Need advice for out of state investing from NY

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Need advice for out of state investing from NY

David Hong
Member since 2020 · 4 posts · 3 votes

Hi - Currently residing in Queens, NY amd have about +$200k for downpayment and want to invest in units as rental property (i.e 3-4 units or duplex).

However, as most of you are aware, it is near impossible to find a property that generates positive cash flow in NY/NJ area and wanted to get some of your insights on how to move forward. Is there any places you recommend to invest in out kf NY or NJ? If out of state is better, where would you recommend? I understand property mgmt is the key...

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Filipe Pereira
Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
6y

Hey @David Hong, welcome to bigger pockets! About 70-80% of the calls that come into our property management office are by out of state investors in NY and NJ, so I definitely hear what you're saying. Since you already understand the value of property management, as long as you are OK with not being a 10 minute drive from your property, I'd say you're a prime candidate for an out of state investment. I wouldn't be surprised if the majority of people who live in NY/NJ and other HCOL locations are investing outside of their state. 

Ask someone to set you up with MLS access in all the areas you're considering, then take a look at list prices vs gross rents generated. In CT we're still seeing about a 1.3% (when folks are referring to the 1% rule). We're getting ready to list a $370K property here next week that generates $4800 in income. Feel free to reach out any questions if you're evaluating Connecticut or Massachusetts. If you do go the MA route, be sure to educate yourself on lead laws and other tenant friendly laws they have in place (like grace periods for rent payment).

Best of luck! 

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  • Charles Xia
    Investor · New York, NY · Member since 2019 · 44 posts · 30 votes
    6y

    Hello David,

    I’m a licensed real estate agent and and investor. The closest areas I know investors are in are Philadelphia and Connecticut. I would see how comfortable you are investing out of state and trusting a property manager. Would you want to visit your property? How far and frequently are you willing to travel? I ask this because I take care of my own properties. Ive already had experiences with bad contractors and do the work myself.

    I’ve seen almost cash flow positive places in Jersey City, Hoboken, Journal Square (near the Path line). Other than that you can look out in Philly and Connecticut.

    Happy Investing,

    Charles

    2Reply
  • Sam Abazari
    Lender · Chicago, IL · Member since 2020 · 53 posts · 30 votes
    6y

    Hi David! Most people would agree that it's always better to be close to your investment, but if OOS investing is what you're looking for, it's certainly possible to find success in doing so as well. In this case, it's pretty important that you learn about the market you'd be interested in looking into - I'm personally more informed about the market here in Massachusetts if this is potentially one of your interests - and then within there, find a trustworthy property manager. I'd say it'd be useful to personally meet the PM / team if possible, but otherwise ask around, or even here on BP I'm sure people would be willing to offer their help! 

    2Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    Hey @David Hong, welcome to bigger pockets! About 70-80% of the calls that come into our property management office are by out of state investors in NY and NJ, so I definitely hear what you're saying. Since you already understand the value of property management, as long as you are OK with not being a 10 minute drive from your property, I'd say you're a prime candidate for an out of state investment. I wouldn't be surprised if the majority of people who live in NY/NJ and other HCOL locations are investing outside of their state. 

    Ask someone to set you up with MLS access in all the areas you're considering, then take a look at list prices vs gross rents generated. In CT we're still seeing about a 1.3% (when folks are referring to the 1% rule). We're getting ready to list a $370K property here next week that generates $4800 in income. Feel free to reach out any questions if you're evaluating Connecticut or Massachusetts. If you do go the MA route, be sure to educate yourself on lead laws and other tenant friendly laws they have in place (like grace periods for rent payment).

    Best of luck! 

    3Reply
  • David Hong
    OP
    Member since 2020 · 4 posts · 3 votes
    6y

    @Filipe Pereira thanks for the advice! Can you please share some of those listings? I would like to evaluate..

    1Reply
  • Sean Toomey
    Deer Park, NY · Member since 2016 · 115 posts · 85 votes
    6y

    @David Hong

    Hi David. My name is Sean and I started out in the same boat as you. I’m from Long Island and I choose to invest OOS. Returns are much better and you don’t get hit with those high tax bills. I own properties in Memphis and a bunch of multi families in CT. Feel free to reach out to me if you have any questions.

    Sean

    2Reply
  • Alex Olson
    Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @David Hong:

    Hi - Currently residing in Queens, NY amd have about +$200k for downpayment and want to invest in units as rental property (i.e 3-4 units or duplex).

    However, as most of you are aware, it is near impossible to find a property that generates positive cash flow in NY/NJ area and wanted to get some of your insights on how to move forward. Is there any places you recommend to invest in out kf NY or NJ? If out of state is better, where would you recommend? I understand property mgmt is the key...

