How do you choose a remote investment property

Question

I would like to do BRRRR and I am out of state (actually out of the country, but I am a US citizen and have lived in Illinois). I would love to invest in real estate in the US. However, my knowledge of the various markets is extremely limited. I see many great looking deals on Roofstock, but it seems as if their properties are overpriced and their "4 star neighborhoods" are ones that I'm told are not good at all, neighborhoodscout says it's number 2 on the crime index out of 100 (1 being the worst), areavibes gave it an F rating on crime, employment, schools, and housing.

Basically, I am new to real estate (never bought a property) and not sure how I am supposed to be assessing the neighborhoods and properties for remote investment and would appreciate any help I can get. I'm not really looking for a turnkey provider (I think at the moment at least) as I would be interested in doing BRRRR.

Claire Nnadi · Answer

Hi All,

I was wondering if anyone has created an ultimate guide to Youngstown, Ohio neighborhoods or something similar. I am trying to dabble into that neighborhood which already sounds risky. If anyone has any information about the most decent neighborhoods to invest in that area or contact info for reliable property managers and contractors in the area, that will be super helpful.

I was going for the BRRRR method but may have to do the traditional method until I build enough cash flow to get started on BRRRR. I am an out of stater living in CA. Any help will be appreciated. THANK YOU ALL

Tom Ott · Answer

BRRRR can be very difficult OOS. Many investors opt to do Turnkeys. This way everything has been done for you before. The TK provider would have renovated the property in-house first, placed a tenant, and then supplied management in-house after closing. All done in one place and ready to go.

Account Closed · Answer

@Tal C.

You should look into tertiary market investing, this will allow you to achieve the returns you want while protecting yourself from the unpredictability and small CAP rates of the larger markets.

James Wise · Answer

Welcome aboard. Many markets available. Cleveland is the one I am most familiar with and it's also very popular with investors across the USA so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides those listed above. 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

• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• 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 lose 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 Fraud and/or Morris Invest Fraud 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 averse, real estate, (especially out of state) is not for you.

Charles Carillo · Answer

@Tal C.

Number one I would say is to choose your target markets, neighborhoods and then put together your team on the ground before starting to look at any properties. Once your team is set, you can start reviewing properties and putting in offers.

How do you choose a remote investment property

How do you choose a remote investment property

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