I’m trying to invest out of state

Melrose, MA · Member since 2018 · 1 post · 0 votes

Hey guys, I currently live in Massachusetts, and trying to buy my first rental property out of state, because the market where I am (Boston) is too expensive. So I did some research on which states are landlord friendly, and found that FL, WV, TX, ID, etc. Chose to start with Arkansas for right now, next was which zip codes are best/good and found 72712- 72034- 72701 etc. I’m looking for a class C+ or above neighborhood to invest in that would give me a 10% return. 3 beds , 2+ bath 2 car garage with a minimum of 1,500 square ft. under 130k. Preferably near places with jobs that won’t go away like a hospital. Mind you I have never stepped a foot in that state, but trying to fight my fears. Saved up a good chunk and looking to put that money to work, ultimate goal is to create cash flow. Any advice please ?!

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Simcha Davidman
Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
6y
@Pierre Victor welcome to BP! I'd recommend going over there for at least a few days, seeing the neighborhoods and networking with locals.
Otherwise, if you want to do it blind, just call up some real estate brokers and tell them what you're looking for. I don't specifically recommend this, but it can probably be done. You can also speak with some agents, get some properties you're interested in, and then fly out there to confirm it's still good after seeing the properties and neighborhood.
Another alternative is to find deals in MA, and even NH, southern ME, RI and maybe even CT. Within a couple hours drive you have a lot of different types of markets and you can find cheaper housing. It's also close enough that you can just pick up on a random day and go look at a bunch of properties, meet people, etc. and it could take only only a few hours (as opposed to flying halfway across the country). But it's also far enough that you can't really manage that yourself and you will need to institute best practices for setting up a business and not a job.
Good luck! The only thing you'll regret (aside from making a terrible decision :) ) is not taking action!

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Rod F.
Rental Property Investor · Higginson, AR · Member since 2016 · 48 posts · 46 votes
6y
interested in turnkey or property's that need light rehab work .
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Jonathan Oh
Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
6y
@Pierre Victor You can do much better than 10% for a C+ neighborhood and your requirements you have. As far as overcoming fears of out of state investing, I bought properties sight unseen too, so its possible. But you have to be very thorough with your research. And I highly recommend to visit your market if you get a chance. It will get you a better feel for the market.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
6y
Originally posted by @Pierre Victor:
Hey guys, I currently live in Massachusetts, and trying to buy my first rental property out of state, because the market where I am (Boston) is too expensive. So I did some research on which states are landlord friendly, and found that FL, WV, TX, ID, etc. Chose to start with Arkansas for right now, next was which zip codes are best/good and found 72712- 72034- 72701 etc. I’m looking for a class C+ or above neighborhood to invest in that would give me a 10% return. 3 beds , 2+ bath 2 car garage with a minimum of 1,500 square ft. under 130k. Preferably near places with jobs that won’t go away like a hospital. Mind you I have never stepped a foot in that state, but trying to fight my fears. Saved up a good chunk and looking to put that money to work, ultimate goal is to create cash flow. Any advice please ?!

Most folks going out of state hit up the turnkey markets. There are tons turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors
- Cleveland, Ohio
- Cincinnati, Ohio
- Dayton, Ohio
- Toledo, Ohio
- Youngstown, Ohio
- Cincinnati, Ohio
- Memphis, Tennessee
- Birmingham, Alabama
- Kansas City, Missouri
- Saint Louis, Missouri
- Indianapolis, Indiana
- Detroit, Michigan
- Erie, Pennsylvania
- Louisville, Kentucky
- Milwaukee, Wisconsin
- Jackson, Mississippi
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
- Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
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Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
6y
Originally posted by @Pierre Victor:
Hey guys, I currently live in Massachusetts, and trying to buy my first rental property out of state, because the market where I am (Boston) is too expensive. So I did some research on which states are landlord friendly, and found that FL, WV, TX, ID, etc. Chose to start with Arkansas for right now, next was which zip codes are best/good and found 72712- 72034- 72701 etc. I’m looking for a class C+ or above neighborhood to invest in that would give me a 10% return. 3 beds , 2+ bath 2 car garage with a minimum of 1,500 square ft. under 130k. Preferably near places with jobs that won’t go away like a hospital. Mind you I have never stepped a foot in that state, but trying to fight my fears. Saved up a good chunk and looking to put that money to work, ultimate goal is to create cash flow. Any advice please ?!

Buy and holds that need no work are best for OOS. Another option would be to go with a Turnkey Provider. They would have everything done for you and the investment should be 100% passive.
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Kendall Staggs
Investor · Huntington, Barboursville · Member since 2019 · 42 posts · 29 votes
6y
The Huntington, WV area is great for single family home investing. Huntington has two major hospitals which focus on different areas of medicine, St. Mary's is a heart surgery hospital and Cabell Huntington is general surgery/ cancer treatment. Landlord laws are very favorable in this area, you can typically get someone out in 30 days or potentially less with the cash for keys method. Most of your single family homes in $87/ sq ft. range will most likely need some renovations but would be closer to B properties for that purchase price.
I have 2 single family homes and an 8 unit complex which I own in the Huntington/ Barboursville area. All of my rentals meet the 1% rule, actually they are all over 1.25%.
Reach out to me with any questions. I was the general contractor for the 8 unit complex and I manage my own properties, so I would be willing to assist you in all aspects of your OOS investing.
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