How to Get Started in Out-of-State Real Estate Investing

Summary

In this video, Sarah Weaver and Sulway share their experiences and strategies for investing in out-of-state real estate. They discuss the importance of selecting markets with strong metrics like population and job growth, wage increases, and rising home values. The hosts emphasize the value of building a reliable on-the-ground team through networking and referrals, and they encourage viewers to take action despite fear, highlighting how they've successfully scaled their portfolios and managed properties from thousands of miles away.

Takeaways

• 🏠 Sarah and Sulway invest in out-of-state properties, leveraging the benefits of lower prices and better cash flow in different markets.
• 🌐 They manage their investments remotely, with Sarah owning properties as far as 8000 miles away while living in New Zealand.
• 📈 Key metrics for choosing a market include population growth, job growth, wage and income growth, rent rate increase, and home value appreciation.
• 💼 Industry diversification is important to ensure a stable tenant demand and mitigate risks associated with market reliance on a single industry.
• 🤝 Building a reliable on-the-ground team is crucial for managing properties from a distance, with referrals from experienced investors being a valuable source.
• 🔍 Both Sarah and Sulway rely heavily on investor-friendly agents for deal flow, with about 75% of their properties coming through such agents.
• 📊 They also explore direct-to-seller marketing strategies like mailers, cold calls, and social media to find deals with potentially higher discounts.
• 🚀 To grow an agent network, start with online research and networking on platforms like BiggerPockets, and leverage referrals from solid team members.
• 🛑 Don't wait until everything is figured out to start investing; embrace problem-solving and take action despite initial uncertainty.
• 💪 Function in the fear: Investing, especially out-of-state, can be intimidating, but taking the leap and creating processes can lead to success.
• 🌍 Real estate investments have allowed Sarah and Sulway to travel full-time, demonstrating that with the right approach, it's possible to balance lifestyle and investment goals.

Q & A

What is the main topic of the video?

The main topic of the video is about investing in out-of-state real estate properties, particularly focusing on how to make the jump to investing out of state, picking a market, and building a team remotely.

Why did Sarah Weaver start investing out of state?

Sarah Weaver started investing out of state because she couldn't find properties that cash flowed in her home market of San Francisco Bay Area due to high home prices.

How far away did Sarah Weaver buy her first property when she moved to New Zealand?

Sarah Weaver bought properties in Nebraska when she moved to New Zealand, which is approximately 8,000 miles away.

What is Sulway's experience with investing out of state?

Sulway started investing out of state by buying properties 900 miles away and later scaled up to owning 19 units in four states.

What metrics does Sarah use to pick a real estate market?

Sarah uses metrics such as population growth, job growth, wage and income growth, rent rate increase, and home value increase to pick a real estate market.

What is Sulway's strategy for finding deals in real estate?

Sulway relies heavily on investor-friendly agents for finding deals, with 75% of her portfolio coming from such agents, half of which were off-market deals.

How did Sulway expand her agent network?

Sulway expanded her agent network by scouring the internet for investor-friendly agents, networking on forums like BiggerPockets, and building relationships with experienced investors who could recommend agents.

What is the importance of having an on-the-ground team when investing out of state?

Having an on-the-ground team is crucial for managing properties, ensuring they are well taken care of, and for alleviating the fear and anxiety associated with investing in a market far away.

What advice does Sarah give to those interested in investing out of state?

Sarah advises not to wait until everything is figured out to get started and to function in the fear, taking action despite the potential for feeling scared.

What is Sulway's biggest piece of advice for people looking to start investing out of state?

Sulway's advice is to not wait until feeling completely ready and to start taking steps towards investing out of state, even if it feels scary.

How did the speakers manage to invest in real estate while traveling?

The speakers managed to invest in real estate while traveling by creating processes and systems that work for them, allowing them to invest out of state and maintain their properties remotely.

Outlines

00:00

🏘️ Investing in Out-of-State Properties

Sarah Weaver and Sulway discuss their experiences investing in rental properties from a distance. They share how they made the transition to out-of-state investing, offering tips and tricks on selecting a market and building a team remotely. Both investors emphasize the importance of analyzing market trends such as population growth, job growth, wage and income growth, rent rate increase, and home value appreciation. They also highlight the role of investor-friendly agents in finding deals and building a reliable on-the-ground team, which is crucial for managing properties from afar.

05:02

🔍 Strategies for Finding Real Estate Deals

The speakers delve into their strategies for finding real estate deals, with a significant portion of their portfolio coming from investor-friendly agents, both on and off the market. They discuss the importance of building a network of reliable professionals, including agents, property managers, and contractors, through online forums and personal referrals. The summary also touches on the value of direct-to-seller marketing for expanding deal flow and emphasizes the necessity of taking action despite fear and uncertainty when investing out of state.

