Out-of-state Multifamily Purchase

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Out-of-state Multifamily Purchase

Diane Bonheur
Member since 2023 · 21 posts · 16 votes

Hi everyone! Recent lurker and learner here. I'll cut straight to the chase - I have $100k cash and I'd really like to buy a 3 or 4 unit multifamily. Yesterday my job was eliminated, so my main source of income is gone, however, I have $1,425/mo coming in from a condo that's paid off. I spoke with my mortgage broker and she advised as long as the numbers make sense, I can still purchase an investment property. 

I was scouting out towns in Rockland and Orange Counties, but (as some of you may have already guessed), the prices of homes in the area are ridiculous. Based on my future goal(s), I'm aiming to purchase a multi with good cash flow and I don't think that'll be possible in the surrounding markets.

With that said, I'm considering looking into Pennsylvania and Delaware....maybe Jersey too? They're all within reasonable driving distances for me. I've been looking into all 3 states over the past few days but would love to connect with and hear from anyone familiar with the markets. 

Thanks in advance!

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Bradley BuxtonBusiness Member
Real Estate Agent · NV · Member since 2023 · 1k+ posts · 715 votes
2y

@Diane Bonheur Take a look at the Reno market. We work with many CA investors looking for something close by yet more affordable and good appreciation. There are MF properties that cash flow in some B areas around Reno. The Tahoe market still has some STR opportunities. The best part about Reno / Tahoe Nevada are it's landlord friendly, Real estate taxes don't reassess on the sale, insurance is low and we continue to have increased in migration, jobs (no state income tax) and our own land constraint issues which prevent the market from getting overbuilt. I'm happy to be a resource for you in the NV market.

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  • River SavaPro Member
    Lender · USA · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Hi Diane, I would love to help you out with out of state investing. Sending you a dm to connect!

    [email protected]
    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Diane Bonheur

    is this something you'd live in, or a pure investment property? it's going to be very difficult to cash flow with interest rates where they are, especially if you would be taking out a DSCR loan.

    0Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y
    Quote from @Nicholas L.:

    @Diane Bonheur

    is this something you'd live in, or a pure investment property? it's going to be very difficult to cash flow with interest rates where they are, especially if you would be taking out a DSCR loan.


     I'd live in the unit depending on the location. If it's out of state then no. With rates being astronomical, what would you suggest?

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Diane Bonheur

    great question, it's just a really tough market right now for cash flow. a lot of the traditional strategies still work - house hacking, BRRRR - but they are not cash flow strategies right now. given your situation i just don't think it would make sense to get into something that is break even or cash flow negative right now.

    and, it's very smart of you to consider different markets a little distance away. for new investors, i think they really need to ( 1 ) get into a strong financial position, and ( 2 ) put some time into building a network and gaining market knowledge. so if there's a market within driving distance that you like, spend the next 6-12 months going to REIA meetings; meeting other investors; joining the Facebook and Meetup groups; driving neighborhoods; looking at properties; talking to absolutely everyone about real estate; etc.

    2Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y

    @Nicholas L. ideally I'd like to live in the unit but if I have to purchase something out of state then no

    0Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y
    Quote from @Nicholas L.:

    @Diane Bonheur

    great question, it's just a really tough market right now for cash flow. a lot of the traditional strategies still work - house hacking, BRRRR - but they are not cash flow strategies right now. given your situation i just don't think it would make sense to get into something that is break even or cash flow negative right now.

    and, it's very smart of you to consider different markets a little distance away. for new investors, i think they really need to ( 1 ) get into a strong financial position, and ( 2 ) put some time into building a network and gaining market knowledge. so if there's a market within driving distance that you like, spend the next 6-12 months going to REIA meetings; meeting other investors; joining the Facebook and Meetup groups; driving neighborhoods; looking at properties; talking to absolutely everyone about real estate; etc.


