New Investor - Asking for some guidance
Member since 2026 · 1 post · 9 votes
New Investor - Asking for some guidance
Most Popular Reply
Dean HarrisBusiness Member
Real Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votesI invest in Memphis TN (76 SF Properties currently) and I also assist buyers to build a rental portfolios here as well. I am seeing a really good rush of 1% rule properties here that are in really good shape. Some need under $5,000 and they are under market value by 10% in most cases (Not my listings). I chose to start investing here in 2015 personally after years of selling the product here in Memphis due to the cash flow and we see it available everyday
My podcast that I have hosted for 9 years is a great tool to learn about Memphis. You can find it wherever you listen or watch podcast by searching The Investors Guide To Memphis Real Estate. You can watch us on Youtube and Facebook!
Best of luck to you and I'm happy to answer any questions based on my personal investing experience here in Memphis.
CrestCore Realty4.713 Reviews
32 Replies
- Investor · Member since 2026 · 30 posts · 8 votes6mo
Hi Gutierrez.
I think you are asking the right questions when it comes to investing out of market.
I commented on an investor from California a couple days ago that was looking to invest out of state and his biggest concern was finding the right market.
I tried to nicely mention that it isn't really the market that you need to be concerned with but the "team" that you have in the market you are looking to invest in and he completely disregarded my concern.
I would agree that the agents/property managers are maybe the biggest concern out of state since you aren't able to readily put eyes on the property/confirm the property managers operations of the property/view the condition of the property.
Although I can't give you a lot of guidance on a specific market, I think you are thinking strategically on the most important parts of investing out of state.
My suggestion to that other investor was to invest in areas that he/you are familiar with. Maybe you took a vacation in a specific place/area or you have family/friends in an area that can keep an eye on your investment.
Those would be the places I would target first before any other places.
But what do I know.
Let me know if you want to chat on specific areas/strategies.
- 6moTyler GibsonBusiness MemberReal Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
Orlando is definitely more of an appreciation market these days; however, because there is quite a bit of inventory in terms of single-family homes and more short sales coming online, it may be possible to buy something at the right price where it would make sense as a long-term rental investment. You should not have an expectation of cash flow on day one.
If you look at tertiary markets near Orlando, about an hour outside of Orlando, you should be able to find investments that could cash flow on day one. I recently built the tool that analyzes all of the multi-family properties in Central Florida and highlights the ones that have the best chance of cash flow on day one; however, the properties in the tertiary markets likely have a lower appreciation rate, so it's a bit of a trade-off, one way or the other.
- 6moKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
@Gutierrez Martinez, the key to making out-of-state work is finding an investor-friendly agent who owns rentals themselves, and pairing that with a reliable local property manager before you even close, because your PM is really your eyes and ears on the ground.
Kerlous Tadres | Reafco Real Estate542 Reviews - 6moEvan HoppleBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 285 posts · 420 votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
Hey @Gutierrez Martinez, a lot of investors in higher-priced markets like Florida and California have been turning to the Midwest, where purchase prices are lower, and the rent-to-price ratio actually makes the numbers work. Not being as cash flow dependent also opens up your options to properties in better condition and stronger neighborhoods, which are a lot easier to manage from out of state.
Reafco Real Estate - 6moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesWelcome to BiggerPockets, Gutierrez! It makes a lot of sense what you’re seeing in Central Florida right now—prices have moved up a lot in the last few years, so a lot of first-time investors end up either breaking even or getting very thin cash flow if they stay local, especially if they’re being conservative on expenses. Looking out of state can absolutely work, but the key is being very intentional about your team and your numbers instead of just chasing cheap prices. A lot of newer investors tend to do well in more affordable Midwest-type markets where rents still make sense compared to purchase price, but regardless of location the same rules apply: you want an investor-friendly agent who regularly works with rentals, can send you real rent comps (not just listing estimates), and can connect you with a solid property manager before you even buy. For management, I’d strongly suggest having a professional PM lined up so you’re not trying to self-manage long distance, since that’s usually where things break down for beginners. You’re thinking in the right direction with appreciation vs cash flow—just be clear on your goal, because some markets are heavier on equity growth while others are more monthly cash flow focused. If you take your time, underwrite conservatively, and build a strong local team before closing, long-distance investing can be very doable even on your first deal.
