Out-of-state real estate investing for beginner

[Sonya C.]

Hi All,

I've read some posts about achieving FIRE via real estate investing and I'm hoping to start doing that 2024. I don't really have much experience in this area and would love some advise. I'm currently in Phoenix AZ where housing prices are still high and does not seem to make sense in terms of cash flowing perspective, so I'm looking for out-of-state investing opportunities with the following criteria (and please kindly list more if you can think anything else):

1). Positive cashing flowing since Month 1-2, ideally more than the 1% rule?

2). Low property tax/lower costs to maintain, etc.

3). Landlord friendly (eviction, rent increase, etc.)

4). Few natural disasters (flooding, thunderstorms, snowstorms, etc.)

5). Good job or population growth

6). Cheaper price (ideally less than $250k so the mortgage would not be too much)

Any advice either regarding the above or real estate investing in general is very much appreciated. Thank you very much!

[Joe Hammel]

I've seen quite a few investors achieve FIRE through REI. REI is by far the best vehicle to do so.

Personally, my portfolio here is to that point..making over $100k/yr cash flow from 16 properties here. All of which, I’ve purchased only within the last 4 years.

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity. It statistically has the best price/rent ratios in the country...so it's arguably the "easiest" place to execute FIRE.

Some people don't like Detroit.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s statistically the best market in the country for cash flow.

$100k a year and also built a lot of equity which opens up a lot of doors as well.

Here is the primary target...

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: 1%-1.4% rule deals

ROI: 10-14%

Cash flow: $150-$300/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

Detroit has the the highest rent to price ratio in the country…and we focus on the best balance of price/location within the area.

You may have noticed our name is literally FIRE lol.

Questions:

1) Best price/rent in the county. Easily beats the 1% rule and cash flows

2) Taxes pencil out fine and deals cash flow

3) Michigan is considered a swing state..Detroit isn't notably hard on landlords. No rent control, you can evict as needed. It's likely not an easy thing to do anywhere, but can be done.

4) No notable natural Disasters

5) A dozen fortune 500 companies. See notes above

6) We target $80k-$130k (for SFH)

Here is a picture of my portfolio...