Investing in long term rentals out of state

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Investing in long term rentals out of state

Aruna Abdool
Member since 2022 · 36 posts · 32 votes

Hi. I'm in NY, which is not a landlord-friendly state, so I'd l like to invest out of state. What have you encountered investing in a state other than the one you reside in? How did you work to establish trust with the team on the ground?

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Andrew BoscoBusiness Member
Rental Property Investor · NH · Member since 2023 · 448 posts · 421 votes
3y

In this situation, the only different parameter when investing out-of-state or different location comes down to having a reliable / trustworthy PM/Contractors/Trades etc. Do you care if you cash flow in the same state that's 10 minutes away vs. 1000 miles away if you have a trusted team? In my experience, getting that trusted team comes from getting the work done and meeting people. Do some due diligence on local PMs and ask your specific criteria of concern. I would advise to start this locally (even a state away) first and get your hands dirty. 

[email protected]603-833-0951
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  • Andrew BoscoBusiness Member
    Rental Property Investor · NH · Member since 2023 · 448 posts · 421 votes
    3y

    In this situation, the only different parameter when investing out-of-state or different location comes down to having a reliable / trustworthy PM/Contractors/Trades etc. Do you care if you cash flow in the same state that's 10 minutes away vs. 1000 miles away if you have a trusted team? In my experience, getting that trusted team comes from getting the work done and meeting people. Do some due diligence on local PMs and ask your specific criteria of concern. I would advise to start this locally (even a state away) first and get your hands dirty. 

    [email protected]603-833-0951
    Andrew Bosco - Candor Investment Group532 Reviews
    WebsiteView Page
    5Reply
  • Aruna Abdool
    OP
    Member since 2022 · 36 posts · 32 votes
    3y

    @Andrew Bosco Hi Andrew. I appreciate your feedback. Thank you for that simple, practical advice on researching property managers. How could I have missed that?? I research everything to death. I don't want to invest in NY or NJ. I can't afford to have deadbeat tenants, although it's not foolproof, I can't invest in an area that doesn't have laws to protect a landlord. 

    0Reply
  • Andrew BoscoBusiness Member
    Rental Property Investor · NH · Member since 2023 · 448 posts · 421 votes
    3y
    Quote from @Aruna Abdool:

    @Andrew Bosco Hi Andrew. I appreciate your feedback. Thank you for that simple, practical advice on researching property managers. How could I have missed that?? I research everything to death. I don't want to invest in NY or NJ. I can't afford to have deadbeat tenants, although it's not foolproof, I can't invest in an area that doesn't have laws to protect a landlord. 


     Apologies! Let me rephrase this a bit better. In the due diligence, maybe if you can’t find a PM be it on fb, Reddit or simple Google search, then I’d find a real estate company that you trust/like and ask if they have an in house PM that you could chat with. Maybe look at syndications you like and see what they can offer as well in terms of PMs. I’ve found my most trusted subs come from making positive relationships and networking; rather than looking at reviews.  

    [email protected]603-833-0951
    Andrew Bosco - Candor Investment Group532 Reviews
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  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y

    I am from the bay area of California and I was in the same boat. No net positive deals here and too expensive. So, I decide to invest out of state turnkey provider. That's what I would recommend. We can talk more if you wish. 

    2Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    3y

    Hey Aruna, I live in California and have 12-doors in Detroit.

    I cheated though. I lived there for 5 years and got things set up before I moved back to CA lol.

    But it was insanely worth it and I continue to stay active in the Detroit market. I also help investors from out of state get set up in that market by plugging them into my processes. Happy to talk if you think it makes sense.

    5Reply
  • Joseph Crunkilton
    Rental Property Investor · Oregon City, OR · Member since 2020 · 324 posts · 780 votes
    3y

    Hi Aruna, I was in the same situation a few years ago. I connected with @Zach Lemaster who helped me get started. Since then I now own a handful of rentals in remote markets that perform well. You should reach out and see if they can help you!

    2Reply
  • Becca F.
    Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
    3y

    @Aruna Abdool

    I'm in the San Francisco Bay Area. I'm investing in the Midwest, Indianapolis area specifically for now. I know this area pretty since I used to live there and have a SFH rental there. Ohio is also a good market - I talked to a realtor in Cincinnati. I talked to a turnkey company but I would have had to do a lot more research in the markets they buy in: Detroit, St. Louis, Memphis, Ohio (mostly Cleveland area). I'm buying turnkey/move in ready with a local realtor, in escrow right now. I'm not doing an out-of-state renovation but I may consider it in the near future. One thing is that my California properties have appreciated a lot more than my Indiana properties even just in the last 3 to 4 years but I'm not buying here now at these price points.

