Buying First Rental Property Out of State
New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes
Buying First Rental Property Out of State
Most Popular Reply
Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votesI'ts a high risk proposition for sure. There's a reason some of those properties look so good on paper, yet they are still sitting there, waiting for a buyer.
I have a friend who bought a Fourplex in Ohio a few years ago- paid $235K and gross proforma rents were $5K. He kept it for 4 years and was only cash flow positive TWO months out of 48. Never once collected $5k in rents, lost money every month and sold it at a loss.
Make sure you know the neighborhood and tenant base very well- hire a VERY experienced property manager and work with an agent who has high production in that area.
37 Replies
- Investor · Member since 2022 · 65 posts · 38 votes1y
Ohio is a great market to start in . You need a good property management company and boots on the ground to manage your rental since your out of state. I can help with a referral if needed . You also need to figure out if you using financing or buying cash. If you using financing then you need to reach out to a lender to see if you qualify
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Bailey Coleman:
Ohio is a great market to start in . You need a good property management company and boots on the ground to manage your rental since your out of state. I can help with a referral if needed . You also need to figure out if you using financing or buying cash. If you using financing then you need to reach out to a lender to see if you qualify
I have been looking around for property management companies, especially ones that are willing to work with section 8 and have experience with the inspections. I would be happy to look at your referral. I am planning to finance so I am also looking at local lenders.
Thanks
- 1yMatthew CrivelliBusiness MemberLender · MA · Member since 2021 · 1k+ posts · 1k+ votesI personally think Cleveland OH is a tough market for out of state investors. I've seen local wholesalers and property mangers try to take advantage of people out of state. You really need to go to Cleveland, look at the property / neighborhood, do your own inspections, etc. I have also seen section 8 tenants completely DESTROY rental properties. If you are trying to buy c class rentals 6 hours away, you will run into issues. How much cashflow will you make if you have to renovate the entire interior every 5 years?
Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
Freedom Capital Funding, LLC523 Reviews- Investor · Member since 2022 · 65 posts · 38 votes1y
Quote from @Matthew Crivelli:
I personally think Cleveland OH is a tough market for out of state investors. I've seen local wholesalers and property mangers try to take advantage of people out of state. You really need to go to Cleveland, look at the property / neighborhood, do your own inspections, etc. I have also seen section 8 tenants completely DESTROY rental properties. If you are trying to buy c class rentals 6 hours away, you will run into issues. How much cashflow will you make if you have to renovate the entire interior every 5 years?Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
It can be challenging with the wrong team, and I’ve seen out-of-state investors get taken advantage of. I highly recommend visiting at least once to gain a better understanding of the market. Having the right team in place is crucial. A good property manager can help oversee tenants and prevent many common issues. The stigma around Section 8 tenants damaging properties is often misplaced—it’s not about how they pay rent, but rather their behavior as renters. Proper tenant screening is essential, whether they’re on Section 8 or paying cash. - New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Matthew Crivelli:
I personally think Cleveland OH is a tough market for out of state investors. I've seen local wholesalers and property mangers try to take advantage of people out of state. You really need to go to Cleveland, look at the property / neighborhood, do your own inspections, etc. I have also seen section 8 tenants completely DESTROY rental properties. If you are trying to buy c class rentals 6 hours away, you will run into issues. How much cashflow will you make if you have to renovate the entire interior every 5 years?Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
Thanks for your reply, I am definitely going to be careful and take my time finding the right people, especially the tenants.
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Bailey Coleman:
Quote from @Matthew Crivelli:
I personally think Cleveland OH is a tough market for out of state investors. I've seen local wholesalers and property mangers try to take advantage of people out of state. You really need to go to Cleveland, look at the property / neighborhood, do your own inspections, etc. I have also seen section 8 tenants completely DESTROY rental properties. If you are trying to buy c class rentals 6 hours away, you will run into issues. How much cashflow will you make if you have to renovate the entire interior every 5 years?Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
It can be challenging with the wrong team, and I’ve seen out-of-state investors get taken advantage of. I highly recommend visiting at least once to gain a better understanding of the market. Having the right team in place is crucial. A good property manager can help oversee tenants and prevent many common issues. The stigma around Section 8 tenants damaging properties is often misplaced—it’s not about how they pay rent, but rather their behavior as renters. Proper tenant screening is essential, whether they’re on Section 8 or paying cash.Very good point, I have seen some people recommend you or the property management company actually visiting the tenant in their current home to see how they take care of it.
