Out of state market for first time investor

12 Replies

Hello BP community,

I hope everyone had a great Thanksgiving! I am a newbie investor looking to make to my first OOS real estate investment. 

I wanted to get insights from this community on the best markets to invest out of state. I am primarily based in Seattle and I am looking to diversify by investing outside of my resident state. I want to build a balanced portfolio of appreciating and cash flow properties and I would like to start off with an appreciation property as my immediate focus is to build long-term wealth and also because most markets I am interested in seem to have properties in the $200k-$350k range which falls within the range for my budget (I have ~60k-70k to invest). Being a newbie investor, I do not have much insight into flipping homes or rehabbing a property and thereby looking into markets where I can get a recently build (max 5 years old)/new property that does not require additional work to rent out. As an alternative I have been looking into turnkey properties too but again I am unsure which market is the ideal place to start. Ideally, I would want the property to be cash flow positive just enough to cover all the expenses (mortgage, taxes, property mgmt) with a buffer in case the market cools down in the coming years. Given how crazy the market's been recently i do not think the craze will sustain over a long period and if the market cools down in some areas it makes sense to invest in a property that retains its rental value.

Based on initial research, it seems like Charlotte fits the criteria as it has seen decent population growth and appreciation in the recent years and is my first choice but I haven't had any luck finding properties that checks the boxes. Additionally, I am not seeing the same enthusiasm in this forum (or maybe i have missed the posts) towards Charlotte and I have also read enough posts about how the inventory is bought up by the big funds and there is little to no options to invest within and around Charlotte that meets the criteria i shared above. I would be glad to be proven wrong if anyone else thinks otherwise. I have seen a lot of chatter around the Midwest markets such as Kansas City, Columbus, Indianapolis but most people who have acquired property seem to boast about its cash flow strength rather than appreciation. I am also conscious of the impact of climate change on our country's demographic and therefore do not feel confident about investing in Florida as I have read some urban planning research papers that predict in the long-term, half the state will be underwater along with Louisiana (20 years out). I don't think that leaves with me a lot of options so any guidance here would be really helpful!

I have made a lot of assumptions here and I might as well be completely wrong about all of them. Looking forward to get some feedback/guidance from the experts here to boost/re-orient my thought process and also hoping to network with individuals who can help me with my investment goals! Thanks in advance!

Originally posted by @Chirag Shetty :

Hello BP community,

I hope everyone had a great Thanksgiving! I am a newbie investor looking to make to my first OOS real estate investment. 

I wanted to get insights from this community on the best markets to invest out of state. I am primarily based in Seattle and I am looking to diversify by investing outside of my resident state. I want to build a balanced portfolio of appreciating and cash flow properties and I would like to start off with an appreciation property as my immediate focus is to build long-term wealth and also because most markets I am interested in seem to have properties in the $200k-$350k range which falls within the range for my budget (I have ~60k-70k to invest). Being a newbie investor, I do not have much insight into flipping homes or rehabbing a property and thereby looking into markets where I can get a recently build (max 5 years old)/new property that does not require additional work to rent out. As an alternative I have been looking into turnkey properties too but again I am unsure which market is the ideal place to start. Ideally, I would want the property to be cash flow positive just enough to cover all the expenses (mortgage, taxes, property mgmt) with a buffer in case the market cools down in the coming years. Given how crazy the market's been recently i do not think the craze will sustain over a long period and if the market cools down in some areas it makes sense to invest in a property that retains its rental value.

Based on initial research, it seems like Charlotte fits the criteria as it has seen decent population growth and appreciation in the recent years and is my first choice but I haven't had any luck finding properties that checks the boxes. Additionally, I am not seeing the same enthusiasm in this forum (or maybe i have missed the posts) towards Charlotte and I have also read enough posts about how the inventory is bought up by the big funds and there is little to no options to invest within and around Charlotte that meets the criteria i shared above. I would be glad to be proven wrong if anyone else thinks otherwise. I have seen a lot of chatter around the Midwest markets such as Kansas City, Columbus, Indianapolis but most people who have acquired property seem to boast about its cash flow strength rather than appreciation. I am also conscious of the impact of climate change on our country's demographic and therefore do not feel confident about investing in Florida as I have read some urban planning research papers that predict in the long-term, half the state will be underwater along with Louisiana (20 years out). I don't think that leaves with me a lot of options so any guidance here would be really helpful!

I have made a lot of assumptions here and I might as well be completely wrong about all of them. Looking forward to get some feedback/guidance from the experts here to boost/re-orient my thought process and also hoping to network with individuals who can help me with my investment goals! Thanks in advance!

 Columbus, Ohio has seen great appreciation due to its increasing job and population growth.

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@Chirag Shetty

why dont you check your local area ( maybe an hour out from seattle) for a duplex type of investment. Most of the OOS markets have a lot of appreciation already and we dont know when a correction may take place.. a local property makes more logic than one a few states away in todays marketplace. 

Real estate ownership is not as passive or turnkey as the forums might lead you to believe.  Exhaust all your options in the local area before you go OOS and if you do decide to go OOS route, you should be able to scale to 3 to five units in next couple of years..

I started in Seattle too because I lived there but eventually went oos in 2012 for cashflow.

Let me know if you have specific questions.

Birmingham, Atlanta, Indianapolis, Gary (IN), St Louis, Huntsville, Phoenix/Tempe/Mesa, Kansas City, Memphis, Little Rock, Indianapolis, Harrisburg (PA), Greenville, Jacksonville, Tampa, Houston, San Antonio, Little Rock, Milwaukee, Cincinnati, Dayton, Cleveland, Ohio, or other secondary or tertiary markets all work.

@Chirag Shetty Cincinnati, Ohio has been seeing a ton of out of state investors the past few years. We still have 1% or better price to rent ratio deals here in many of the C class areas. If you have any questions feel free to reach out, happy to chat! Best of luck! 

@Chirag Shetty  
You were definitely on the right track when you said Columbus. It's a great place to invest out of state because of the population growth and job opportunities we have. Also, the market here in Columbus is like a nice hybrid of good cash flow and good appreciation. Best of both worlds. 

The sun belt continues to provide opportunities. Markets like Charlotte (as you mentioned), Atlanta, Dallas, Tampa, Jacksonville, Orlando have all seen growth in categories like population, job, income and rent. Tertiary markets like Chattanooga, Winston Salem, Greensboro, Huntsville and Birmingham have also benefited from this major market growth as well. 

Hi Chirag! My personal recommendation is to find a market that you are familiar with or at least have some knowledge of. Somewhere close to where you currently live or have lived or visited before. Seattle might be too expensive for you but there are smaller suburbs in Washington State that are much cheaper. The nice thing about Washington state is that property taxes are fairly low! 

I was browsing different markets across the country recently and after a while, I realized that even though some are cheaper than where I currently live (Salem Oregon), I'm not convinced that any of them are better than here so I've decided to just focus on the market here instead. 

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