rent and people pay me even more than that to get in there awesome man now i'm excited i feel like i i need to come back in a couple of weeks and see if i can pull the trigger on something all right well this has been fantastic dave i really like being interviewed by you it's kind of nice to be able to sit on the other side of this thing and answer the questions instead of ask them and we will be here all day but we go ahead no sorry it's just saying that this has been a lot of fun i've learned a lot like i feel like i hope everyone at home was learning along with me because i feel like i hijacked the podcast for my own purposes but i think this is just it's a hugely important topic right now it's a really good time to consider this kind of stuff so thank you for uh indulging me and and teaching me all this stuff i don't think anyone minds that you hijacked it because that's what brandon turner has done for eight years and that's how he's built his real estate empire so you're just falling right in line with or he's not here today he's not here today so we get to do that's exactly right so that we're not here all day we're gonna move this thing on we're going to get into the furious four and dave and i are going to ask each other four questions that we think are most applicable to the uh plight of the real estate investor today so i will start with number one dave what is one metric investor should pay attention to when making decisions they often overlook one of my personal favorites right now is wage growth i think it's like really interesting to see what's going to happen especially with inflation right now and all the stuff that's going on in the economy it's a really good predictor of both appreciation and cash flow and it's sort of in flux right now it's growing faster than it has in years if that's gonna keep up i'm not quite sure so that's something i'll be keeping an eye on for sure that's profound i love your answer and another i'll add on to what you're saying money is flowing into the economy but it's not flowing equally into every part of the economy right like some streams are much thicker and heavier than others so wage growth is often dependent on the type of industry and certain industries are having wage growth that is in much higher proportion to others so paying attention to specifically what type of industry is in that area will help you figure out what wage growth to be aware of i think that's a very great piece of infight uh what i would say is investors need to pay more attention to how many days properties are on market if you really break down what makes real estate work it you get to an understanding and i'm writing about this in my next book for bigger pockets which is for agents it's that buyers drive markets the number of buyers in a market is the most important metric that me as a real estate agent or an investor can possibly know but there's no way that buyers don't register to tell you that they're in the market it's not like a listing where you can look and see how many sellers are in a market so i have to try to figure out based on how many loan applications went out and pre-approvals were issued because that that number is tracked um how many showings maybe happen you're always trying to figure it out but the number one metric that i can use that will tell me how many buyers in a market is how many days on market houses are sitting for so when houses are sitting on the market very low day on market you should expect to write over asking price offers you will see appreciation because there's a lot of demand for it it will be harder to get into that market that doesn't necessarily mean it's bad but it does mean it will be more difficult when days on market starts to get higher there's less competition you'll typically see less appreciation going on in a market like that and you probably need to be a little pickier about which properties that you go after and so i most people don't look at that metric but i recommend that they should nice i i completely agree it is and it is crazy right now so it is something you definitely need to keep an eye on because it is pretty much at all time lows i think it's bounced back a little bit but it is pretty pretty much as low as it's ever been okay so question number two what is one habit investors fall into they should avoid if possible i think it's the fact that investors get that i'm gonna shove this square peg into a round hole mentality and they just keep doing the same thing so we talked about how that applies with cash flow because that's one of the things that people are just trying to force whereas i've sort of like taken what the defense gives me hey i can cash flow really strong after five years of rent increases and i'll be very glad i bought this property and it will have gone up and i'll probably refi and get my money out but that's not happening for five years so can i delay gratification and be okay with that result versus continuing to look for that one diamond in the rough that all the other thousand buyers in my market are all looking for it's like using someone else's game plan is the way i would think of it it's like everyone's you know you listen to this podcast to get advice and to listen and and learn some really applicable skills that you can use in your own investing but everyone's financial situation everyone's strategy has to be different like you everyone's you know uh the amount of money you have to invest your your own personal risk tolerance when you want to retire matters so much and so you need to look at like what you have and make your own decisions about what's right for you we've talked a lot about that on the show but i think that's the habit i see most from people is trying to apply their situation to uh a strategy that just doesn't work for them and i think uh people really do start getting away from that that's a great point i mean it makes me think of sort of in sports you can take inspiration from other players but you can never copy their game completely because you don't have their body and you don't have their skills and so in this podcast i talk a lot about what i'm doing in my own personal portfolio and i'm hoping that that inspires the listeners who hear ooh that could work for me or that wouldn't work for me but that might work for me in five years after i hit these