Where to search for out of state for newbie.

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Where to search for out of state for newbie.

Sino U.
Member since 2023 · 38 posts · 28 votes

Hi BP Community,

I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

• Lower property costs

• Landlord-friendly laws

• Lower property taxes

However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

Thank you! 

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Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
2y
Quote from @Sino U.:

Hi BP Community,

I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

• Lower property costs

• Landlord-friendly laws

• Lower property taxes

However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

Thank you! 

Hey Sino, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out! 

[email protected]614-300-7535
Jimmy Lieu, Red 1 Realty4.9120 Reviews
WebsiteView Page
3Reply
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  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    Lots to unpack here, man. Let's see how much I can help without getting too long winded.

    $50k can get you 25% down on a couple SFH's in a place like Detroit. I'm mentioning it because that's where I invest and have 12-doors there (8 SFH's and 2 duplexes).

    It would also be enough to put 30% down on a decent duplex. You just have to really understand how to run your numbers and make sure you find the right deal.

    Regarding the HELOC... it's a fantastic tool provided a) you can comfortably service the added debt, and b) you have a plan to pay it back. I know because I used a $130k HELOC to aggressively build my portfolio. You're absolutely correct, it's best to pair with the BRRRR method so you can pay all or most of it back after a refi.

    If not, you're just dumping 25% down on properties and having to service a line of credit at a higher interest rate. Then what's the plan? Pay it down with cash flow and W2 income? It will take a very long time and likely doesn't make much sense.

    There are plenty of Section 8 "gurus" that will make it sound hard, complex, and intimidating. It's not a big deal. I have 3 of my homes rented to S8 folks. It's more work upfront but they tend to stay longer.

    I always tell folks not to lean on this as their primary strategy. Instead, be open to S8 tenants or "cash paying" tenants equally. You want the best tenant for the home full stop. 

    S8 has also gotten far more popular and it's clear folks, at least in Detroit, are having a harder time finding S8 tenants. But rental demand in Detroit is extremely strong overall.

    1Reply
  • Sino U.
    OP
    Member since 2023 · 38 posts · 28 votes
    2y

    thanks for replying @Travis Biziorek i know the question was quite vague, but i was trying to understand whether it make sense to invest out of state but not too far from where i live myself. 

    If not, you're just dumping 25% down on properties and having to service a line of credit at a higher interest rate. Then what's the plan? Pay it down with cash flow and W2 income? It will take a very long time and likely doesn't make much sense." - but when taking a heloc, i would need to pay down the money anyways, which is also from the cash flow and it will take time no? I am a bit confused..

    0Reply
  • Vadim F.
    Investor · Member since 2020 · 337 posts · 213 votes
    2y
    Quote from @Sino U.:

    thanks for replying @Travis Biziorek i know the question was quite vague, but i was trying to understand whether it make sense to invest out of state but not too far from where i live myself. 

    If not, you're just dumping 25% down on properties and having to service a line of credit at a higher interest rate. Then what's the plan? Pay it down with cash flow and W2 income? It will take a very long time and likely doesn't make much sense." - but when taking a heloc, i would need to pay down the money anyways, which is also from the cash flow and it will take time no? I am a bit confused..


    Sec8 is great and super easy to do. Requires a little more work upfront like Travis mentioned but you'll get slightly higher rents and those tenants do tend to stay longer. If you hear those saying Sec8 tenants are a nightmare, its not always true. When you are investing in these lower income markets, you may have more issues with "cash paying" vs subsidized. In the end its all about how you screen your tenants.

    0Reply
  • David Fals
    Member since 2023 · 37 posts · 32 votes
    2y
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 

    I'm also in New Jersey and purchased a condo in 2022, it's been crazy here (Newark used to be cheap to get multifamily) and I'm also looking at out-of-state deals to invest. We pretty much have the same plan, I'm looking at putting $50-70k down, but would like to have some spare money in case it requires repairs. I'm open to suggestions and will follow this topic to see what more anyone has to say!

    0Reply
  • Vanessa Ivonne Hernandez
    Lender · Jersey City, NJ · Member since 2020 · 102 posts · 43 votes
    2y

    @David Fals I'm in the same boat! I purchased a condo in 2020 in NJ and now I'm looking to grow my portfolio with out of state investments for the same reasons outlined on this thread. 