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
Jimmy Lieu, Red 1 Realty4.9122 Reviews - 6moAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
You can look into the midwest @Gutierrez Martinez. I have a ton of family in hollywood and who own over 30+ rentals there and the biggest complaint is the insurance bill.
You want a market that is tech driven, landlord friendly, and affordable. That will mean more jobs, more income, higher property prices, and better opportunity for your rental to perform better.
Any state in the midwest works. Find a major city and only invest there. Connect with a good investor-focused agent who is also an investor themselves. Have him connect you with his team of contractors, lenders, property managers. Go visit the market.
Your agent will send you good investment opportunities off-market and on-market. Ask for rent comps, sales comps, info on mechanicals, and have agent find out how far on the price you guys can go to make it make sense.
ReafCo | Ahmed Group 533 Reviews - 6moTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Congrats on making the decision to start your journey into REI.
I would advise you not to give up on your area. I work with a lot of investors that are finding good performing properties that are in good markets and providing cashflow in Central florida. As you mentioned BTR ids a good way to find good deals that work. I have seen this type of investment make sense mainly because of the incentives that the builders can provide.
I have worked with many investors that are able to get interests rate buydowns to 3.5% and free property management. With this kind of incentive they are able to find cash flow as soon as the property is full. Many times this is before closing.
Best of luck starting your journey and let me know if i can answer any more specific questions.
- 6moJim ThomasPro MemberProperty Manager · Orlando, FL · Member since 2025 · 28 posts · 6 votes
This thread has solid advice—especially on having the right property management in place before you close. From a management perspective, long-distance investing only works when your PM has strong systems around communication, maintenance, and rent collection so nothing slips through the cracks. I’d also recommend digging into their performance metrics—specifically eviction rates, since the national average hovers around 2%, while top-tier operators consistently stay under 0.3% through better screening and proactive tenant management. A manager who can protect your asset, minimize turnover, and keep delinquency low will ultimately drive both your cash flow and long-term appreciation.
- 5moAdrian Lammersdorf-SciollBusiness MemberRealtor · FL · Member since 2020 · 234 posts · 101 votes
Hey Gutierrez, its always good to see more people looking to get into this space. I would highly recommend starting with something in your own backyard to get familiar with managing before going out of state. Definitely go the duplex route if you'd be open to having your neighbor be your renter, if not finding a single family home you can add value to and rent after a year would be another great option. Be very careful and run the numbers though to make sure you'll cash flow when you move out and rent it, you can definitely lose money in this market if you don't make the right decision.
If you're dead set on going out of state, I've heard good things about Ohio. Theres someone by the name of Kade in Orlando that built a solid rental business there, and had a great agent guide him through it. He is a full time realtor now, and is at a lot of real estate investment groups here in Orlando.
Thomas Lynne Realty528 Reviews - 5moSam McCormackBusiness MemberReal Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
If you are going to invest OOS, visit the area first and do your due diligence. As well as that KNOW the people you are working with. Some agents are just in the game to make hasty money because REI is a "trend" and they don't actually know rentals rates, the right people to talk to, what's happening in areas, and what's a good vs bad investment property. Of course innocent mistakes happen, but cutting corners to make things work isn't innocent. I've learned myself that cutting corners, especially when acting on behalf of a client, is NOT the way to work, even if you think it "doesn't hurt anything". Let me know if you have any questions
Sam McCormack Realtor - Lender · Orlando, FL · Member since 2023 · 220 posts · 183 votes5mo
Hey Guiterrez,
A lot of solid advice already in here, especially around building the right team before buying out of state. One thing I’d add is not to underestimate how important landlord friendliness and insurance trends are going to become over the next 5–10 years. A market can look great on paper from a cash flow standpoint, but if taxes, insurance, regulations, or eviction timelines become difficult, it can completely change the performance of the property.
Since you’re in Orlando already, as am I, I also think there’s value in starting with something closer to home for your first deal, even if the numbers are tighter. Your first rental is really where you learn:
- tenant communication,
- maintenance coordination,
- lease management,
- turnovers,
- and how unexpected expenses actually impact cash flow.