- 1yArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 948 votes
Cleveland can be a solid market for investing, but as an out-of-state investor, it’s important to approach it with a solid plan. Section 8 can offer stable rental income, but tenant screening, property management, and maintenance costs are key factors to consider. Some investors mitigate risks by focusing on B-class neighborhoods with strong rental demand and reliable tenant pools.
Have you had a chance to visit the area yet? It’s always a good idea to walk the neighborhoods, understand rent comps, and connect with local professionals before making a decision. What criteria are you using to select your first property?*
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Arman Ahmed:
Cleveland can be a solid market for investing, but as an out-of-state investor, it’s important to approach it with a solid plan. Section 8 can offer stable rental income, but tenant screening, property management, and maintenance costs are key factors to consider. Some investors mitigate risks by focusing on B-class neighborhoods with strong rental demand and reliable tenant pools.
Have you had a chance to visit the area yet? It’s always a good idea to walk the neighborhoods, understand rent comps, and connect with local professionals before making a decision. What criteria are you using to select your first property?*
Thanks for the reply, I haven't had a chance to visit the area yet but that is a good idea. I have talked to a realter from the area and he sent me information for a lender and property management company. He says good things about them. I am looking to buy a property at about 100k with a conventional loan that is basically ready to move in. I am going to use BiggerPockets rental property calculator when I find a deal I am interested in, and I look to make about 400-500 per month in profit.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.
If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Logical Property Management4.9459 Reviews- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Drew Sygit:
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.
If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Thank you for this reply! Very informative and something I wasn't thinking of too much before. I have seen a lot of advice saying to forget anything B class or less since they come with many more headaches and expenses. Maybe I can hold off until I get a good team around me. Would you say a better route would be an FHA loan closer to me for a duplex.
- 1yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Hey Cole, my advice is to really take a closer look at the neighborhood of the property you're eyeing. There are a lot of single-family homes in that price range, but they're mostly in D/F class neighborhoods. I’d be careful with those, especially in F class areas as they come with higher risks.
You can still find single-family homes in that price range in C class areas. I recommend focusing on west side of Cleveland. Just know that they might need some work, considering the price. An inspection contingency should help you get a good look at the property's condition. Good luck on your search!
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Min Zhang:
Hey Cole, my advice is to really take a closer look at the neighborhood of the property you're eyeing. There are a lot of single-family homes in that price range, but they're mostly in D/F class neighborhoods. I’d be careful with those, especially in F class areas as they come with higher risks.
You can still find single-family homes in that price range in C class areas. I recommend focusing on west side of Cleveland. Just know that they might need some work, considering the price. An inspection contingency should help you get a good look at the property's condition. Good luck on your search!
Thank you for the reply, will keep that in mind. I've seen a lot of people say to even focus on only B class and up.
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
i'll simplify. do not do this. or at least, do not start with this. that price point will put you in a challenging area, and unless you have the best team in the state, which i doubt you do, you will just lose money on turnovers and capex. that will set you back.
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
https://www.biggerpockets.com/forums/52/topics/868202-tenant...
i get that NJ may be too expensive. so go 1-2 hours out.
not trying to be discouraging - just realistic
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Nicholas L.:
i'll simplify. do not do this. or at least, do not start with this. that price point will put you in a challenging area, and unless you have the best team in the state, which i doubt you do, you will just lose money on turnovers and capex. that will set you back.
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
https://www.biggerpockets.com/forums/52/topics/868202-tenant...
i get that NJ may be too expensive. so go 1-2 hours out.
not trying to be discouraging - just realistic
Appreciate the reply, reading those links I can see what your saying, it seems that you can be profitable in that area but you need experience and like you said a good team. Also definitely not discouraging, it actually encourages me more to look at different options. I am also looking in other areas and thinking about an FHA loan for a duplex if I can find the right deal.