10:03

🎵 Embracing the Journey of Fear in Real Estate Investment

This paragraph, marked by the presence of music, seems to be a conclusion or transitional segment in the video script, possibly featuring a motivational or reflective message about embracing the journey of fear in real estate investment. It may include an applause or a musical interlude, indicating a pause or a shift in the presentation's tone. The exact content is not provided, but it likely serves to inspire viewers to take action in their own real estate endeavors.

Keywords

💡Out-of-state investing

Out-of-state investing refers to the practice of purchasing and managing real estate properties in a state or region different from the investor's primary residence. This concept is central to the video's theme, as both Sarah and Sulway discuss their experiences in investing in properties from distances ranging from 900 miles to as far as 8,000 miles away. They share their strategies for overcoming the challenges of managing properties remotely, such as building a reliable team and leveraging technology.

💡Cash flow

Cash flow in real estate refers to the net amount of money that remains after all expenses, including mortgage payments, taxes, and maintenance costs, have been paid. It is a critical concept in the video, as both Sarah and Sulway emphasize the importance of investing in properties that generate positive cash flow. They chose to invest out-of-state because they found better cash flow opportunities in markets with lower property prices compared to their home states.

💡Investor-friendly agents

Investor-friendly agents are real estate professionals who specialize in working with investors and are familiar with investment properties. In the video, both Sarah and Sulway credit a significant portion of their portfolios to deals brought to them by such agents. They highlight the importance of building a network of investor-friendly agents to find deals, both on and off the market, which is crucial for out-of-state investing.

💡MLS (Multiple Listing Service)

MLS is a platform used by real estate agents to list, share, and sell properties. It is a key resource for real estate investors looking for potential properties. In the video, Sulway mentions that 50% of her portfolio was acquired through MLS listings, indicating the importance of this platform in finding investment opportunities, even for out-of-state investors.

💡Off-market deals

Off-market deals refer to real estate transactions that are not publicly listed on the MLS or other public platforms. These deals are often negotiated privately and can offer better terms or discounts. In the script, Sulway mentions that half of her portfolio consists of off-market deals, showing that these types of deals are an important part of an out-of-state investor's strategy.

💡Population growth

Population growth is a key metric used by real estate investors to identify markets with potential for increased demand for housing. In the video, Sarah discusses using population growth as one of her criteria for selecting investment markets, as it indicates a growing number of potential tenants and a healthy rental market.

💡Job growth

Job growth is another important economic indicator that investors like Sarah and Sulway consider when choosing investment markets. It reflects the availability of employment opportunities in an area, which can attract more residents and, consequently, increase the demand for rental properties.

💡Wage and income growth

Wage and income growth are metrics that indicate the financial health of a region's residents. In the context of the video, Sarah uses this metric to assess the ability of potential tenants to pay higher rents, which is essential for ensuring a property's cash flow and long-term viability as an investment.

💡Rent rate increase

Rent rate increase refers to the upward trend in rental prices within a market. Sarah mentions this as one of her metrics for selecting investment markets, as it suggests that landlords can raise rents over time, improving the return on investment.

💡Home value increase

Home value increase, or appreciation, is the rise in the market value of a property over time. While Sarah and Sulway prioritize cash flow, they also recognize the importance of investing in properties that are likely to appreciate in value, as this can enhance the overall return on investment.

💡Industry diversification

Industry diversification in the context of real estate investing refers to the presence of multiple industries within a market, reducing the risk of economic downturns in any single sector affecting the rental demand. Sulway mentions this as a criterion for selecting investment markets, emphasizing the importance of a stable and diverse economic base to support tenant demand.

💡Competitive advantage

A competitive advantage in real estate investing is a unique benefit or resource that an investor has, such as local knowledge or a network of industry contacts. In the video, Sarah discusses how having a competitive advantage in Cincinnati, through a network of investors, helped her make informed investment decisions and build confidence in her out-of-state investments.

💡Direct to seller marketing

Direct to seller marketing involves reaching out to property owners directly, bypassing traditional real estate listings. Sulway mentions using this strategy to increase her deal flow and find properties with steeper discounts. This approach requires more effort but can be effective for out-of-state investors looking to secure better deals.

💡Referrals

Referrals in the context of real estate investing are recommendations from trusted sources, such as experienced investors or satisfied clients, for service providers like agents, property managers, or contractors. Both Sarah and Sulway emphasize the importance of referrals in building a reliable on-the-ground team, which is crucial for managing out-of-state properties.

