Out of State Investing-- How to Start

Investor · Collierville, TN 38017 · Member since 2017 · 815 posts · 597 votes

I'll give you the view from the other side of the table — I'm the local operator in Memphis that out-of-state investors hope to find.

Pick the market by the numbers, not vibes. My box: under $100K all-in, ARV $180K–$265K, 3BR Section 8 rents $1,395–$1,950, and it has to hit the 1% rule. Memphis ZIPs like 38109, 38111, 38114, and 38118 still pencil because prices are low and rents are real. If a market can't produce numbers like that, no tool fixes it.

Your PM instinct is right — for your first deal out of state, a good local manager is your whole operation. Interview them like a hire, not a vendor: how many units, average days to lease, do they self-perform maintenance.

One warning: deal flow is the real bottleneck, not money. A PM finds you renters, not deals. Get plugged into local wholesalers before you buy, and never put earnest money down on a deal you can't walk from.

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Mike PaolucciBusiness Member

Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 501 posts · 553 votes

2w

Quote from @Robert Nebel:

Hi everyone,

I am new to real estate, have been on BP for a few months, have been watching/listening to the youtube videos and podcasts. I'm looking for some guidance on where to start my out of state investing joruney.

I currently live in NYC and would rather not live in this area utilizing an FHA as prices can get expensive. So I am looking out of state and wondering where to begin with finding the right market for buy and hold long term investing. Is BP market finder tool up to date with accurate data? Are there other tools I should be utilizing?

Once I find the right market, I will most likely search for a good, local property management company (since this will be my first deal) and then get to analying properties on top of properties to try to find good deals in neighborhoods they are familiar with and have good knowledge of.

If you have any advice or can point me in the right direction, that would be very helpful and appreciated!

Welcome to BP @Robert Nebel

I was in a similar position back in 2020/2021 while living in San Francisco. Nothing made sense and landlord laws also didn't make sense either.

I'd recommend looking at the economics of various markets and see where things are growing both in population & local economy. What companies are actively investing in infrastructure and creating jobs in the market and how does it effect the long term outlook of the individual market.

Once you narrow down the market, figure out the strategy and start building out your team. You'll need investor focused realtors / lenders, property managers and contractors to help you build out the systems. When it comes to the realtor, I'd recommend connecting with ones that actively invest and own properties. There's a lot of realtors out there who don't own property or understand the economics & reality of investing in property.

Happy to answer any additional questions.

[email protected]614-892-9184

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Austin GoetzBusiness Member

Lender · Minneapolis, MN · Member since 2026 · 33 posts · 10 votes

2w

Running the numbers on investment financing is something you will want to do early on. Big difference between the FHA financing (down payment, rate, costs) compared to conventional investment property financing or DSCR financing. Conventional financing comes with a bit more paperwork upfront qualifying you based upon your employment and income keeping your DTI under 50%, but you can see better terms. DSCR financing has less paperwork and qualifies you on the rental income that property would generate, but rates and fees could be higher along with prepayment penalties.

Both are solid options and good to explore both avenues before starting searching for properties.

Happy to be a lending resource for you as you explore your out of state options. Feel free to reach out with any questions or to run through those numbers.

[email protected]952-797-2007

Magnolia Bank

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Christine Kankowski

Real Estate Broker · Temecula, CA · Member since 2014 · 994 posts · 783 votes

1w

I did a lot of research on the areas prior to even looking at houses. Looks at price point vs rent point, Unemployment, income level, Crime, etc. A lot of this can be found on bestplaces.net. From there, you can visit the areas and see what works for you, I like low crime, good schools and im' willing to pay a little premium for nicer areas over ones that have a lot of potential problems.

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Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

1w

Good work on identifying your current market/situation and evaluating different markets that you should look into @Robert Nebel

Tons of investors from NYC, LA and the bay area usually tend to buy real estate in the midwest because it is cheaper, land-lord friendly, and tech companies investing has boosted the economy.

You should do some research and find a good market that has good potential and connect with an investment realtor who can connect you with their team of contractors, lenders, and property managers.

They will also send you off-market and on-market deals that you can buy. Start with turnkey rentals then shift to the BRRRR model and you can recycle your capital and grow your portfolio. Eventually, do a 1031 exchange when you have enough units and exchange it for a large multi-family complex without paying capital gains.