- 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
Hi Cole, I am really experienced with the Cleveland market and will let you know to be VERY VERY careful about the location you buy. Even if a house is hitting the 2% rule on paper, there are locations that you won't ever be able to collect rent and dealing with constant police calls/break ins. It's not worth the headache! Additionally, the constant turnover will kill any profitability you have. All I'm saying is to be really careful and even if a deal looks great on paper in Cleveland, you want to make sure you're not buying in a warzone. Personally, I moved to Columbus where the neighborhoods are a lot better and can still hit the 1% rule and have tons of amazing appreciation here! Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9120 Reviews- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Jimmy Lieu:
Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
Hi Cole, I am really experienced with the Cleveland market and will let you know to be VERY VERY careful about the location you buy. Even if a house is hitting the 2% rule on paper, there are locations that you won't ever be able to collect rent and dealing with constant police calls/break ins. It's not worth the headache! Additionally, the constant turnover will kill any profitability you have. All I'm saying is to be really careful and even if a deal looks great on paper in Cleveland, you want to make sure you're not buying in a warzone. Personally, I moved to Columbus where the neighborhoods are a lot better and can still hit the 1% rule and have tons of amazing appreciation here! Happy to connect and answer any questions you have!
Thank you for the reply, definitely looking around in many locations and will keep that in mind.
- 1yCorby GoadeBusiness MemberInvestor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
I'ts a high risk proposition for sure. There's a reason some of those properties look so good on paper, yet they are still sitting there, waiting for a buyer.
I have a friend who bought a Fourplex in Ohio a few years ago- paid $235K and gross proforma rents were $5K. He kept it for 4 years and was only cash flow positive TWO months out of 48. Never once collected $5k in rents, lost money every month and sold it at a loss.
Make sure you know the neighborhood and tenant base very well- hire a VERY experienced property manager and work with an agent who has high production in that area.
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Corby Goade:
I'ts a high risk proposition for sure. There's a reason some of those properties look so good on paper, yet they are still sitting there, waiting for a buyer.
I have a friend who bought a Fourplex in Ohio a few years ago- paid $235K and gross proforma rents were $5K. He kept it for 4 years and was only cash flow positive TWO months out of 48. Never once collected $5k in rents, lost money every month and sold it at a loss.
Make sure you know the neighborhood and tenant base very well- hire a VERY experienced property manager and work with an agent who has high production in that area.
Thank you for the reply, that is a big concern for me. If you don't mind sharing what do you think the biggest reason for the poor performance was whether its poor tenant screening, bad neighborhood, etc. I am also trying to get a job in property management so I can gain some experience in the business.
- 1yRyan SpathBusiness MemberReal Estate Agent · Boise, ID · Member since 2017 · 570 posts · 378 votes
As long as you have the proper team you should be ok, look out for "turnkey" investments from no creditable operations. Find someone local and build a relationship, if you are going to invest 100k, Id even get on a plane and go visit a few operations and see what/who you can do business with.
- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Ryan Spath:
As long as you have the proper team you should be ok, look out for "turnkey" investments from no creditable operations. Find someone local and build a relationship, if you are going to invest 100k, Id even get on a plane and go visit a few operations and see what/who you can do business with.
Thank you for the reply, I am definitely going to try and get out there.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Cole Jennings It's always better to be hands on when possible.
You'll learn more and the knowledge will be great going forward.
Just make sure you TRACK your time! Many owners on BP claim they manage their property(s) better than any PMC. This is true, but taken out of context. Owners do more managing their properties than they will pay a PMC to do, because owners don't properly track the time they actually spend on their property(s).
If you go the 2-4 unit route, an FHA loan is a great option. Suggest you look into the FHA 203(k) loan, which allows you to roll in repair costs into the purchase mortgage.
In addtion to renting out the other units LTR, suggest you consider:
1) Trying MTR or STR on one other unit for more income.
2) If it works out, do it on the other units.
3) Try MTR or STR on the other bedrooms in the unit you occupy.
4) If the property has a decent basement, see if you can make it liveable for yourself, so you can rent out all the other units. Most cities will NOT allow you to rent out a basement, but there's rarely no laws against an owner living in their basement.
5) If you can make this all work, you can refi out of the FHA mortgage, so you can re-use it to repeat the process and grown your portfolio.