    That's pretty much what I'm hearing from everyone and thank you for the advice! I didn't even know about this association - I'm excited :D 

    1Reply
  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 715 votes
    2y

    @Diane Bonheur Take a look at the Reno market. We work with many CA investors looking for something close by yet more affordable and good appreciation. There are MF properties that cash flow in some B areas around Reno. The Tahoe market still has some STR opportunities. The best part about Reno / Tahoe Nevada are it's landlord friendly, Real estate taxes don't reassess on the sale, insurance is low and we continue to have increased in migration, jobs (no state income tax) and our own land constraint issues which prevent the market from getting overbuilt. I'm happy to be a resource for you in the NV market.

    3Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y

    @Bradley Buxton I'm so glad you commented because you just reminded me I have family in NV - they just moved there. I will definitely look in to that market and keep you in mind. Thanks! 

    0Reply
  • Rob LawrenceBusiness Member
    Real Estate Agent · West Chester, PA · Member since 2017 · 270 posts · 97 votes
    2y

    I service the Philly suburbs and I am an investor and an agent.  If that's an area of interest, happy to connect.

    1Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y

    @Rob Lawrence hi Rob! I just sent you a message with my connection request 

    1Reply
  • Rob LawrenceBusiness Member
    Real Estate Agent · West Chester, PA · Member since 2017 · 270 posts · 97 votes
    2y

    Awesome!  Looking forward to connecting

    0Reply
  • Chris Pelc
    Investor · Philadelphia · Member since 2023 · 104 posts · 46 votes
    2y

    Hey Diane, 

    Your best bet might be to explore some off market options if you are finding that the retail market is inflated. Have you considered property with value add?

    The Philly market provides great opportunities to investors looking for rentals with great rent/value ratios. I just sent a connection request. If you're looking for a chance to connect some more, id be happy to talk. 

    0Reply
  • Evan HoppleBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
    2y

    @Diane Bonheur

    Cleveland, OH would be a good fit for cash flow! I prefer Columbus, OH for the mix of appreciation and cashflow

    [email protected]614-924-8151
    Reafco Real Estate
    View Page
    3Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    @Diane Bonheur
    If you are looking for markets, that cash flow, Columbus and Cleveland, are great places to start if looking out of state in areas that are landlord-friendly. 

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Evan Hopple

    @Patrick Drury

    With rates where they are, can you really buy a random property in Columbus and cash flow more than a trivial amount? Say you don't know the market, so you buy a SFH in a solid neighborhood, that maybe just needs a refresh and not a rehab, and say your W2 income doesn't support your primary + this new purchase, so you have to get a DSCR loan. Aren't you getting a rate in the 8s? What is the cash flow?

    In Pittsburgh, you can buy a great house in a nice neighborhood for $200K... and it might be a solid investment.  But it's going to break even.

    2Reply
  • Max FeinbergPro Member
    Real Estate Agent · Pittsburgh, PA · Member since 2017 · 151 posts · 70 votes
    2y

    @Diane Bonheur Hi Diane! I’d love to talk to you about some of the options here in the Pittsburgh area. Feel free to send me a PM and we can connect!

    1Reply
  • Liam TenniesPro Member
    Real Estate Agent · Pittsburgh, PA · Member since 2020 · 44 posts · 40 votes
    2y

    Hey Diane, you can still find cashflow in Pittsburgh. Just depends on where you're buying. Typically we see the better rent:price ratios/cash flowing properties a bit outside of the city maybe within 45 minutes or so of downtown, or in the C class neighborhoods closer to the city that are a bit more management intensive.

    You might be able to get a close to turnkey duplex for ballpark 80-130k if looking in the area I mentioned above. Similar condition SFH maybe in the 70-120k range. Multi's will cashflow better for you long term though.

    Agree with some of the comments above that in general it's harder to find cashflow nowadays. Rates are high and are making DSCR thresholds harder to reach. Speaking from experience of working with investors in Pittsburgh though, there's still those deals out there.

