Out of State rental purchase - recommended cities?

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Out of State rental purchase - recommended cities?

Rajiv Bm
Member since 2021 · 5 posts · 6 votes

I've decided to look to buy my first true investment property starting out with Out of State rental purchases (i am based out of California)

I'm having a difficult time deciding where I should be looking to buy. I'm considering either a small multifamily (duplex or four-plex) or perhaps a single family that will be easy to rent and cash flow. 

For those who invested out of state, looking for some guidance how did you decide on your market? 

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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
3y

@Rajiv Bm

I am a real estate agent and investor in the Houston market.

Katy, Cypress, Spring, some parts of Houston, Conroe, Tomball, Pearland are great markets.

Rent growth and appreciation is steady.

These cities tend to command quality tenants, and they have great schools.

Good Luck!

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  • Christian EhlersBusiness Member
    Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
    3y

    Hey @Rajiv Bm I would first ask why you are looking to buy out of state in the first place and what your goals are?

    If you already live in California and are paying high rent (or almost any rent for that matter) I would first recommend learning the ropes by househacking in your area. California has high prices but the appreciation (in general) is HUGE for growing your wealth over time. Cashflow won't be great to start but 5-10 years from now you won't regret it if you buy right. Plus if you buy out of state I'm assuming you won't be living in the property, so your down payment will increase dramatically. 

    If you decide to invest out of state anyways like I did, I would either look for markets you like that you have "boots on the ground" in, either family/friends, previous agents or contractors or somebody that you know personally there. If not I would look for a market where the strategy you want to use is more likely to work, and even if out of state investing its likely easier to stay on the west coast (same time zones, easier to travel there if needed, etc). Find a market you like, assemble your team and just go for it!

    [email protected]978-396-9939
    2Reply
  • Rick MartinPro Member
    Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
    3y

    @Rajiv Bm one of my first long distance, out-of-state investments was BRRRRing a Quad. Looking back, it was a heavy lift, and I learned a few lessons maybe the hard way, but it's always cash flowed. I've since gone on to large MF, but I still have that thing.

    1Reply
  • Rajiv Bm
    OP
    Member since 2021 · 5 posts · 6 votes
    3y

    Thanks @Christian Ehlers. I don't plan to move out of California. Looking primarily from an investment perspective. My primary goal is to invest with a target of cash flow (start with one investment) and of course expand it if things go well.

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Killeen Texas

    1Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    3y

    @Rajiv Bm

    I am a real estate agent and investor in the Houston market.

    Katy, Cypress, Spring, some parts of Houston, Conroe, Tomball, Pearland are great markets.

    Rent growth and appreciation is steady.

    These cities tend to command quality tenants, and they have great schools.

    Good Luck!

    [email protected]832-776-9582Podcast Guest on Show #469
    NETWORTH BUILDERS5236 Reviews
    WebsiteView Page
    3Reply
  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y

    I am from the bay area of California and I have been investing out of state. In the beginning, you can consider a good turnkey provider to reduce your hassle. 

    Message me and we can connect, I will share my experience. 

    1Reply
  • Steve Donovan
    Rental Property Investor · Green Bay, WI · Member since 2016 · 150 posts · 94 votes
    3y

    Hello @Rajiv Bm  You should definitely look to the Midwest for your investments.  There are many localities that offer great cashflows.  I'm happy to help if you'd like.  All the best in your investing future!

    1Reply
  • Account Closed
    Investor · Denver, CO · Member since 2022 · 184 posts · 78 votes
    3y

    I am an acquisitions analyst at a real estate investment advisory firm based in Denver. We invest ourselves and for clients in two midwestern markets.

    If you'd like to discuss these, shoot me a DM. More than happy to talk about these markets and why we like them. 

    1Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    3y

    Hi Rajiv, I have found value investing in Cleveland, OH because it is home to Cleveland Clinic, lot of good neighborhoods, landlord friendly laws, stable appreciation and good cash flowing properties. There are also abundant opportunities for small multi family and SFH. I have been able to scale up to 12 doors in 2 years so definitely recommend this area. Feel free to reach out and we can discuss.