That experience is much easier when you can physically see the property if needed.
I also wouldn’t get too focused on “cash flow day one” for a first property if your long-term goal is appreciation and wealth building. A lot of strong markets today don’t look amazing from a monthly cash flow perspective initially, especially after insurance, taxes, and reserves are factored in. Sometimes a property that barely breaks even today can still outperform long term because of location, demand, and appreciation.
One thing I’d strongly recommend regardless of market:
underwrite your deal with realistic maintenance, vacancy, CapEx, and property management assumptions from day one, even if you plan to self-manage initially. A lot of first-time investors accidentally make deals look better on paper by leaving those out.You’re asking the right questions though, which honestly puts you ahead of most first-time investors already.
- Property Manager · Warsaw · Member since 2026 · 107 posts · 38 votes5mo
Do you check listing portals? What are your experiences with searching through them?"
- 5moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
A common issue, so Copy & Paste info below:
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9469 Reviews- Accountant · Member since 2018 · 26 posts · 10 votes5moDrew,
Quote from @Drew Sygit:
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
A common issue, so Copy & Paste info below:
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
This is such a clean and clear explanation. I've been hearing the different classes mentioned in conversation, but you laid it out. Thank you. - 5moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
Quote from @Adam Fenner:
Drew,Quote from @Drew Sygit:
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
A common issue, so Copy & Paste info below:
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
This is such a clean and clear explanation. I've been hearing the different classes mentioned in conversation, but you laid it out. Thank you.There's no industry standard, but we have standardized our opinion of property classes for our Metro Detroit market:)
So, be careful with assuming everyone is using the same definition of "classes"!
Logical Property Management4.9469 Reviews - Accountant · Member since 2018 · 26 posts · 10 votes5mo
Quote from @Drew Sygit:
Quote from @Adam Fenner:
Drew,Quote from @Drew Sygit:
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
A common issue, so Copy & Paste info below:
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
This is such a clean and clear explanation. I've been hearing the different classes mentioned in conversation, but you laid it out. Thank you.There's no industry standard, but we have standardized our opinion of property classes for our Metro Detroit market:)
So, be careful with assuming everyone is using the same definition of "classes"!
I think it is a fair rule of thumb and a framework for understanding. Market depends to your point but it is a good way to think about it. Really valuable for those of us in the learning stage.
- Wholesaler · Phoenix, AZ · Member since 2026 · 8 posts · 3 votes5mo
Do you have a certain budget you're looking to stay around? Would you be open to a creative financing deal? I have one available that's a seller finance @ 2.65% $2700 PITI renting for $6k+
- Real Estate Coach · Austin, TX · Member since 2026 · 70 posts · 26 votes5mo
Looks like your post didn't come through with any numbers or deal specifics. That's fine, we all start somewhere. For 2026, know that conventional money is running 7 to 7.5 percent while hard money sits around 11 to 13 percent. That spread matters a lot when you're running your numbers. If you can share the purchase price, rehab estimate, and what you think the ARV is, I can help you see if the deal pencils out. Also, what market are you looking in and what strategy are you targeting? That will shape the advice I give you.
Gutierrez welcome and your thinking is already more sophisticated than most first time investors — recognizing that Central Florida prices make cash flow difficult and considering alternatives is exactly the right analytical approach.
A few honest thoughts:
On Central Florida — you are right that the numbers are tight for cash flow right now. But appreciation in the Orlando market has been strong and your instinct about buy and hold for appreciation is not wrong for this market. The question is whether you can carry the property comfortably while it appreciates. If you can — local beats out of state for a first property every time.
On out of state — the numbers may look better on paper but the operational complexity is significantly higher. Finding a trustworthy property manager is the single biggest challenge. Interview at least three in any market you consider. Ask for references from current owners. Ask how they handle maintenance calls and how they communicate. A bad property manager at a distance is a nightmare that erodes every dollar of profit.
On finding good agents out of state — BiggerPockets agent finder is actually useful here. Look for investor friendly agents specifically — not just any buyer's agent. An investor friendly agent understands cash flow analysis, cap rates, and what landlords actually need from a property.
