9 Questions with OB from Out of State Investor

9 Questions with OB from Out of State Investor

Originally I started this series as “Wide Web Wednesdays” but I’ve developed it a bit and changed it to “9 questions”. As I develop the series I expect it to go through further revisions.

Please check out all interviews that I have done.

If you are interested in being interviewed for this series, please contact me with answers to the questions.

Now, without any further delay, I’d like to introduce O’brian Rossi (OB) from Out of State Investor.

Where do you live?

Los Angeles

What is your full time job?

Aerospace engineer

What is your investment strategy?

I’m a buy and hold investor focused on single family homes that cash flow. I like to use leverage given the low interest rates and while I have the income from a full time job. I do use my own cash to fund down payments and rehab costs.

Another strategy of which I plan to use is make all cash purchases that will allow me to acquire better deals, but then perform a cash-out refinance so that I can reuse the cash for future deals.

I target homes that need to be fixed up so that properties can be picked up at a discount and equity is gained from day one. My strategy is to hold the properties for a long time so that I can fully reap the benefits of holding income-producing rental property. That is, monthly cash flow, equity pay down by the tenant, appreciation, and tax benefits.

What’s your plan to achieve financial Independence?

Financial independence is when my passive income exceeds my expenses.

My plan is slow, but simple. I plan to continue adding cash flowing rental properties (single family and multifamily) located near good schools, in markets with a growing population, and a strong local economy. The cash flow from these rentals will first go towards building critical cash reserves to cover expected vacancies and capital expenditures.

Once reserves are met, the total cash flow from my portfolio will go partly toward making an additional principal payment on 1 property and the rest will be saved for future rental investments.

The cash flow will snowball, slowly at first both from adding cash flow properties and by paying mortgages down one at a time. Eventually, passive income will exceed expenses and financial independence will be achieved.

What’s your website?

www.outofstateinvestor.com

What is unique about your site (why should people read it)?

I live in an expensive market and have a full-time job, but I didn’t let that stop me from investing in real estate on the side.

When I first started looking for deals in my own market and I recommend anyone getting started to first look in your own backyard, my home market had 2 major problems.

First, it didn’t cash flow after accounting for repairs, maintenance, and vacancy loss. Sometimes it didn’t even cash flow after the PITI payment!

The second problem was that my market was so expensive that a single down payment was easily $100k! Even as a beginning investor at the time, I knew that putting down all of my savings on a rental that doesn’t cash flow was not smart.

So I slowly researched markets further away from home until I was easily a few hours away given the LA traffic. At that point, I realized I could very well hop on a short plane ride and invest in a great market with much better returns.

Once this realization sunk in, I began researching out-of-state markets, networked with other out-of-state investors, and eventually flew out to see for myself.

What are your favorite 3 pieces of content on your site?

1- I have a 2-part series on buy and hold numbers for the beginning investor. I introduce the concepts of cash flow and cash-on-cash return with a lot of helpful tips worth reading.

http://www.outofstateinvestor.com/cash-on-cash-return/

2- Investors often ask me how I research a new market and honestly, it can be learned from the internet. I wrote a very detailed case study on a sample CA market where I looked at various metrics such as population, unemployment, and the major employers. I also show a sample rental analysis. For anyone looking to learn the process of studying a market, I recommend checking this post out.

http://www.outofstateinvestor.com/temecula-real-estate-market/ 

3-  I just began an interview series on my blog where I have other out-of-state investors share their strategies and experience with investing from afar. This is definitely becoming one of my favorite pieces of content because I love hearing how others got started and how they invest.

Most recent interview:

http://www.outofstateinvestor.com/interview-2-rehabbing-out-of-state-with-hybrid-turnkeys/

What is your favorite investing/business book? Why?

“The $100 Startup” by Chris Guillebeau

It’s a modern day roadmap for anyone choosing to go into business for themselves. It’s filled with practical checklists and models, but what I enjoyed most were the inspiring stories of average Joes who got past their fears and just launched a business.

What Is The Biggest Piece Of Advice You Could Give To Someone Just Getting Started?

Get educated. Real estate investing education is more accessible now than ever in history. There are books, podcasts, online websites and forums such as Bigger Pockets, and real estate meet-ups that are all freely available. Whatever your preferred mode of learning, you can find what you need to learn how to invest.

By | 2016-12-07T08:41:44+00:00 September 30th, 2016|Categories: Interviews|7 Comments

About the Author:

An investor that reached financial independence at the age of 30, Eric has been seen on Forbes, Trulia, WiseBread, TheStreet, and other financial publications.

7 Comments

  1. Brian - Rental Mindset September 30, 2016 at 6:48 pm - Reply

    OB – it is awesome you did so much analysis locally, but didn’t give up when you couldn’t get the numbers to work. So many people would have stopped there and concluded it is impossible for them to be a real estate investor.

    Thanks for sharing!

    -Brian – Rental Mindset

    • OB @ Out of State Investor October 1, 2016 at 5:45 pm - Reply

      Happy to share and thanks for the opportunity Eric! Speaking of living in an expensive area, but finding a way to still invest in real estate. You’ve done an awesome job finding an out of state market too!

      • Eric Bowlin October 1, 2016 at 5:56 pm - Reply

        Thanks OB! For me, it was more about finding what type of property worked in my market.

        Single family residential simply doesn’t work in that market, but multi-family properties had strong numbers.

  2. George @ Properly September 30, 2016 at 10:17 pm - Reply

    Managing out of state rentals will only keep getting easier as technology improves. I should know since my business is to empower landlords to self manage rentals :). Great advice on the education – there are so many resources and tools on the internet (i.e. bloggers such as OB and Eric).

    • OB @ Out of State Investor October 1, 2016 at 5:35 pm - Reply

      Great point George. More agents and real estate professionals are offering VR services to buyers and investors. Gary Vee even spoke this summer at the Inman Connect conference about how tech is impacting real estate. 10 years out, I think investing out of state will only improve.

  3. Michael @ Financially Alert October 1, 2016 at 9:56 am - Reply

    Great interview, OB! More proof for CA investors that think it can’t be done. Remote real estate investing will only grow from here. Other than KC, what other markets are you looking in? What’s you’re thoughts on the current market you’re in?

    • OB @ Out of State Investor October 1, 2016 at 5:54 pm - Reply

      Thanks Michael! There are several markets that have strong fundamentals (e.g. growing population, strong jobs, affordable housing with high rent to price ratios), but just as critical is finding a local team that you trust. I’m focused only in KC now because I have a team there, but I’ve thought about diversifying into other markets in the future. Currently, cap rates there have been getting compressed a bit, indicating that buyers have been paying more for the same cash flow stream. So it’s been harder to find deals just off the MLS and requires a little more work in finding the deals.

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