    3Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    @Rajiv Bm
    I would look at cities that are landlord friendly and have lots of population growth, and job opportunities. 

    [email protected]614-412-4565
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  • Alex Evans
    Memphis, TN · Member since 2022 · 230 posts · 99 votes
    3y

    Hey @Rajiv Bm

    I definitely recommend the Memphis Market!  

    We have great job growth, good cash flow, stable appreciation, and some opportunities available that are small multifamily and single family. 

    Memphis is comprised of over 50% renters so it typically does not take to long to find tenants either!

    I would be more than happy to speak with you about Memphis and the upside of investing here in town!

    2Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
    3y

    @Rajiv Bm

    Hey Rajiv, if you are looking for my cash flow, I highly recommend the midwest market. I am sure you have heard that 100 times already but there's good reason. As well as that, if you happen to want to look in Cincinnati or NKY, I can help you out and find you a great property! Please, DM me if you have any questions about these markets and I will be happy to help!

    [email protected]859-443-4952
    Sam McCormack Realtor
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    2Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Killeen/Austin Texas

    1Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    3y

    @Rajiv Bm start by clearly identifying your objectives and criteria and quantifying them. The more specific you are upfront, the easier it will be to narrow down your chosices. If your strategy is long term buy and hold, look for markets with good growth potential and not just immediate cash flow. No one gets rich off of cash flow alone and in fact, on average, only about 1/3 of returns come from cash flow. Real wealth comes from investing in markets with long term appreciation potential and rising rents. Start by identifying states with low to moderate property taxes and insurance and favorable landlord tenancy laws. Then look at the markets within those states that have growing populations, jobs and incomes. Look for markets that have modern/diverse economies and industries. These are the markets that will have the best long term appreciation potential rental growth. Personally I like Indianapolis, Kansas City and the Quad Cities. We've been active in all of them for years and they check off all of the boxes above. Feel free to connect and I'll be happy to share more insight on any of them and how to go about choosing a market.

    3Reply
  • Mackaylee BeachPro Member
    Real Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes
    3y

    @Rajiv Bm I have seen great returns in Kansas City for multi family. 

    [email protected]
    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    3y
    Quote from @Rajiv Bm:

    I've decided to look to buy my first true investment property starting out with Out of State rental purchases (i am based out of California)

    I'm having a difficult time deciding where I should be looking to buy. I'm considering either a small multifamily (duplex or four-plex) or perhaps a single family that will be easy to rent and cash flow. 

    For those who invested out of state, looking for some guidance how did you decide on your market? 


     Seen some folks talking about Cleveland as a landing spot for you. Lots of out of state investors come here to Cleveland, but you have to be careful. For everyone that makes a ton of money here in Cleveland I see others loosing it because they overpaid or bought in an area they could not handle.

    If you get into Cleveland further, you'll want to read The Ultimate Guide to Grading Cleveland Neighborhoods to help you learn what's what out here.

    2Reply
  • Todd Knudson
    Real Estate Agent · Houston · Member since 2022 · 34 posts · 19 votes
    3y
    Quote from @Rajiv Bm:

    I've decided to look to buy my first true investment property starting out with Out of State rental purchases (i am based out of California)

    I'm having a difficult time deciding where I should be looking to buy. I'm considering either a small multifamily (duplex or four-plex) or perhaps a single family that will be easy to rent and cash flow. 

    For those who invested out of state, looking for some guidance how did you decide on your market? 


     As I am in the process of OOS investing, i have been following the BP blog. they have a lot of insight and research as to market trends, area and states with growth, strong employment growth, landlord friendly, etc... I am currently looking in TN airbnb, NC, SC, GA, FL

    1Reply
  • Todd Knudson
    Real Estate Agent · Houston · Member since 2022 · 34 posts · 19 votes
    3y
    Quote from @Mackaylee Beach:

    @Rajiv Bm I have seen great returns in Kansas City for multi family. 


