Out-of-State investing help
William MontgomeryPro Member
New to Real Estate · Renton, WA · Member since 2019 · 5 posts · 7 votesOut-of-State investing help
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes@William Montgomery for many new investors, buying their first rental can be intimidating and there are all sorts of perilous challenges!
What @G. Brian Davis offers is a pretty safe alternative. It allows you to share the risk with other investors and learn from each other. THEN you can decide if you want to invest solo:)
If you do proceed solo, ASSUME EVERYONE IS LYING TO YOU until they prove otherwise!
I know that sounds a bit crazy, but it will protect you. The honest people won't really mind, but the scammers will keep telling you to trust them until they get tired of your quetioning them and ignore or "fire" you.
Here's some copy & paste advice you may find useful:
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We think the Midwest is a GREAT place for OOS investors to consider!
Your first question shouldn't be WHERE to invest (that is #2 question), but HOW you will invest!
Many OOS investors set themselves up for failure because they don't invest the time to ACTUALLY understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.
Good luck!
Logical Property Management4.9460 Reviews
8 Replies
- 11moG. Brian DavisPro MemberInvestor · Hatboro, PA · Member since 2016 · 3k+ posts · 872 votes
Hi William, just wanted to throw another idea out there that you may not have considered.
I spent 10 years living overseas, and for the first few years I still owned some rental properties in the States. It was way more work than I wanted, even with a property manager. I ended up unloading all 15 properties.
I wanted to keep investing in real estate however so I started exploring passive investments. I ended up forming a community with a bunch of other passive investors, and today our co-investing club meets 1-2X a month on Zoom to vet a new passive real estate investment together. We can each go in with $5K if we like a particular investment.
It's been a much easier way for me to invest long-distance. Just another perspective/option to consider.
- 11moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@William Montgomery for many new investors, buying their first rental can be intimidating and there are all sorts of perilous challenges!
What @G. Brian Davis offers is a pretty safe alternative. It allows you to share the risk with other investors and learn from each other. THEN you can decide if you want to invest solo:)
If you do proceed solo, ASSUME EVERYONE IS LYING TO YOU until they prove otherwise!
I know that sounds a bit crazy, but it will protect you. The honest people won't really mind, but the scammers will keep telling you to trust them until they get tired of your quetioning them and ignore or "fire" you.
Here's some copy & paste advice you may find useful:
--------------------------------------------------------------------------------------------------------
We think the Midwest is a GREAT place for OOS investors to consider!
Your first question shouldn't be WHERE to invest (that is #2 question), but HOW you will invest!Many OOS investors set themselves up for failure because they don't invest the time to ACTUALLY understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.
Good luck!Logical Property Management4.9460 Reviews - 11moKevin FarmarBusiness MemberChicagoland, IL · Member since 2025 · 9 posts · 7 votesHi William, I am a boots on the ground IL Realtor. Happy to connect and chat about the market, and help you out with property analysis. Have a great Friday.
- 11moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
not to be discouraging but... i recommend not doing this.
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
that is what usually happens when someone in an expensive area picks a market based solely on price. if you can't be there in person...
- New to Real Estate · Renton, WA · Member since 2019 · 5 posts · 7 votes11mo
Quote from @Nicholas L.:
not to be discouraging but... i recommend not doing this.
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
that is what usually happens when someone in an expensive area picks a market based solely on price. if you can't be there in person...
Thanks what would You suggest?
- 11moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @William Montgomery:
Hello,
I am in the Seattle are looking into Invest In out of state rental properties. I have been researching Peoria IL, due to its price range (150k and below). I was wondering if anyone has any connections in this area? I would perfer to buy before the end of the year.I own my own home, looking to use the equity from that to start my investment journey. I am looking for suggestions for the following:
- out-of-state Investor friendly Real estate agent.
- Property Management Company.
-Lenders.
- Contractors.
- Neighborhoods/ things to watch out for.
- landlord regulations.
I appreciate any help. Have a great day! Thanks for the help.
Hey William, welcome to BiggerPockets! Sounds like you’re in a great position to get started, and it’s smart that you’re doing your research before jumping in. I don’t personally have much experience in Peoria, but since you’re open to out-of-state investing, I’d highly recommend taking a look at Columbus, Ohio as well. I actually moved here from Portland back in 2020 to invest and now own 10+ rentals. The market here is super investor-friendly with strong population and job growth, and a ton of major companies like Intel, Amazon, Facebook, Google, Honda, Microsoft, LG, and Anduril are building and expanding here. You can still find great properties in the $120K–180K range that hit the 1% rule and cash flow from day one, which is getting harder to find elsewhere. Ohio also has very landlord-friendly regulations and tons of solid property management companies that work with out-of-state investors. Definitely worth running the numbers and comparing it to Peoria. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9120 Reviews Quote from @William Montgomery:
Hello,
I am in the Seattle are looking into Invest In out of state rental properties. I have been researching Peoria IL, due to its price range (150k and below). I was wondering if anyone has any connections in this area? I would perfer to buy before the end of the year.I own my own home, looking to use the equity from that to start my investment journey. I am looking for suggestions for the following:
- out-of-state Investor friendly Real estate agent.
- Property Management Company.
-Lenders.
- Contractors.
- Neighborhoods/ things to watch out for.
- landlord regulations.
I appreciate any help. Have a great day! Thanks for the help.
Are you planning on extracting equity from your current home for the down payment to achieve 100% LTV? Have you performed any form of underwriting.
My underwriting would depict a 100% LTV at peoria'savetagerent (~$1k/month) to be very cash negative. A good PM will eat heavily into the $1k/month rent. Maintenance/cap ex will take even more of the $1k rent.
High leverage amplifies the return from appreciation. But Peoria’s appreciation rate has been below the inflation rate (2.07%/year for this century). This means the value is declining in inflation adjusted dollars. https://www.neighborhoodscout.com/il/peoria/real-estate.I am not picking on Peoria but do believe it has virtually no historical appreciation. I believe virtually every market bleeds cash at 100% LTV.
So your investment does not produce return via cash flow and historically it has not produced eingnificant return from appreciation. Do you believe one of these s going to change in Peoria? If not, what is the purpose of the investment?
good luck- Member since 2025 · 3 posts · 0 votes11mo
I understand you are interested, IL. However, I am in Oklahoma. I am an agent and I work with a few investors who purchase rental properties near our military bases. Oklahoma City and Lawton, OK are great options, and decent prices. I'm happy to help in either of these markets, or anywhere statewide. I also specialize in helping investors acquire HUD/VA foreclosures. Happy to help, if interested.
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