    I've heard that upstate New York has better price to rent ratios than New York City. I don't know anything about NY but that's what a few investors have said. Good luck!

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    3y

    @Aruna Abdool

    We think the Midwest is a GREAT place for OOS investors to consider!

    YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods:

    https://www.biggerpockets.com/...

    (BP search feature can be problematic, so we’ve also added links @ our website under View Cities & Neighborhoods We Service)

    Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

    Many OOS investors set themselves up for failure because they don't truly take the time to understand:

    1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

    2) The Class of the PROPERTY they are buying - which is relative to the overall area.

    3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

    4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

    5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

    6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

    7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

    8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

    9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

    10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

    11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
    ***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

    https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

    Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

    Good luck with whatever you decide😊

    Please send us any feedback via email, as we do not use the DM feature here.

    [email protected]248-209-6824
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  • John Jones
    Realtor · Memphis, TN · Member since 2020 · 33 posts · 22 votes
    3y

    Memphis is a great place to invest because of the relative low cost of entry and it's great cashflow. While it shouldn't be the main objective, you could see varying levels of appreciation depending on the zip code you're investing in too! If you're interested, I can send a link to a free zip code guide that would help give more insight into the different areas. 

    0Reply
  • Wyatt Seidel
    Investor · Kansas City · Member since 2023 · 70 posts · 62 votes
    3y

    Hey Aruna! I would be happy to chat with you about the Kansas City area if that would interest you. We have a great team out here that has helped my wife and me so much

    0Reply
  • Alex Evans
    Memphis, TN · Member since 2022 · 230 posts · 99 votes
    3y

    Hey @Aruna Abdool

    John is absolutely correct! Memphis is a great market to invest in if you are looking to invest out of state. There are many factors that play into this the first being the entry cost. With such a low entry cost compared to a lot of other places, you are able to grow your portfolio at a much higher rate. The other major upside to Memphis is that we see good cashflow and appreciation! I would be more than happy to discuss Memphis with you!

    1Reply
  • Walter JonesBusiness Member
    Real Estate Agent · Memphis, TN · Member since 2018 · 102 posts · 102 votes
    3y

    Another Memphis vote!

    It can still be very competitive - a properly priced property will still go on under contract quickly with multiple offers. 

    [email protected]901-235-3245
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  • Michael Dumler
    Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
    3y

    @Aruna Abdool, if you are interested in rent by the room investments I'd be more than happy to discuss this unique investment strategy. This asset class assumes more risk than a traditional rental but with the right systems and management in place can perform very well. Not to mention, Georgia is a landlord-friendly state and Atlanta is a steadily appreciating market. You establish trust by speaking with referral clients and getting their input. If you'd like to connect, feel free to reach me via cell or email (contact info is listed in my bio). 

    0Reply
  • Jasmin Hernandez
    Rental Property Investor · California, AZ · Member since 2021 · 18 posts · 14 votes
    3y

    I live in California where the rental laws highly favor the tenant. For that reason I've chosen to do business out of state in Arizona. The laws there are more balanced in my opinion. Rents are high if you can cleanup the units and make them enticing to the tenants, even in areas that are not class A or B. I established trust with my management team by vetting them and reading reviews. They have managed my initial property with so much success that I've been able to purchase two more properties, which they will manage for me at a discounted rate. Once your find a good property management team, the relationship can definitely carry you more than just the property you acquire, it can help you in future acquisitions as well and really help you scale your business. 

    2Reply
  • Cullen W Jones
    Real Estate Agent · Indianapolis, IN · Member since 2019 · 42 posts · 24 votes
    3y

    Hi @Aruna Abdool ! I'm Cullen, I am a licensed Realtor in Indianapolis, IN. I have experience with assisting out of state investors in buying and selling homes in the Indianapolis Metropolitan area. If you're looking to build a portfolio, Indianapolis is a fast growing and relatively affordable cash-flow market. We should connect on here and have a conversation about what your goals are as an investor, and see if it makes sense for us to work together.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Aruna Abdool

    find a market you can drive to, even if OOS and even if 1 or 2 or 3 hours away

    go to REIAs, network, find PMs, build your core 4

    put the work in

    also, lots of people are successful in NY

    0Reply
  • Bernard Joseph S.
    Investor · NJ · Member since 2022 · 155 posts · 224 votes
    3y
    Quote from @Aruna Abdool:

    Hi. I'm in NY, which is not a landlord-friendly state, so I'd l like to invest out of state. What have you encountered investing in a state other than the one you reside in? How did you work to establish trust with the team on the ground


     Same situation as you, I'm from NY/NJ and decided to go out of state. Can't go wrong moving your money to a landlord and legislatively friendly environment. I have explored some flips in Alabama and met some really nice people. I have confidence in the team when I make an investment there. Nothing beats actually visiting different places and networking. I highly suggest you visit the areas you're interested in and make those connections.