    @Sino U. My research is leading me to PA or OH for my next property because I can get more bang for my buck. Moreso PA because I want to be driving distance since this will strictly be an investment property. I'm happy to share PA contacts that have helped me on my journey.

    2Reply
  • Linda LabbePro Member
    Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
    2y

    We invest in Toledo and Detroit where we get a huge bang for our buck. We can purchase properties in decent areas and still  use the 2 % rule. More then willing to share how we do it with anyone who wants to chat

    1Reply
  • David Fals
    Member since 2023 · 37 posts · 32 votes
    2y
    Quote from @Vanessa Ivonne Hernandez:

    @David Fals I'm in the same boat! I purchased a condo in 2020 in NJ and now I'm looking to grow my portfolio with out of state investments for the same reasons outlined on this thread. 

    @Sino U. My research is leading me to PA or OH for my next property because I can get more bang for my buck. Moreso PA because I want to be driving distance since this will strictly be an investment property. I'm happy to share PA contacts that have helped me on my journey.

    I have been considering investing in PA or MD, but I have learned that these states are not so landlord-friendly. However, they are located close enough to drive. I have also been exploring the option of investing in Ohio and Georgia, but I am not yet sure if I want to invest so far away.

    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2y
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 

    Hey Sino, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out! 

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
    WebsiteView Page
    3Reply
  • Jason Allen
    Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes
    2y
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 


     Are you putting 50k down? or is your total budget 50k? If you're planning on putting 50k down, there are plenty of opportunities here in the Columbus, Ohio market for multi-family units. 

    2Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Sino U. it's hard to beat all the potential happening in Detroit right now!

    https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/

    Logical Property Management4.9454 Reviews
    WebsiteView Page
    0Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    2y
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 


     Hi Sino, 

    Great questions to being with. You are asking the right questions. First I would recommend read as many books as you can. Investors summarize their whole life in 200-300 pages. This is how I got my start. 


    Out of state investments are going to be key to building generational wealth and cashflow. States like NY, NJ, Cali, FL, NV are not idea for in-state investments anymore. The midwest has become a popular hub for investors to build wealth in today's time. 

    I would like into Ohio. Columbus has seen major growth over the last few years. Major tech companies like Intel, Amazon, Google, and smaller startups are taking place there. 

    Buy in turning areas with economic bases. 


    Good luck!

    [email protected]614-802-5698
    ReafCo | Ahmed Group 536 Reviews
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    2Reply
  • Sino U.
    OP
    Member since 2023 · 38 posts · 28 votes
    2y
    Quote from @Vanessa Ivonne Hernandez:

    @David Fals I'm in the same boat! I purchased a condo in 2020 in NJ and now I'm looking to grow my portfolio with out of state investments for the same reasons outlined on this thread. 

    @Sino U. My research is leading me to PA or OH for my next property because I can get more bang for my buck. Moreso PA because I want to be driving distance since this will strictly be an investment property. I'm happy to share PA contacts that have helped me on my journey.

     Thanks @Vanessa Ivonne Hernandez - did you end up actually acquiring a property in PA? Would love to connect with you 

    0Reply
  • Sino U.
    OP
    Member since 2023 · 38 posts · 28 votes
    2y
    Quote from @Jason Allen:
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 


     Are you putting 50k down? or is your total budget 50k? If you're planning on putting 50k down, there are plenty of opportunities here in the Columbus, Ohio market for multi-family units. 


    Was thinking of 50K for downpayment, but also have an option of using HELOC, but for HELOC it would need to be a BRRRR based on what I have read here

    0Reply
  • Sino U.
    OP
    Member since 2023 · 38 posts · 28 votes
    2y
    Quote from @Michael Smythe:

    @Sino U. it's hard to beat all the potential happening in Detroit right now!

    https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/

     Thanks for sharing the source, @Michael Smythe will look into it. Too many options haha, which is not bad :) Do yo also invest in MI?

    1Reply
  • Sino U.
    OP
    Member since 2023 · 38 posts · 28 votes
    2y
    Quote from @Alfath Ahmed:
    Quote from @Sino U.:

    Hi BP Community,

    I’m excited to join and start my journey in real estate investing. I’ve been reading Brandon Turner’s book on the subject and am nearing the end. Eager to begin, I have a few questions and would appreciate your insights and advice.