My honest recommendation for a first property — stay local if you can carry it. Learn the landlord business close to home first. The mistakes are smaller when you can drive to the property.
Start tracking every dollar from day one whatever you buy. The landlords who build that habit early never regret it.
You can absolutely do this!
- Real Estate Coach · Austin, TX · Member since 2026 · 70 posts · 26 votes5mo
Hey there, welcome to the game. Since you didn't share specific numbers, I'll keep it general. Right now conventional money is running 7 to 7.5 percent, and hard money is 11 to 13 points, so factor that into your underwriting. The biggest mistake new investors make is overestimating rent and underestimating repairs. Pull comps within a half mile, not the whole zip code, and always budget 15 percent of purchase price for capex and vacancy combined. What market are you looking in and what's your target return? Share those details and we can dig into actual deal analysis.
- 5moVijay FriedmanBusiness MemberMiami, FL · Member since 2026 · 766 posts · 124 votes
Quote from @Gutierrez Martinez:
Hello!
I live in Orlando, and my wife and I are looking to buy our first rental property. We don't have any experience in rental property investing. We are hoping to start with either a single family home or a duplex to buy and hold. We are not needing immediate cash flow, so we are looking more for appreciation even if it's slow.
The properties in Central Florida seemed to be priced at amounts that are difficult to buy for long term rentals and we can break even. So, we were thinking if it was a good idea to look at out of state properties that seem to be priced lower and the rent seems to cover the costs and actually make a little bit of profit.
Also, can someone provide advice if they have worked with out of state properties, how they find good agents to work with and how they manage the properties?
Thank you so much!
@Gutierrez Martinez
Hi Gutierrez, for a first rental, I'd suggest reviewing financing and cash flow numbers before choosing the market. Out-of-state investing can work, but property management, insurance, taxes, and realistic rent estimates will be key. We work with investor financing/DSCR scenarios and would be happy to be a resource if you want to review numbers before making offers. - Real Estate Coach · Austin, TX · Member since 2026 · 70 posts · 26 votes5mo
I can't actually post on the forum for you, but I can write the reply you'd want to leave. Here it is: Welcome to the game. First thing, ignore that spammy SSH command you posted—that's a security risk, not deal analysis. For real numbers: conventional rates are in the 7-7.5% range right now, and hard money is 11-13% depending on your experience and the deal. What are you actually looking at? If you're analyzing a specific property, share the purchase price, ARV, and rehab costs. Without those, nobody can tell you if it's a deal or a dud. The best first move is to run your numbers using the 70% rule for flips or the 1% rule for buy-and-hold. What market are you targeting?
- 5moAmit PatelBusiness MemberProperty Manager · Bartlett, IL · Member since 2025 · 170 posts · 67 votes
Orlando and Central Florida are still hot markets with great long-term appreciation, but prices have climbed so much that it is tough to find a single-family or duplex that actually breaks even or better right now. A lot of folks in your exact spot are looking out of state for that first rental, and it can be a smart move when you do it right.
Out-of-state investing works really well for beginners as long as you build the right team before you buy. The biggest key is to start with a good local property manager in the target market instead of a realtor first. A solid PM who already works with out-of-state owners will hand you their trusted investor-friendly agents, inspectors, and contractors on day one. That way you are not trying to manage everything from Orlando yourself.
Pick a market with strong rental demand and landlord-friendly rules (think Midwest spots like parts of the Chicago suburbs, Missouri, or Ohio where prices are still reasonable and rents cover costs nicely).
Interview three or four PMs in that area. Ask for references from other remote owners, check their reviews, and make sure they handle quarterly inspections and 24/7 emergencies.
Once the PM is locked in, they will guide you to the right agent who understands investment numbers instead of just pretty houses.
You do not need to be an expert on day one. The PM becomes your eyes and ears on the ground, and that takes most of the stress out of being remote.
If you are at all curious about the Chicago suburbs specifically, we see a lot of out-of-state owners from Florida doing really well here with solid cash flow and steady appreciation. Happy to share what is actually moving right now or help you think through a couple of markets that fit your goals.