    Another option is you could use your cash for bigger equity plays rather than focusing primarily on cashflow right now. If you can get some chunks of equity then you'll be able to turn that into cash flowing properties down the line. Sounds like with your current situation you'll need the cashflow right off the bat though which is totally fine. Just have to work with a local investor focused agent who can point you in the right direction and will be forthcoming with you. Feel free to shoot me a message if you end up looking more into Pittsburgh, and good luck!

    [email protected]
    2Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y
    Quote from @Liam Tennies:

    Thanks for the advice, Liam. I’d love to connect and learn more about the equity option

    0Reply
  • Tom Hall
    Member since 2023 · 29 posts · 34 votes
    2y

    it is very common to see agents talking about their city or town being the one to invest. Don't forget to do your own research! 

    When it comes to NJ I don't find it landlord/investor friendly state at all. The price of the houses are astronomical, property taxes is the highest in the States. If you get DSCR mortgage (investment mortgage) the rate is mid or high 8th that all being said, there wont be any cash flow in the state of NJ easily. Unless you get a dumb and renovate it yourself and put forced values and rent it out .....I have a very similar case like you, I am looking to invest in NJ but based on my research and calculation I will be on minus and zero cash flow. (IT IS JUST MY OPINION) ....

    Take into consideration mortgage rates fluctuate it maybe a good time to invest and be on minus FOR NOW, later on refinancing might save up some $$$ 

    0Reply
  • David Liu
    San Francisco Bay Area · Member since 2018 · 33 posts · 31 votes
    2y
    Quote from @Nicholas L.:

    @Diane Bonheur

    great question, it's just a really tough market right now for cash flow. a lot of the traditional strategies still work - house hacking, BRRRR - but they are not cash flow strategies right now. given your situation i just don't think it would make sense to get into something that is break even or cash flow negative right now.

    and, it's very smart of you to consider different markets a little distance away. for new investors, i think they really need to ( 1 ) get into a strong financial position, and ( 2 ) put some time into building a network and gaining market knowledge. so if there's a market within driving distance that you like, spend the next 6-12 months going to REIA meetings; meeting other investors; joining the Facebook and Meetup groups; driving neighborhoods; looking at properties; talking to absolutely everyone about real estate; etc.

    First of all congrats on having $100k saved up for your next investment! 

     I really like Nicholas's answer. At the root of it, I believe you are undecided on your market because of the lack of knowledge on those markets you're looking at. So definitely go attend meetups, in fact you may not even need to go to far away meet ups, you may find investors in your local area that invest in Pennsylvania and Delaware. So take that 1st step and go to a local meetup, you never know who you'll bump into. 

    I also sense some hesitation in investing out of state, because you want your next property to be a "reasonable driving distance" from you. That's understandable especially when it's your 1st out of state investment. So I recommend you read David Greene's book on Long distance real estate investing to get the step by step guide on how to get your next property. There will be advice on how to get over your fear of investing out of state, maybe the place you'll find will be a flight away, not just a drive... i.e. My wife and I live in California but invest in NC. 

    Good luck Diane! 

    0Reply
  • Greg McLaren
    Investor · Moorestown, NJ · Member since 2014 · 3 posts · 2 votes
    2y
    Quote from @Diane Bonheur:

    Hi everyone! Recent lurker and learner here. I'll cut straight to the chase - I have $100k cash and I'd really like to buy a 3 or 4 unit multifamily. Yesterday my job was eliminated, so my main source of income is gone, however, I have $1,425/mo coming in from a condo that's paid off. I spoke with my mortgage broker and she advised as long as the numbers make sense, I can still purchase an investment property. 

    I was scouting out towns in Rockland and Orange Counties, but (as some of you may have already guessed), the prices of homes in the area are ridiculous. Based on my future goal(s), I'm aiming to purchase a multi with good cash flow and I don't think that'll be possible in the surrounding markets.

    With that said, I'm considering looking into Pennsylvania and Delaware....maybe Jersey too? They're all within reasonable driving distances for me. I've been looking into all 3 states over the past few days but would love to connect with and hear from anyone familiar with the markets. 

    Thanks in advance!


