Out-of-state investing · with Heather Marchant
And I look at other people's rental deals for a living. I pass on most of them.
Why I do this
They call because they want the day when money stops being the thing they think about. The house is just how you get there.
Here is what they say when I ask them why.
Not one of them has ever said "I want to own a house 1,500 miles away." That's just where the math went.
Where I live · Salt Lake County, Utah
Rent and taxes are estimates for a house this size where I live. Utah taxes a rental on its full value and a house you live in on 55% of it, so the tax line on a rental here is nearly double.
My first rental · 506 Suffolk Court, Fayetteville NC · an 80s build
I've never seen this house. I owned it eight years and never once stood in front of it.
It takes twice the cash to collect less every month than I did back then. I did not have to be clever in that year. Everybody buying now does.
Nothing about the asset changed. Four returns, a bank funding most of it, a tenant covering the note. What changed is that the place you happen to live stopped being a place where that arithmetic works.
Same wallet. Same week
One house. $135,000 down. Minus $8,988 for the year, which is a 6.7% loss before anything breaks.
Two houses. $135,480 down. Plus $14,076 for the year, which is 10.4%. Both are on my website right now.
Same money, same month, same person. A swing of $1,922 every month, and the only thing that changed is the zip code.
Before we go looking
A note pays you one way. A dividend stock pays two. This one pays four at the same time, and a bank will fund 80% of it. Nobody lends you 80% to buy a stock.
Most people count the first one and stop.
The deals didn't disappear. They moved somewhere you don't live, and they stopped being obvious.
So let's find out how good you are at this
All four crossed my desk. You get the photo and the numbers, which is all I got. I'm not telling you what I did until the end.
Same money on all four: 20% down, interest only. How you pay for them is its own conversation, and it comes later.
House A
$4,872 a year ÷ $57,080 in = 8.5% ROI. That is the number you compare against everything else you own.
House B
Your turn. Work out the return before I turn the slide.
House C
Same again, and no help on this one. This is a house in a market like the one you live in.
House D
Last one. Neither number you need is on this card.
Everything a seller tells you is a claim. These are the three places you check.
Three of your four died, one at each filter. The one that lived is on my website right now.
A town nobody is shouting about
By the time the press calls a market hot, the window closed.
I own a short-term rental there. It stays full, and the stays run a month or more. That is not tourism, that is crews.
Forty minutes from Oklahoma City, fifty from Lawton. In the hiring radius of both, outside the headlines.
House A
361 Bay Meadows Dr, Aiken, SC
So I passed. Paper doesn't know how long the last one took to rent.
The seller wrote this page. The seller wants to sell it.
On the finished house, not the empty lot.
A signed lease, not a range.
Quoted. Never estimated.
Last. Not first.
A builder I've used for years told me "rents in the $2,050 to $2,150 range." Nobody signs a range. The lease came in at the bottom of it, and the return on the front page was worked off the top.
House B
6317 Lemongrass Dr, Columbus, GA
A range built from dollars per square foot. Nobody had rented this house, or one like it.
Most 3/2s in that zip go $1,100 to $1,500. One of them is 2,002 sq ft at $1,500. Ours is 1,410. Cash flow goes +$154 to −$46.
Even at the top of the range it was a 5.6% cap and 3.8% ROI. It barely worked in the version the seller wrote. And on a different deal, in Texas: a client of mine signed, tried to cancel two days later, and lost $10,000 to one line on page 117: “Seller does not return earnest money under any circumstances for investors or 2nd home purchasers.”
Six of mine. Every one of them cost somebody money before I learned to ask it.
Hands up: which one would you never have asked?
The rest of them
The one nobody thought to ask is the one that costs you.
House C
1733 NE 28th St, Renton, WA
Positive from day one.
One meter. The owner pays water, sewer, gas and electric for both units. About $420 a month.
And that $4,461 was Zillow's guess, not a lease. He owns the rental across the street, and it gets $3,708, under its own estimate. A converted house, so the question was worth asking. On new construction I never ask it.
House D
3308 S 23rd St, Chickasha, OK · +$687 a month
Boring is what survives three filters.
The part everybody worries about
The arithmetic is the easy part. What people actually ask me is who turns the key, who takes the call at midnight, and who is standing there when I am not.
I have never stood in front of my first rental. Eight years, and the team did the standing.
Every seat an out-of-state deal needs. I will point you at all of them.
The question everybody is waiting to ask
You never write me a check.
All four went through all three filters
Perry and Yukon are the two I put against the house on my street. Chickasha is the one you just voted on.
The two that are not finished yet print the whole rent range, not the top of it.
If you want me to do this part
Same three filters. I just run them before you ever see the house.
You never hear about the ones that died. That's the part you're paying nothing for.
One thing to take with you
Now ask me anything. Shout out a house you've been watching and we'll run all three on it right now.
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Not in the running order
The fifth deal from the Money Moves set. Both sides already leased at $3,990, nothing estimated. Makes the survivors two instead of one, and lets the close say "nothing went wrong, twice."
Right now the builder's $2,050 to $2,150 is a pull quote on filter two. Money Moves gives it a whole slide with the bar and the mark at the bottom end. Stronger, and it costs a slide.
Phones vote instead of hands, questions land on the screen, emails land in the portal. The layer exists and is live for Money Moves. Deliberately not wired here yet.
uvestlycalculator.pages.dev. Hand the room the sliders and have them price a house from their own street, live. The strongest version of slide 4 and it needs a phone in every hand.
The local house on slides 4 and 7 is the only estimate in the deck. Everything else is off a real proforma.