Logical Property Management4.9459 Reviews- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Drew Sygit:
@Cole Jennings It's always better to be hands on when possible.
You'll learn more and the knowledge will be great going forward.
Just make sure you TRACK your time! Many owners on BP claim they manage their property(s) better than any PMC. This is true, but taken out of context. Owners do more managing their properties than they will pay a PMC to do, because owners don't properly track the time they actually spend on their property(s).
If you go the 2-4 unit route, an FHA loan is a great option. Suggest you look into the FHA 203(k) loan, which allows you to roll in repair costs into the purchase mortgage.
In addtion to renting out the other units LTR, suggest you consider:
1) Trying MTR or STR on one other unit for more income.
2) If it works out, do it on the other units.
3) Try MTR or STR on the other bedrooms in the unit you occupy.
4) If the property has a decent basement, see if you can make it liveable for yourself, so you can rent out all the other units. Most cities will NOT allow you to rent out a basement, but there's rarely no laws against an owner living in their basement.
5) If you can make this all work, you can refi out of the FHA mortgage, so you can re-use it to repeat the process and grown your portfolio.
Thank you for your reply, definitely want to make this more of a passive investment so will be tracking my time. Also, I didn't think about living in the basement and renting the other unit (of a duplex). That is the most likely option I will go with (if the property I buy has a livable basement. Thanks.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Bad idea. Your instinct is to curb your risk by buying a cheaper property and going Section 8. In real estate risks go up with lower prices. The other way around, if you want to reduce risk, go a little up in price.
Many good comments here https://www.biggerpockets.com/forums/963/topics/1234351-out-...
Prices are very low in Cleveland - 139k median. While I can't speak to the demographic, investing at or a little above the median is a good idea and gets you into better quality investments with a lower risk profile.- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Marcus Auerbach:
Bad idea. Your instinct is to curb your risk by buying a cheaper property and going Section 8. In real estate risks go up with lower prices. The other way around, if you want to reduce risk, go a little up in price.
Many good comments here https://www.biggerpockets.com/forums/963/topics/1234351-out-...
Prices are very low in Cleveland - 139k median. While I can't speak to the demographic, investing at or a little above the median is a good idea and gets you into better quality investments with a lower risk profile.Thank you for your reply, I am realizing more and more now the risks involved with cheaper properties, and that they are not a good idea for a first time investor.
- 1yShawn McenteerBusiness MemberRealtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votesHi Cole. I see this situation a lot and in most cases it can comes down to miss information. Regardless of the market you live in from New Jersey to the midwest leveraging a house hacking strategy is very tough to beat. NJ is extremely high priced with high taxes but we also have extremely high rents that appreciate fast. when you break down what it takes to by OOS compared to owner occupying a duplex multiple things will happen.
Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
-25% down loan means 100K property requires you to have 25K. Leverage a 5% down owner occupied loan will get you a 500K property for same down payment
-when things go wrong in your house hack, you live on site already. When something goes wrong with OOS your 6+ hours away
-you need a place to live right now, why not have tenants pay for portion of asset you are living in
-100k property today. maybe appreciates slightly at some point but not much. There is a reason why NJ is expensive, we appreciate fast. No joke cash flow is the joke, equity blows cash flow away. Few hundred bucks per month does not change lives, hundreds of thousands of dollars in equity through appreciation is life changing. Appreciate then buy the cash flow if you must (or keep property because cash flow comes with rent increases)
-management fees are not cheap, learning to self manage is easy
-having team in place 6 hours away is tough, situating team locally much easier especially if you align yourself with people doing what your doing.
To me OOS is taking step in wrong direction for new investor.