[email protected]614-802-5698

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Dean HarrisBusiness Member

Real Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes

1w

@Robert Nebel Welcome to BP!

I work with OOS investors everyday to source cash flowing deals here in Memphis TN. I am seeing houses that rent for better than the 1% rule, occupied and cash flowing houses that are better than the 1% rule and I also have houses that need minimal repairs so you can place your own tenant if that's your strategy. Be sure to trust your source. We have tons of people tossing out "deals" so be sure to trust your source

I also host a Podcast where we discuss how to invest in Memphis, TN and talk all about deals and what strategies work best in Memphis. You can search it wherever you listen to podcast. You can watch us on Youtube by searching The Investor's Guide to Memphis Real Estate

Best of Luck to you as you get started and dont hesitate to reach out with any questions!

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Tyler Palmblad
Member since 2026 · 4 posts · 1 vote
21h
I'd love to connect about investing in Memphis. I just sent you a request.
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Matthew MorrowBusiness Member

Investor · PA - NY - NJ · Member since 2019 · 674 posts · 233 votes

3d

@Robert Nebel a lot of our clients are in your exact spot, living in NY and buying in PA. It's close enough to drive when you need to, taxes are a fraction of NY's, and there's less regulation. Wherever you look, lock down the team on the ground first: an agent who actually invests, a contractor you've tested on a small job, and a property manager. Those people make or break it from a distance. Happy hunting!

[email protected]484-791-6200

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Adam Summerer

Lender · Franklin, TN · Member since 2026 · 104 posts · 23 votes

2d

Since you're buying out of state, FHA is off the table (it has to be your primary), so plan on roughly 15-25% down conventional or a DSCR loan. I'd get pre-approved for the actual investment loan before you pick a market. In the cheaper markets people pitch here, Memphis included, a lot of houses come in under DSCR minimum loan amounts, which tend to run somewhere around $55-100k depending on the lender, and that changes which price points you can even finance.

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Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

1d

I would first find a market that has the pointers you’re looking for i.e (cash-flow, appreciation, low cost of entry, ect). Then I would focus on growing relationships and building your core 4. Having a team in place is essential to long-distance investing. The core 4 consists of a realtor, contractor, property manager, and a lender. Once you have this team in place, you should have the foundation to invest in any market confidently while not being there physically.

[email protected]614-662-1652

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James WachobBusiness Member

Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 890 votes

1d

Hey @Robert Nebel ! Welcme to BP!

I think you’re on the right track. I’d start by narrowing it down to a few markets and comparing the numbers rather than relying on one tool alone. Market Finder can be a good starting point, but I’d also look at actual rental listings, recent sales, property taxes, insurance costs, and local property management fees to get a more realistic picture of cash flow.

I also like your plan to connect with a local property manager early. They can help you understand which neighborhoods they’re comfortable managing and what rents and maintenance costs you should realistically expect. Since this is your first out-of-state deal, I’d focus on finding a market and team you can trust before worrying about analyzing hundreds of properties.

I’m a real estate agent based in Memphis, TN, and I work with out-of-state investors building long-term rental portfolios. Memphis is one market worth researching if you’re looking for a lower entry point and rental cash flow. If you ever want to explore the market or compare numbers, I’d be happy to connect and help!

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

20h

The area you select may well depend on the PMC you can find AND trust!

[email protected]248-209-6824

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James Loffredo

Lender · Dallas, TX · Member since 2024 · 7 posts · 2 votes

19h

Robert, I’m in Dallas, I lend in 48 states, and I have no market to sell you, so take this as a lender’s view rather than an agent’s.

Pick the market with the loan in hand, not after. Before you commit to a market, ask a lender three things: minimum loan amount, minimum DSCR, and how many months of reserves they want after closing. The minimum loan amount quietly rules out the cheapest ZIPs people pitch; many lenders won't go below the mid five figures.

Cheap houses yield more on paper and usually cost more to run. Taxes and insurance by county are the two numbers no market tool gets right for you, so pull them yourself.

Vacant is fine for DSCR. Most lenders use the appraiser's market rent on a purchase, so you don't need a tenant in place to close.

Your plan to find the property manager first is right. I’d add the lender before the agent, because the pre-approval tells the agent which houses to even send you. Happy to look at a couple of candidate markets with you if you message me.

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Out of State Investing-- How to Start

Out of State Investing-- How to Start

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