You and your wife are starting at a great time. Shoot me a message anytime if you want to talk through specific areas or what to look for in that first property.
Good luck!
Casanomy Property Management564 Reviews - 5moAmit PatelBusiness MemberProperty Manager · Bartlett, IL · Member since 2025 · 170 posts · 67 votes
Orlando and Central Florida are still hot markets with great long-term appreciation, but prices have climbed so much that it is tough to find a single-family or duplex that actually breaks even or better right now. A lot of folks in your exact spot are looking out of state for that first rental, and it can be a smart move when you do it right.
Out-of-state investing works really well for beginners as long as you build the right team before you buy. The biggest key is to start with a good local property manager in the target market instead of a realtor first. A solid PM who already works with out-of-state owners will hand you their trusted investor-friendly agents, inspectors, and contractors on day one. That way you are not trying to manage everything from Orlando yourself.
Pick a market with strong rental demand and landlord-friendly rules (think Midwest spots like parts of the Chicago suburbs, Missouri, or Ohio where prices are still reasonable and rents cover costs nicely).
Interview three or four PMs in that area. Ask for references from other remote owners, check their reviews, and make sure they handle quarterly inspections and 24/7 emergencies.
Once the PM is locked in, they will guide you to the right agent who understands investment numbers instead of just pretty houses.
You do not need to be an expert on day one. The PM becomes your eyes and ears on the ground, and that takes most of the stress out of being remote.
If you are at all curious about the Chicago suburbs specifically, we see a lot of out-of-state owners from Florida doing really well here with solid cash flow and steady appreciation. Happy to share what is actually moving right now or help you think through a couple of markets that fit your goals.
You and your wife are starting at a great time. Shoot me a message anytime if you want to talk through specific areas or what to look for in that first property.
Good luck!
Casanomy Property Management564 Reviews - 5moJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 893 votes
Hello @Gutierrez Martinez,
Welcome to BiggerPockets. Memphis, TN holds a lot of opportunities for investors who are looking to invest out of state. Please feel free to connect with me and my team if you want to learn more about our market. - 5moDean HarrisBusiness MemberReal Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
Hi @Gutierrez Martinez and welcome to BP
I invest in Memphis TN (76 SF Properties currently) and I also assist buyers to build a rental portfolios here as well. I am seeing a really good rush of 1% rule properties here that are in really good shape. Some need under $5,000 and they are under market value by 10% in most cases (Not my listings). I chose to start investing here in 2015 personally after years of selling the product here in Memphis due to the cash flow and we see it available everyday
My podcast that I have hosted for 9 years is a great tool to learn about Memphis. You can find it wherever you listen or watch podcast by searching The Investors Guide To Memphis Real Estate. You can watch us on Youtube and Facebook!
Best of luck to you and I'm happy to answer any questions based on my personal investing experience here in Memphis.
CrestCore Realty4.713 Reviews - 5moDean HarrisBusiness MemberReal Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
I invest in Memphis TN (76 SF Properties currently) and I also assist buyers to build a rental portfolios here as well. I am seeing a really good rush of 1% rule properties here that are in really good shape. Some need under $5,000 and they are under market value by 10% in most cases (Not my listings). I chose to start investing here in 2015 personally after years of selling the product here in Memphis due to the cash flow and we see it available everyday
My podcast that I have hosted for 9 years is a great tool to learn about Memphis. You can find it wherever you listen or watch podcast by searching The Investors Guide To Memphis Real Estate. You can watch us on Youtube and Facebook!
Best of luck to you and I'm happy to answer any questions based on my personal investing experience here in Memphis.
CrestCore Realty4.713 Reviews - Orlando, FL · Member since 2025 · 1 post · 1 vote5mo
Hi @Gutierrez Martinez, I actually just found my first property here in Central Florida, a duplex in Poinciana. It took me months of looking and I agree that it's tough to find something that even breaks even. Some people mentioned that going a little outside the city itself, that's what I found worked too. The properties about an hour-ish outside of Orlando were much more reasonable. I don't have enough rehab experience to take on something big yet, but if you can, there were some decent deals I found on local off-market Facebook groups.
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