House Hacking New Jersey563 Reviews- New to Real Estate · Clifton, NJ · Member since 2025 · 16 posts · 10 votes1y
Quote from @Shawn Mcenteer:
Hi Cole. I see this situation a lot and in most cases it can comes down to miss information. Regardless of the market you live in from New Jersey to the midwest leveraging a house hacking strategy is very tough to beat. NJ is extremely high priced with high taxes but we also have extremely high rents that appreciate fast. when you break down what it takes to by OOS compared to owner occupying a duplex multiple things will happen.Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
-25% down loan means 100K property requires you to have 25K. Leverage a 5% down owner occupied loan will get you a 500K property for same down payment
-when things go wrong in your house hack, you live on site already. When something goes wrong with OOS your 6+ hours away
-you need a place to live right now, why not have tenants pay for portion of asset you are living in
-100k property today. maybe appreciates slightly at some point but not much. There is a reason why NJ is expensive, we appreciate fast. No joke cash flow is the joke, equity blows cash flow away. Few hundred bucks per month does not change lives, hundreds of thousands of dollars in equity through appreciation is life changing. Appreciate then buy the cash flow if you must (or keep property because cash flow comes with rent increases)
-management fees are not cheap, learning to self manage is easy
-having team in place 6 hours away is tough, situating team locally much easier especially if you align yourself with people doing what your doing.
To me OOS is taking step in wrong direction for new investor.Thank you for your reply, after thinking about it for a few days I am leaning more towards a house hacking strategy using an FHA loan. It seems like the best strategy for a new investor and I would be able to be on site for any problems.
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes1y
Cole, there's a lot of good advice on this thread already. Out of state investing can be tough, but a lot of the horror stories are also due to people rushing into it.
They look at these cheap properties and think "how bad could it get?" They come into the market overconfident and having done little due diligence. I can tell you how this ends 9 times out of 10...
That said, you can grossly stack the odds of success in your favor by treating it seriously and finding great people to work with.
I own 12-doors in Detroit and live in California. It's been fantastic to me. 3 of my tenants are Section 8. They don't destroy my homes. Everyone else pays rent on time or pays the late fee when they don't.
My point is, these markets can definitely be lucrative and you can be successful. But they can also be disasters. I've seen it all, and I'm happy to share more about my experience if you'd like.
- 1yDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 991 posts · 646 votes
Hi @Cole Jennings, Just my opinion... it seems risky to rent out of state using section 8. Out of state for the first investment can be difficult. You would need someone you trust to manage including contractors. That can be tricky. Section 8 comes with many regs. And if you are not very familiar with it, that in itself can cause issues. I am a Realtor in Pennsylvania (Long & Foster) and I co-founded Spark Rental's coinvesting club. I have been involved in real estate in just about every sector. I also have my own personal investments. Without aging myself.. I have been doing this for over 30+ years. We came up with the coinvesting club so that all people can invest in real estate passively. That means from afar as well. We have invested in large communities in TX, OH and so many other areas. And not only apartment communities, we have invested in mobile home parks and even a steel industrial company. Because you only need $5K to invest in each deal, it allows a diverisified approach to investing. AND I have learned so much from so many of our members who are accountants, insurance brokers and so much more. Anyway... sorry for the rant! Best in all you do!
Spark Rental Co-Investing Club580 Reviews - 1yMike PaolucciBusiness MemberRealtor · Columbus Cleveland Dayton, OH · Member since 2022 · 499 posts · 553 votes
Quote from @Cole Jennings:
I am new to real estate investing and I am planning on buying a 100k house in the Cleveland area and renting out to section 8. I don't live in Ohio so I would be an out of state investor. The market around where I live is too expensive for me at the moment. Just want some advice on whether this is a good idea for a first-time investor or if I should take a different direction.
I was in the same position back in 2021 when I started investing while living in the bay area. I jumped into out of state investing as well and have been pretty happy with my decision. I'd recommend making sure you do plenty of research into the market and chatting with local PM's to get an idea of what you could be looking at. Cleveland is a great market for cashflow but will have some area's you'll want to stay away from (East side of Cleveland). I would recommend staying towards the west side of town.
Local PM's will have plenty of contractor contacts. Pretty easy to get taken for a ride by some random GC / contractor.
I would recommend a turnkey single family property to start. Less wear and tear and risk as you get to know the market and what it's like investing in an out of state property. You'll learn A LOT with your first property.
This is a marathon, not a sprint.
Happy to share some of my oos investing experiences. Good luck with your investing journey!
Reafco - Mike Paolucci 512 Reviews - 1yKristen AmbroseBusiness MemberAccountant · FL · Member since 2024 · 78 posts · 34 votes
First-time investors should seriously consider house hacking—it’s a much easier barrier to entry and a great way to learn the ropes while living in your investment. Out-of-state investing can be powerful, but it’s a different beast. You’ve got to spend serious time understanding the market and building a trustworthy team on the ground. Otherwise, it can turn into a nightmare fast.