    Hey Diane!  When it comes to NJ something to be aware of is the new 'lead based paint in residential dwellings' legislation.  It could potentially have some big cash flow consequences if you purchase a home that was built before 1978.. here is the state guide: https://www.nj.gov/dca/divisions/codes/resources/pdfs/lead_b...

    0Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y
    Quote from @Greg McLaren:
    Quote from @Diane Bonheur:

    Hi everyone! Recent lurker and learner here. I'll cut straight to the chase - I have $100k cash and I'd really like to buy a 3 or 4 unit multifamily. Yesterday my job was eliminated, so my main source of income is gone, however, I have $1,425/mo coming in from a condo that's paid off. I spoke with my mortgage broker and she advised as long as the numbers make sense, I can still purchase an investment property. 

    I was scouting out towns in Rockland and Orange Counties, but (as some of you may have already guessed), the prices of homes in the area are ridiculous. Based on my future goal(s), I'm aiming to purchase a multi with good cash flow and I don't think that'll be possible in the surrounding markets.

    With that said, I'm considering looking into Pennsylvania and Delaware....maybe Jersey too? They're all within reasonable driving distances for me. I've been looking into all 3 states over the past few days but would love to connect with and hear from anyone familiar with the markets. 

    Thanks in advance!


    Hey Diane!  When it comes to NJ something to be aware of is the new 'lead based paint in residential dwellings' legislation.  It could potentially have some big cash flow consequences if you purchase a home that was built before 1978.. here is the state guide: https://www.nj.gov/dca/divisions/codes/resources/pdfs/lead_b...


     Thank you! NJ is looking like it won't be the ideal place for me to purchase a property. I've heard it isn't landlord friendly

    1Reply
  • LeeAnn Owens
    Investor · MD · Member since 2023 · 71 posts · 45 votes
    2y

    Hi Diane! 
    I live near Baltimore, MD but I’m from Upstate NY originally. About a year ago I bought a 3 unit in Saratoga County NY (5.5-6 hours away). I was in a similar situation, I had $100k to put toward something, but that wouldn’t have gone very far in my market. Overall that was the right decision at the time, but if I were in a situation where I had time on my hands, I would 100% take that money to do a couple of fix & flips. I’d be happy to connect if you want to discuss that market!

    2Reply
  • Bonnie Griffin KaakePro Member
    Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
    2y

    @Diane Bonheur  There are a couple things you might want to also keep in mind before you are too deep in a deal. New Jersey and CT have the highest property tax rates in the country. Also, check assessed land values versus assessed total values in the county where the property sits. If the land value is very high, it can limit your tax benefits and cash flow with cost segregation.

    Cost segregation can give you tax benefits and extra cash flow the first year you own the property. If you need to do extensive improvements/renovations down the road you will also have some nice tax benefits. The key is getting a good RE consultant that specializes in no-cost consulting, engineering-based cost segregation estimates, and reasonable study costs who works with your CPA/tax professional. Let me know if you have additional questions. 

    [email protected]303-475-4459
    0Reply
  • Diane Bonheur
    OP
    Member since 2023 · 21 posts · 16 votes
    2y
    Quote from @Bonnie Griffin Kaake:

    @Diane Bonheur  There are a couple things you might want to also keep in mind before you are too deep in a deal. New Jersey and CT have the highest property tax rates in the country. Also, check assessed land values versus assessed total values in the county where the property sits. If the land value is very high, it can limit your tax benefits and cash flow with cost segregation.

    Cost segregation can give you tax benefits and extra cash flow the first year you own the property. If you need to do extensive improvements/renovations down the road you will also have some nice tax benefits. The key is getting a good RE consultant that specializes in no-cost consulting, engineering-based cost segregation estimates, and reasonable study costs who works with your CPA/tax professional. Let me know if you have additional questions. 

    Thanks so much, Bonnie! This is great advice. Since posting this, I've decided to change my strategy a bit. I'm now focusing on finding unlisted deals for C class properties in Rockland County.

    1Reply
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