     Read the book long distance real estate investing by David Greene. It is a great, short crash course on how to do it. I have several New York clients here in KC and have assisted them with all aspects of acquisition.

    0Reply
  • Jimmy O'Connor
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    6y

    @David Hong , a huge portion of my list is actually investing from NYC, namely Queens and Brooklyn. 200k will take you a lot further down here in Philly than it will up in your neck of the woods. On top of that, the development of the high-speed railway going from NYC to DC will make the less expensive metropolitan Philly all the more appealing to live in. I always make it a point to ask investors who are looking to do distance some simple questions:

    1) What is your end goal?

    2) Are you flipping, holding, or both?

    3) What do you value most in your investing? Is it appreciation, cash flow, stability, tenant quality, tenant turn over, etc?

    4) When you are getting started, are you willing to come down more in the beginning as you are vetting your team?

    5) Do you have your metrics figured out on what "good returns" looks like? 

    I'll follow up in PM if you need any more insight!

    0Reply
  • Andrew AkinsPro Member
    Realtor · Memphis, TN · Member since 2016 · 50 posts · 45 votes
    6y

    @David Hong I have been investing in Memphis for 6+ years and Little Rock.  You want to look for areas that cash flow nicely, have large applicant pools, and are landlord friendly which these two markets present.  If you are out of state, property management will make or break your investment so having someone you trust and is going to look out for your investment is key.  Let me know if I can be of any assistance.  

    1Reply
  • Craig Bellot
    Property Manager · CT · Member since 2014 · 687 posts · 329 votes
    6y

    Hello David!

    If your long-term goal is to invest in more properties it is worth it to invest in a solid property manager.
    Your time as an investor is infinitely better spent analyzing markets and deals.
    You want to move up the 80/20 leverage curve from technician to investor/entrepreneur.
    In Bridgeport, CT the investment is about 10% of rents collected. This frees you up from taking resident phone calls, coordinating maintenance, leasing vacancies, accounting P&L's, conducting inspections and making property payments to focus on higher leverage activities.

    Regards, 

    Craig Bellot

    Property Manager

    0Reply
  • Sam Abazari
    Lender · Chicago, IL · Member since 2020 · 53 posts · 30 votes
    6y

    Hi @David Hong! If you want to invest OOS, but still within reasonable proximity, maybe you'd be interested in looking into CT, PA or MA? I'm personally more familiar with the Massachusetts market, and have found success there myself, so would be more than happy to share any insights if you'd be interested! 

    1Reply
  • Michael Reisman
    Columbus, OH · Member since 2019 · 78 posts · 66 votes
    6y

    @David Hong

    I’d recommend looking into Columbus, OH. It’s a hot market with lots of opportunity right now with the population and job growth.

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @David Hong:

    Hi - Currently residing in Queens, NY amd have about +$200k for downpayment and want to invest in units as rental property (i.e 3-4 units or duplex).

    However, as most of you are aware, it is near impossible to find a property that generates positive cash flow in NY/NJ area and wanted to get some of your insights on how to move forward. Is there any places you recommend to invest in out kf NY or NJ? If out of state is better, where would you recommend? I understand property mgmt is the key...

     Columbus, Ohio is a great location to invest in. You need to develop your team of 4, (property manager, Realtor, contractor, and lender). After you do this you can invest in any market.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    1Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    Columbus, OH has a pretty high job and population growth @David Hong! 

    1Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    @David Hong I'll second what all the others have said regarding Columbus OH. In my opinion it is one of the best cities for REI since it has a ton of job growth, even currently, and has a diversity of industries (insurance, fashion, logistics, and University) that are headquartered here. The fun fact I love to quote is that you can get to something like 73% of the continental US within a days drive of Columbus, so it has been and always will be a huge logistics hub. We've got something like 3-4 Amazon warehouses around the area, several Pro Logis campuses, and then theres a couple server farms in the area as well. So not the sexiest industries by any means but they will be around for a while, and the jobs they provide pay well.

    [email protected]614-362-2231
    1Reply
  • Mikael Winkler
    Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes
    6y

    @David Hong

    Great problem to have with $200k+ capital available! I do agree with some of the above regarding Columbus, OH. We are seeing a lot of growth, with a diversified economic and social base. And plenty of opportunity for value-add properties, especially in that 2-4 unit number you mentioned. 

    As @Remington Lyman mentioned, a team is key. In your markets of interest, I'd start reaching out to professionals like Realtors and attorneys to explain your goals and learn the market. Often times, they'll be able to refer to other important members of your team - contractors, property managers, lenders, etc. Ask for referrals and previous work/experience. 

    Any market you choose, if you do your due diligence up front to build that team, you'll be alright.  Good luck!  

    1Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    It should be a place you are intimately familiar with. Or that you will get extremely familiar with. If not, you're just gambling blindly.

    0Reply
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