     Kansas??? I've been hearing good things about Kansas for investing. 

    1Reply
  • Todd Knudson
    Real Estate Agent · Houston · Member since 2022 · 34 posts · 19 votes
    3y
    Quote from @Mike D'Arrigo:

    @Rajiv Bm start by clearly identifying your objectives and criteria and quantifying them. The more specific you are upfront, the easier it will be to narrow down your chosices. If your strategy is long term buy and hold, look for markets with good growth potential and not just immediate cash flow. No one gets rich off of cash flow alone and in fact, on average, only about 1/3 of returns come from cash flow. Real wealth comes from investing in markets with long term appreciation potential and rising rents. Start by identifying states with low to moderate property taxes and insurance and favorable landlord tenancy laws. Then look at the markets within those states that have growing populations, jobs and incomes. Look for markets that have modern/diverse economies and industries. These are the markets that will have the best long term appreciation potential rental growth. Personally I like Indianapolis, Kansas City and the Quad Cities. We've been active in all of them for years and they check off all of the boxes above. Feel free to connect and I'll be happy to share more insight on any of them and how to go about choosing a market.


     Great feedback. I will dig into these areas as well. My investing is long term with some cash flow. 

    1Reply
  • Mackaylee BeachPro Member
    Real Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes
    3y
    Quote from @Todd Knudson:
    Quote from @Mackaylee Beach:

    @Rajiv Bm I have seen great returns in Kansas City for multi family. 


     Kansas??? I've been hearing good things about Kansas for investing. 


     Yes - Kansas and Missouri!   Shoot me a private message and I would be happy to share my experiences. 

    [email protected]
    1Reply
  • Account Closed
    Columbus, OH · Member since 2023 · 427 posts · 254 votes
    3y

    Long-term appreciation: look for economic indicators. Employers moving in, strong job markets, low unemployment, population growth, etc. Also look for construction development and new projects, be it private for public.

    Cash-flow: Look for low price points, affordable housing, strong rental demand. Price:rent ratio is crucial to cashflow.

    There are so many factors to evaluate a market, and even more when you can pick any market in 50 states. Lay out your criteria, long-term goals and budget beforehand, and from there it'll be more clear what markets you should look into. From there, pick one and begin developing a team- lender, agent, PM, contractor. This team is crucial to the success of your deal. 

    2Reply
  • Sheryl Sitman
    Rental Property Investor · Philadelphia, PA · Member since 2015 · 479 posts · 362 votes
    3y

    @Rajiv Bm adding my experienced words of caution. I am not familiar on a personal level with the markets mentioned here and you did not provide detail about what you are seeking. But you do want to avoid what many new investors fall into which is to look for opportunities that provide good cashflow on paper. The reality of high ROI can sometimes hit you in the face really hard. If you are out of state NAD not experienced, distressed properties with less than ideal tenant pool can end up costing you money and not making you money. That is not to say that the approach is bad -- when you do understand the market, the risks and have a good trustworthy team, these types of investments can be great. I have a strategy of a mix of types of investments in multiple states and would suggest not to build all your hopes on one property, one market . . . The first one may only be a learning experience. Would be good to identify a trustworthy team and not prioritize choosing the locale -- you can do well in thousands of markets in the US when working with good people and getting the right info.

    2Reply
  • Alex Olson
    Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    3y

    @Todd Knudson I am not sure about Kansas in general but Kansas City metro is where I recommend. Kansas City Metro covers two states - KS and MO. Both are land lord friendly, low taxes, increasing rents and great upside. You can throw a dart at the metro and likely hit a great place to invest. The city is a master of none but has an economy that includes virtually every work sector (tech, ag, animal health, major hospitals, major universities, blue collar, warehousing, air tonnage, etc...)

    2Reply
  • Todd Knudson
    Real Estate Agent · Houston · Member since 2022 · 34 posts · 19 votes
    3y

    Thank you for your kind feedback Alex. 

    0Reply
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