First Out of state rental

23 Replies

Good morning All, 

I am currently located in the greater NYC North Jersey market and I am looking to close on my first multifamily rental property within the next 3 months. The market here is expensive and make it difficult for investors starting out. I have been thinking about having my first rental be an out of state property so I can get more for my money. I have been researching the Cleveland and Hreater Philadelphia area respectively. 

Any advice would be greatly appreciated. Thanks in advance 

Originally posted by @Wayne Mack :

Good morning All, 

I am currently located in the greater NYC North Jersey market and I am looking to close on my first multifamily rental property within the next 3 months. The market here is expensive and make it difficult for investors starting out. I have been thinking about having my first rental be an out of state property so I can get more for my money. I have been researching the Cleveland and Hreater Philadelphia area respectively. 

Any advice would be greatly appreciated. Thanks in advance 

Hi Wayne,

I don't have an opinion on the Cleveland market as I know nothing about it and can't compare the two. I can tell you I'd rather be able to drive to my property and check it out occasionally (assuming you're outsourcing management) rather than flying to Cleveland. Unless you have family/work/some other reason to travel to Cleveland regularly, I'd stick closer to home. 

If you're going to self-manage, the drive-ability factor is even more important. 

Hello Wayne,

I am getting ready to close on my first rental property in Cleveland from out of state. I have research a lot of houses before finally deciding on the particular property that I selected. I am originally from Cleveland and I travel home about twice a year so the decision was easy for me. Cleveland does have a lot of Cash Flowing houses available. You would definitely need a good property management team or a turnkey operation on the ground to be successful though.I’m in Colorado and I haven’t seen the kind of Cash Flow opportunity that Cleveland has in Colorado.Best of luck to you.

Robert H.

Hey Wayne! I'm not a fan of Cleveland personally (I consider it still very much a declining market) but I am a fan of Philly. Philly has some great MFRs (in short supply, but they are there) and the market has a lot going for it. Big advocate. And it'd be driving distance from you!

@Wayne Mack great plan. @Troy S., he is a great guy and knows a lot about oh Philadelphia. I love the Philly market I buy a couple properties a month there at auction. Also Cleveland is a good market, just have to know locations. I have a couple friends that own in Cleveland.

Let me know if you have any questions and anything I can do to help.

Hey Wayne,

I completely agree with @Troy S. and @Ali Boone . The ability to be at your investment in a couple hours is a huge advantage. As Ali mentioned, the Philly market for MFH is pretty competitive, however if you are willing to put some work in, or invest some capital to make some repairs, opportunities exist.

One thing to note, if you buy in the next few months finding renters might be difficult if you do in fact make improvements to the property (as it is vacant). However, if it is a property that has some unattractive problems and you end up closing early 2016 you may be able to have it up and running at the ideal time!

I live/work in the city so reach out any time with questions about areas and options. Philly seems to be more and more and option for NYC investors because of the proximity.

Best of luck!

-James

@Troy S. you do make a very valid point and I do agree that being able to dry by your property is very important. That why I am highly considering the Philly market as it is driving distance from where I am located now

@James Wise thanks for the link and neighborhood ratings! That will be very useful. Can we further discuss the cleveland market? So I can become a little more familiar. You seem to be very in tune with the market there

Originally posted by @Wayne Mack :

@James Wise thanks for the link and neighborhood ratings! That will be very useful. Can we further discuss the cleveland market? So I can become a little more familiar. You seem to be very in tune with the market there

 Sure shoot a message anytime you have questions related to Cleveland. Whether it be real estate or the Cavaliers winning a title in 2016.

@James Wise   OK Mr. welcome wagon got to stop you there on the Cavaliers.. my warriors are the favorite as you know. and La bron he is just a bully.. I had never watched him play before my team go hot this year.  But he is DULL  grabs the ball backs in bullies his way to the hoop and scores.. and he was a total baby in the finals.

Lets hear it for Steph Curry now there is a class act along with the rest of the Warriors.

Originally posted by @Jay Hinrichs :

@James Wise  OK Mr. welcome wagon got to stop you there on the Cavaliers.. my warriors are the favorite as you know. and La bron he is just a bully.. I had never watched him play before my team go hot this year.  But he is DULL  grabs the ball backs in bullies his way to the hoop and scores.. and he was a total baby in the finals.

Lets hear it for Steph Curry now there is a class act along with the rest of the Warriors.

 Jay it is true, Your Warriors did squeeze out a win against my Cavaliers 3rd string squad. The fact remains that a healthy Cavaliers team is the clear favorite to win it all. 

As a matter of fact I think a wholesaler from California has a better chance at making some money selling me a Cleveland property than your Warriors beating a healthy Cleveland squad.

Originally posted by @Jay Hinrichs :

@James Wise  and we can go baseball and football as well.