    Same situation as you, I'm from NY/NJ and decided to go out of state. Can't go wrong moving your money to a landlord and legislatively friendly environment. I have explored some flips in Alabama and met some really nice people. I have confidence in the team when I make an investment there. Nothing beats actually visiting different places and networking. I highly suggest you go see the areas you're interested in and make those connections.

    In the meantime, I chose the turnkey route in Florida for the bulk of my beginning strategy. These are people who do this day in and day out, and if you find a good company, they are priceless. From educating you on areas, helping to obtain properties and financing, and getting property management in place it's a nice experience when you're first starting out. Could springboard you to being comfortable doing deals on your own as you grow.

    @Zach Lemaster at Rent to Retirement has been great to work with. If you go the turnkey route thats my #1 choice. 

    2Reply
  • Brian Fitzgerald
    Property Manager · California Washington North Carolina South Carolina, Georgia and Alabama · Member since 2020 · 71 posts · 27 votes
    3y

    Hello Aruna,

    Wonderful to meet an active investor. Regarding working with a management company I can provide resources and information on that. I recommend working with a company that is in many markets that can give you credible feedback and input on your search and acquisition for a new rental asset. Most management companies have a roster of contractors and vendors to assist with inspections, repairs, renovation and general due diligence. 

    Feel free to PM and I can give you a couple of recommendations.

    0Reply
  • Dean HarrisBusiness Member
    Real Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    I'm listing properties everyday now that are grabbing multiple offers. Others that aren't in good shape or that are priced incorrectly are sitting there. The properties that I am trying to buy seem to have offers on them as well. Memphis is still a good place to buy and hold rental properties for sure!!

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  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Aruna Abdool- get  pre approved and  work with a firm that can  lend in the states you are interested in 

    0Reply
  • Kunal DattPro Member
    Raleigh, NC · Member since 2020 · 30 posts · 25 votes
    3y

    @Ruchit Patel

    Which turnkey provider did you use and which market did you choose?

    0Reply
  • Kunal DattPro Member
    Raleigh, NC · Member since 2020 · 30 posts · 25 votes
    3y

    @John Jones

    I’m interested in investing in Memphis. Please send that zip code guide!

    0Reply
  • Todd Helzer
    Real Estate Agent · Birmingham, AL · Member since 2018 · 11 posts · 5 votes
    3y

    We work without a-lot of out of state investors and I would say the key is finding a good team and listening to their advice. We tell out of state investors everyday to invest in Birmingham in the $125k+ range and some still buy 50k houses and wonder why all their cashflow is chewed up with repairs. There are certain things local investors can do which is harder for out of state investors. One being finding cheap labor and being onsite to asses repairs and not overdue or overpay on repairs. I think being realistic about expectations and investing wisely you can be successful! 

    1Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 835 votes
    3y
    Quote from @Aruna Abdool:

    Hi. I'm in NY, which is not a landlord-friendly state, so I'd l like to invest out of state. What have you encountered investing in a state other than the one you reside in? How did you work to establish trust with the team on the ground?


     My most recent client is actually doing great with his right now! They are getting it rented now. They are from Texas, and bought in the Queen City, Cincinnati

    [email protected]859-443-4952
    Sam McCormack Realtor
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  • Jay ThomasPro Member
    Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 716 votes
    3y

    If you're considering investing out-of-state or in a different location, it's important to ensure that you have a reliable and trustworthy property manager (PM), contractors, tradespeople, etc. Real estate investing is all about building relationships with this team of people and getting the job done right. Therefore, I recommend doing your due diligence when researching PMs and other professionals to work with; make sure they meet the criteria that are most important to you. To get started, start local – even if it means going to another state – and get your hands dirty. A good way to begin is by finding real estate deals within reach so that you can learn more about the area and its potential for growth. With enough effort put into networking locally, you'll eventually build up a reliable team and be well on your way to expanding your real estate portfolio. Good luck!

    [email protected]832-889-5607
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