💡Functioning in fear

Functioning in fear is the concept of taking action despite feeling scared or uncertain. Sarah and Sulway both advise viewers to invest out of state even if they feel fear, as taking action is the first step towards building experience and confidence. This concept is a key takeaway from the video, encouraging viewers to overcome their fears and start their investing journey.

Highlights

Sarah and Sulway share their experiences investing in out-of-state properties while traveling full-time.

Sarah discusses the decision to invest out of state due to high home prices in the San Francisco Bay Area.

Sulway explains how they scaled their investment quickly, from three to 15 units in 90 days.

The importance of having an investor-friendly agent in finding deals in new markets.

Sarah's criteria for picking investment markets include population, job, wage growth, and rent rate increase.

Sulway prioritized cash flow over appreciation when choosing Cincinnati for investment.

The value of industry diversification in ensuring a healthy tenant demand.

Sarah emphasizes the personal aspect of picking a market and the importance of taking action despite analysis paralysis.

Sulway's advice on leveraging competitive advantages, such as personal connections or local knowledge, in new markets.

The significance of deal flow and how to secure it through investor-friendly agents.

Sarah and Sulway's reliance on agents for the majority of their property deals, both on and off the MLS.

Sulway's diversification into direct-to-seller marketing to increase deal flow and find better discounts.

Building a strong on-the-ground team through referrals from experienced investors in the market.

The importance of referrals in growing one's network and overcoming the fear of out-of-state investing.

Sarah's advice on not waiting for perfect conditions but taking action despite fear.

Sulway's encouragement to function in fear and start the investment process without feeling completely ready.

The journey of scaling from owning no properties to multiple units across states over time.

Sarah and Sulway's lifestyle of traveling the world while managing their rental properties.