Giants 3 championships in 5 years.. 49ers  5 super bowls. I watched every game in person from 1977 to 2002  what a run  LOL

 Can't argue that one. I don't enjoy baseball and well lets face it, that wholesaler from my previous post has a better chance at selling me a 3 day coaching program than my Browns have at winning a title..... : (

@James Wise   well shoot I thought I had something there.. your guard that got hurt in the fist game would have made a difference.. but remember the warriors were cold In this series Curry was not hot.. Thompson was very cold.. you give them a year and some experience they may come in next year and light your boys up.

NOw lets talk baseball and football.. your football team from what I recall has not seen a good day since Kosar retired.. my 49ers were pretty great as well know and will acknowledge then they went poo poo.. then we had a run now we are rebuilding again

The Giants what can I say 3 championships in 5 years. 

 I remember my dad taking me to games in the  60's watching May's Marichal Mccovey and others.. and I even remember watching Roberto Clemente .. Sandy Koulfax, Don Drysdale  Harmon Killabrew   Hank Aaron.. am I dating myself or do you even know who these guys are  LOL

We have had a nice run in our sports teams.. I hope you guys can win some championship one day

@James Wise    well I am going to roll into town one day and your going to buy me those pastami balls I dream of those things.

out here in granola land they would be not be popular.. but if your looking for wheatgrass and kale on every corner along with Coffee and a bunch of folks with funny colored hair then you should come out and visit

In my ten years managing my rental properties, I have come to even dread a drive across town much less out of town or out of state. So I only own and buy property nearby. There is some good advice here in my opinion in that regards.... I could go on for pages of what could go wrong if you are absentee and far away (and trying to manage it from afar).Bear in mind you may have to go by frequently for any number of issues related to the tenants, the building, etc. (and should to be a diligent landlord).

Picture the worst weather and the worst possible time for you and imagine getting in the car to head over.....This is not an unheard of scenario...

I recommend a property nearby or on your daily commute to make oversight easier if you are hand on. If you are hiring a manager (as some mentioned here), then your options are more open... but if you are seldom going to see the place anyway, really run the numbers and include an management fee and appropriate vacancy rate (remember the manager may have less incentive than you)....compare your returns on that far away rental you have to worry over against an index fund or REIT may be a better investment.

@Wayne Mack

Welcome. I work with @James Wise and @Account Closed in Cleveland. They are very knowledgable of the areas, and can assist you with managing the properties. I have seen many clients profiting greatly in Cleveland. 

HI Wayne,

Im in Northern NJ and can understand you frustration with the local market,  Its a difficult buy and hold market.  I have found much better opportunities out of state.  I have held a few properties in FL because I go there offer and Im familiar with the market. I also expect to close on 4 units in NC next month.  In this I hired a property manager.  A good manager is probably the most important factor.  If its to far away for you to manage you need someone you can trust and someone who has experience with the type of property you are buying. Your manager will make or break your returns!

Adam

Originally posted by @Adam Anderson :

HI Wayne,

Im in Northern NJ and can understand you frustration with the local market,  Its a difficult buy and hold market.  I have found much better opportunities out of state.  I have held a few properties in FL because I go there offer and Im familiar with the market. I also expect to close on 4 units in NC next month.  In this I hired a property manager.  A good manager is probably the most important factor.  If its to far away for you to manage you need someone you can trust and someone who has experience with the type of property you are buying. Your manager will make or break your returns!

Adam

 Thanks for the insight Adam! It's nice to see someone from my area/market that had the same dilemma at some point. My concern is and has been not being able to have immediate access to my property. Especially since I don't have any hands on investing experience. How did you start out Adam? If you don't mind me asking 

@Wayne Mack 

I'm in Geauga county, just outside of Cuyahoga county (Cleveland).  There are a lot of septic systems, which can be a blessing and a curse. If you ever need  something just send me a message. Thanks and have a great day 

My First through 3th property was in FL and I lived there at the time and still hold one.  I'm working on a 4 unit building out of state now that I have not yet seen.  There is already a property manager marketing it for rent and I called around to about 1/2 dozen local managers to interview them to make sure the current manager is the best fit.  I did the same thing with a few real estate attorneys.  I asked each person including their staff about the area the property was in and verified everything the seller had been telling me.  I also asked for lots of pictures.  Once I felt comfortable enough I secured the property with a deposit and plan to take a day trip to visit it in person and meet the manager.  Once you narrow down an area its not to hard to get familiar with it...just takes some time and research.  In my opinion, as long as the investment is profitable and I can find a good manager, out of state is much less of an issue. 

There are also a number of Turn Key companies you can research here on BP.  I spoke with many of them.  Overall, I think you can do better on your own or with a partner but I haven't ruled them out

Adam