    I currently live in Monmouth County, NJ, and bought our home last summer. Considering the high property taxes unfriendly laws towards landlords , inventory, and prices here, I’m pondering out-of-state investments for potentially better cash flow. I’m attracted to markets with:

    • Lower property costs

    • Landlord-friendly laws

    • Lower property taxes

    However, I’m unsure about the best market for a beginner like me, aiming to invest in multi-family properties with a budget of $50K. Is this feasible in the current market?

    Another concern is financing. I'm considering using a HELOC from my residence. From what I've read, this seems more suited to a BRRRR strategy. Would it still be a wise choice for a straightforward investment?

    Lastly, I’m curious about starting with Section 8 housing. As a novice in real estate, is this advisable, or should I gain more experience with other properties first?

    Thank you! 


     Hi Sino, 

    Great questions to being with. You are asking the right questions. First I would recommend read as many books as you can. Investors summarize their whole life in 200-300 pages. This is how I got my start. 


    Out of state investments are going to be key to building generational wealth and cashflow. States like NY, NJ, Cali, FL, NV are not idea for in-state investments anymore. The midwest has become a popular hub for investors to build wealth in today's time. 

    I would like into Ohio. Columbus has seen major growth over the last few years. Major tech companies like Intel, Amazon, Google, and smaller startups are taking place there. 

    Buy in turning areas with economic bases. 


    Good luck!


     Thanks Ahmed, yeah def looking into states that appreciate and brings positive cash flow. 

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Sino U. all our investments are in Metro Detroit for the last 20+ years.

    What do you want to know?

    Logical Property Management4.9454 Reviews
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    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 695 votes
    2y

    @Sino U.

    I recommend investing wherever you feel you have competitive advantage. 

    i.e. I live in San Diego, but I invest in Jacksonille FL because my old job used to fly me out there for work, so I was able to learn the area very well. 

    [email protected]
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  • Nate MeekerBusiness Member
    Real Estate CPA | California · Member since 2020 · 544 posts · 251 votes
    2y

    @Sino U. - Section 8 can actually be easier and more secure at times than standard renters. The government is paying a lot of your rent and the direct deposit hits every month without worry. I would put some money into marketing and find your own off-market property. That's where the major discounts are. 

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  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    2y

    @Sino U. choosing a market where you have a leg up of some sort vs just relying on a realtor and property manager would be the way to go. I used to have out of state investments myself and relying on just realtors and property managers in a market and not being a big player there is not necessarily a great position to be in.

    Out of state investing always sounds great to many living on the coasts in higher cost living areas but there are many things to keep in mind.  I am in San Diego and the few out of state investors here that do well from what I've seen are the ones that have some sort of advantage of either having lived in those markets previously, having personal contacts there such as family, or something along those lines.  

    It's easier and more fun to share stories of success on this platform and adding more doors in these low cost markets, but many of those that end up in a pickle don't speak up as much.  Here are a few things to be aware of especially since you are going after 50k properties in unfamiliar markets:

    - A roof replacement usually costs between 8k-12k range whether the house is worth 50k or 850k...that can be 20%+ of the properties value.  That goes for all major systems.  A major expense can wipe out years and years worth of "cashflow'

    - A property that cash flows on paper is different from a property cashflowing in reality...There are many times additional expenses to be aware of that may come up in some markets that you are not familiar with...in my case some items were pipes freezing over and much higher vacancy than was figured in initial calculations.

    - Markets that have very high cap rates as a whole such as 8% + are typically markets that are perceived to have much higher risk and likely will have little to no appreciation at best and more likely would depreciate.

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  • Tam Lapp
    Investor · PA · Member since 2024 · 25 posts · 3 votes
    2y

    Feel free to connect if interested in the PA market. 

    0Reply
  • Matthew Masoud
    Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes
    2y

    Personally, I like Ohio.

    Good price to rent ratio. Large section 8 tenant pool.

    The only problem you'll run into with BRRRR is needing to do the Renovation part of it long distance. That can be a quick way to lose a lot of money fast.

    Teams are important for long-distance investing 

    1Reply
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