I live in NJ, so I totally understand. My first property was a duplex in west long branch NJ that my husband and I lived in.
Ambrose Bookkeepers531 Reviews - 1yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Cole Jennings
If you are looking in Cleveland, I would recommend being in areas on the West Side of Cleveland like West Blvd, Cudell, Old Brooklyn, Clark Fulton, Edgewater, Jefferson, and Brooklyn Centre. The reason is the rent-to-price ratio is good so you can cash flow, and most of the West side doesn’t have a Point of sale inspection which is really annoying. - 1yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Investing in a $100K property in Cleveland for Section 8 rentals can be a solid strategy, as the market offers affordability and strong rental demand. However, as an out-of-state investor, you’ll need a reliable property manager and a solid understanding of the neighborhood dynamics to avoid problem areas. Texas could also be a great alternative, offering affordable markets with strong job growth, landlord-friendly laws, and solid rental demand.
If you need help finding resources or connections, DM me, and I’ll point you in the right direction!Good luck!
NETWORTH BUILDERS5236 Reviews - Member since 2025 · 4 posts · 8 votes1y
I don't think I have seen anyone mention this yet re: how to own the asset itself and take title with the asset protection and anonymity in mind. My clients invest all other the US. Making sure you set up a foundation to protect your business assets from your personal liabilities and your business liabilities from your personal liabilities starts at this stage. Here, OH is a state of anonymity so if possible form an OH LLC with the OH SOS, use a third party registered agent and an anonymous business address (no personal address or personal identifying information) to own the property and act as the landlord. That way if someone slips and falls, they don't get access to any cash or asset that the OH LLC doesn't ow. It also means if someone gets evicted, you are getting death threats to your home address (this has happened to so many of my clients). Using an LLC that's tax election is disregarded (or partnership if there are two owners) instead of an S or C corp, will allow you to benefit from cost segs and claiming depreciation as well as other business deductions you are going to incur and will want to write off -- even if you're running at a loss. All of my clients benefit much more from operating a company landlord vs as a sole prop. You can do this! Good luck with your investing!
- Member since 2025 · 1 post · 0 votes1y
I used to be a gladiator landland. There are a few things to take into consideration when deciding on tenants and section 8. Tenants that are in the home 24 hours a day, will turn you or your PM into a butler/repairman. If the house is damaged by tenant and the tenant calls for inspection, the inspector will give the tenant and/ or you a fix it ticket. If the repairs aren't completed, the section 8 payment will be stopped/held until section repairs are completed. You might have to evict, repair and shop for new section 8 tenant. This is something to consider being out of state landlord.
- 1yBernice RetzloffPro MemberMemphis, TN · Member since 2024 · 234 posts · 100 votes
Hey @Cole Jennings!
Buying a $100K house and renting to Section 8 can be a solid strategy, especially if you’re focused on steady rental income and guaranteed payments. That said, since you’ll be investing remotely, the biggest factor will be having a strong property management team to handle tenant placement, maintenance, and compliance with Section 8 requirements. Cleveland has some good cash flow potential, but I’d also suggest looking at other markets like Memphis, where similar-priced properties can offer strong rental demand and landlord-friendly regulations. If you’re open to exploring options or want to compare strategies, I’d be happy to chat and help you find the best fit for your goals!
- Memphis, TN · Member since 2023 · 100 posts · 24 votes1y
HI Cole,
I’m not an expert on the Cleveland market specifically, but buying low-priced properties — especially as an out-of-state or first-time investor — can be a risky strategy. While they may look appealing on paper, they often come with significant challenges and ongoing issues on the backend.
You might consider continuing to save or even partnering with someone to invest in stronger, more stable neighborhoods. It’s also a good idea to interview multiple property management companies to ensure you’re aligning with the right team before moving forward.
- Investor · United States · Member since 2022 · 55 posts · 15 votes1y
We scan and analyze every new listing all across the country and I would highly recommend out-of-state investing if you're in an expensive area! We see a very low "hit rate" in even the best markets today so good deals can just be hard to come by!
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