Transcripts

do you live in an expensive market or

want to travel full-time but you also

want to own cash flowing rentals in this

video we'll show you how we made the

jump to investing out of state and share

tips and tricks on picking a market and

building a team from thousands of miles

away

i'm sarah weaver and i'm sulway and

we're in guatemala

today we're going to be going over why

and how we invest long distance and we

mean long distance yes i bought my

properties from 2500 miles away what

about you sarah i started out small i

bought from 900 miles away and then when

i moved to new zealand i bought

properties in nebraska making that 8 000

miles away and today we're going to show

you how we did it that is so awesome

sarah i cannot wait to hear more about

it but as always make sure to like and

subscribe to this channel for more

videos like this and follow us on

instagram at lattes melisa's and sarah d

weaver if you stay to the very end we'll

be sharing our biggest pieces of advice

for people who are looking to start

investing at a state as well

absolutely and solely with interest

rates the way that they are rising so

quickly i'm getting asked more than ever

sarah how do you invest out of state me

too so i'm from san francisco bay area

where home prices are typically over a

million dollars and when i started

investing at 22 i didn't have the

capital or income to qualify for a house

that price

i decided that it made more sense for me

to look at a state where the prices were

a little bit lower and the cash flow was

a lot better i was in the same boat i

was living in denver colorado and at my

price point i couldn't find anything

that cash flowed so i bought my first

property from 10 hours away in kansas

city

and you scaled really quickly after that

first property right you know what's

really interesting is actually didn't i

bought that property

two years later bought another property

but then in spring of 2021 that is when

i scaled really quickly i went from

three units to 15 units in 90 days and

now i own 19 units in four states or

states why so many

you know it's interesting i didn't

intend on owning in four states it just

kind of happened that way i met an

investor friendly agent in a market that

i wasn't investing in and next thing i

knew i owned in that market and then i

did it again in des moines and so that

wasn't my intention but it is the

investor friendly agent that led me to

my market what about you i scaled fairly

quickly i went from

no properties to 27 units within two

years mostly through

investor friendly agents as well so i

chose to invest in cincinnati because i

had a small network of investors who

were able to introduce me to their team

and that gave me a lot of the confidence

when i was buying my first deal out of

state and on that note let's go ahead

and let's dive into the good stuff today

we want to talk about how we picked our

market but then more importantly how we

find amazing deals in that market even

from so far away and i know that we

credit a lot of our success to the on

the ground teams so we'll also cover how

we build those

let's start with picking a market sarah

how did you settle on yours you know i

have these certain metrics so i'll start

with those i have population growth i

want to see that population is

increasing more people are moving there

i want to see that there's job growth

that there's more jobs in that market

for those people moving there then i

want to see wage and income growth

because i want to see that they're

getting paid more so that i can increase

rent and that's my other metric is rent

rate increase i want to see that other

landlords are charging more in rent so

that i can do the same thing and then

last but not least is home value

increase i want to see that home are

increasing i mean we are investing right

and so i want my homes to appreciate and

so solely that's one of my questions for

you is

when you invested outside of california

i mean california is one of the most

appreciating markets ever and so why did

you choose cincinnati so i was actually

prioritizing cash flow over appreciation

and that's why i decided to look out of

state instead of investing locally in

california

me too that's excellent any other

metrics that you use

yeah so all those metrics are great i

look at them as well the one thing i'd

add is industry diversification so when

i'm looking for

a market i'm looking for one that has

multiple industries so not just a an

army base or one single hospital or

factory so that if that shut down you

would lose all of your tenant demand so

making sure you have multiple industries

that support a healthy tenant demand

you're absolutely right and here's the

thing solely and i we can sit on the

screen and we can say these are the

metrics that we look at but at the end

of the day you you have to just pick a

market you could

go into analysis paralysis googling best

market for this and best market for that

but at the end of the day you just have

to pick something do you agree

i totally agree picking market is very

personal as well so what i like to look

for is competitive advantage i had a

competitive advantage in cincinnati

because i had a network of investors who

were willing to introduce me to their

team and so whether you went to school

somewhere and you know the market really

well or you have a sister or friend

who's a property manager and can

introduce you to some parts of the

market or look after your properties i

think that's actually a great place to

start to start to narrow down the

markets that you're looking at i love it

because even if you have the best market

the next step is do you have deal flow

that's a great point sarah that brings

us right into the next portion of

today's show how we find deals so i know

you're getting great deals in your inbox

daily where are most of those coming

from

i rely really heavily on investor

friendly agents it turns out 75 of my

portfolio was actually brought to me

from an investor friendly agent and of

that 50 of that was on the mls and half

of that was what we call off market

deals what about you solely where are

you finding deals

it's funny because my percentages are

probably very similar 75 from agents 50

off market and 50 on market which a lot

of people think you can't find good

deals these days i've been diversifying

recently a little bit to just direct to

seller marketing so

mailers cold calls a little bit of

facebook marketing which i call direct

to seller and although it takes a little

bit more work you usually find a little

steeper discounts and so i like to just

increase my deal flow by adding in those

marketing avenues as well so since

you've been finding most of your deals

through agents what have you found to be

the best way to grow your agent network

absolutely and keep in mind you guys i'm

growing my my network or on the ground

team from far away i'm still not flying

to this market and so i go to the

internet and i scoured the internet for

investor friendly agents i started in

the bigger pockets forums

networking with other experienced

investors and building relationships

with them asking them who they recommend

to use and then i don't stop there i ask

for

agents property managers contractors

general contractors cleaners

photographers and a lot more i

definitely agree on the referral front

especially from experienced investors in

the market that's how i've built the

majority of my team so one of my

favorite sayings is rockstars no rock

stars and so once you find that first

solid team member usually people start

with investor friendly agents because

they're well marketed your referral lab

just definitely begins to grow once you

find that solid team it takes a lot of

the fear and anxiety out of out of state

investing because you know that there

are solid people looking after your

properties for you

absolutely i couldn't agree more

referrals are so important and for those

of that are interested in investing out

of state solely what's one of your

biggest pieces of advice i would say

don't wait until you got everything

figured out to get started i know i

definitely did not know what i was doing

at first at all but i quickly became a

problem solver and just put one foot in

front of the next you're never going to

feel 100 ready to take that leap so at

some point you just got to do it oh i

couldn't agree more and absolutely

slowly you're one of the best problem

solvers that i know

my advice is really similar i call it

function in the fear

for some investing can be scary and then

investing out of state can be even

scarier and i just tell people with

kindness just do it anyway so function

in the fear because i can't tell you i

get so many messages solely that are

like sarah you're so lucky you get to

travel how do you do it and i really

want to write back i buy a plane ticket

and then i get messages that are like

wow you're so lucky you own so many

rental properties how did you do it and

i want to say i bought rental properties

and so my advice is even if you're

scared do it anyway while investing out

of states can be scary for some of you

i'm hoping that hearing how sully and i

function in the fear create processes

and systems that work for us you now

have the confidence to invest in

out-of-state as well

and remember we didn't start out with 20

units it took time to get here to work

to build those processes but it all

started with a decision to take action

so through our real estate investments

we're able to travel full-time if we

want to sarah has been doing it for

three and a half years and i just

started thanks for joining us today and

follow us along on instagram to see how

we travel the world and invest out of

state

[Applause]

[Music]

you