Choosing a market when investing in multifamily out of state

[Anthony Bielecki]

Hello all,

To anyone out there who is currently investing in multifamily properties out of their home state, how did you find and choose the market you invested in? From books and articles I've read here on BiggerPockets, I'm comfortable gathering information to help determine whether a market is favorable or not, but I'm overwhelmed by the sheer number of choices when investing out of state. Obviously I can't look at the CAFR for every city in the US or even a single state. Any suggestions for narrowing it down would be greatly appreciated.

[Omar Khan]

@Anthony Bielecki I would second @Andrew Johnson comment. 

Every single list will include: Dallas, Austin, San Antonio, Houston, Salt Lake City, Raleigh-Durham-Charlotte, Colorado and cities in Florida. 

But you have to pick where you have an edge. It could be because you've lived there before or have family/friends in the area. Either way, I would try to not rely solely on internet listings and try to understand your edge first. Follow that up with your goals and objectives to get a better idea. 

If you're investing in large multifamily (60-200 units), then investing out of state should not be an issue. If you are only buying 10-20 units then buying out of state can be a logistical nightmare even if the deal is great. For instance, a month or two's worth of cash flow will be eaten up if you travel and stay in the market of your investment. That will be a massive drag on performance.