numbers so don't try like you said dave it's not good to try to copy somebody else's game plan but take inspiration from their game plan take the pieces out of it that do work for you and then apply it absolutely all right so next question what is one resource bigger pockets offers that many members are not aware of well i'll just go back to the one i said because i'm excited about to use it now which is the agent finder and you can find that on biggerpockets.com agents and it's just a good place where investor friendly agents people who genuinely know what they're doing are and hanging out so if you are looking to invest out of state i would recommend looking there is a good place to start and don't forget to ask those three questions david outlined earlier in the show yeah and i'm one of those agents on there by the way so we're not just saying to use it yeah i'm one of the people that you can go in there and find and i can represent you in the in the areas that i work in perfect and what is one bp resource that you would i think people need to go check out bigger pockets insights so this is the area where a lot of the information that dave and his team have compiled data and not only do you provide the data but you also write articles that summarize and help people process what this data means and how it could be applied so there's information about which areas are expected to see the most wage growth or the most rent growth or where you'll get the biggest bang for your buck or where people are leaving right like they'll take all this information and then they'll put it in an article that you can read that will save you a ton of time and you don't have to figure it all out so not enough people talk about that but i think that that's a very valuable resource sweet thanks man appreciate the vote of confidence all right so our last question what is a market you're interested in why and you can't say tampa because we both already said that what i'm looking at right now outside of tampa is and this is a strategy i recommend that everybody should use is you go to the spot where everybody's already going to so we mentioned like huntsville alabama that would be a spot everyone's already going to nashville tennessee people have been going there for a long time and instead of trying to jump into nashville you i would ask myself if somebody wanted to buy a house in nashville and they just couldn't and they got discouraged what city would their agent recommend that they go look at instead okay some it's often a secondary market it might be the part of nashville that's not as popular or a suburb outside of nashville and when i get there i look at the days on market if the days on market are six days seven days is just as hot as nashville i'm probably not going to find something but if i see days on market 20 30 40 days i know hey this hasn't heated up to the point that nashville has but it probably will and i want to get there first so one market that i'm looking in would be something outside of nashville which i haven't identified yet but where people who want to live or work there would go and if they couldn't find anything in nashville proper or in i think franklin's really close this is where they would spill over into i think i would say i don't have a city picked out yet but i'm very interested in both florida and texas and i would say texas more specifically you said earlier about no income tax which is really important the population is exploding a lot of really big companies are relocating like you said out of california out of new york to both of these areas um and i need to do some more analysis and figure out the specific cities but i think those two states are really interesting opportunities right now texas hits almost every single metric that we mentioned outside of geographic barriers so there's plenty of room to build in texas so that's one thing to be careful of that's true but businesses are leaving california and going there population is leaving california and going there the state income taxes are very favorable the climate is very it's hard not to find something in texas that you would say that's not good for long-term investing yeah that's a really good point and it's so funny because what i do is analysis for bp insights like and i you know do all this data crunching and it comes out with like top five lists top and bottom and florida is always both the top and the bottom it's like like everything else is in between it's like the best casual cities in florida worst cash flow cities also florida so it's like very polarizing so you got to find the right place but i think there's a lot of opportunity there as well that's a great reason that people should be checking out bp insights because you might just hear florida and say oh i'll go invest there and end up in one of the worst parts that you could be in and you missed out on one of the best totally absolutely all right well thank you very much dave this has been a blast if you guys have liked this show please go to youtube and comment there and let us know what you liked what you learned what you wish that we had talked about so we can maybe cover it there you can also go to biggerpockets.comshow515 and you can leave a comment there and get a discussion going with other bigger pockets members about this show what you're thinking about where you might want to invest what questions you might want to ask just basically improve your game dave it's been a blast thank you very much we will have to do this again and i'm going to get us out of here this is david green for dave 80 luke skywalker 20 c3po meijer signing off i like that you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com your home for real estate investing online

Channel: BiggerPockets

Views: 168,584

Keywords: buying out-of-state rental properties, out-of-state rental properties, out of state investing, out of state real estate investing, income property, long-distance real estate investing, long-distance investing, real estate investing, real estate investor, passive income, cash flow, buy and hold real estate, investing in out of state rental property, investing in different markets, real estate tips, long distance landlord, long distance landlording, biggerpockets, david greene

Id: P2eGYQqj_qY

Length: 71min 44sec (4304 seconds)

Published: Thu Oct 07 2021