Looking for the best out of state market!

San Francisco, California
Real Estate Agent
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Looking for the best out of state market!

Shannon Park
New to Real Estate · San Francisco, CA · Member since 2021 · 2 posts · 15 votes

Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo and have around 100k ready to invest. I am very new to real estate and currently do not own any properties. I and am looking for a market that will possible provide me some cash flow + appreciation. I am honestly very overwhelmed with which state I should be looking in. I hear mixed reviews about investing in Texas because of the high property tax. But I know a good deal works well in any market. Texas, Indiana, Kentucky, Wisconsin, Tennessee, Florida? How do I narrow down my search ?

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
4y

Metro Detroit offers many options for meeting the 1% Rule and relatively high ROI.

Follow our "Deep Dive" series we're doing about Metro Detroit cities and City of Detroit Neighborhoods: https://www.biggerpockets.com/...

The two most common mistakes we see investors make, over & over again, are:

1) Not understanding and running their own ROI numbers

2) Not having a clear understanding of the type of asset a property is

In our opinion, your best team member should be your Property Management Company (PMC). They have to deal with any property you buy every month until you sell or terminate them. Everyone else on your team will be transaction-based and not really involved after a purchase.

We're in the Metro Detroit area, so you may want to follow our blog here on BP, but at least read the following posts:

How to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

In our experience you will need to:

1) Learn to "Maintain to the Neighborhood", not your personal standards

2) Tenant-Proof everything you can

  • Hard surface flooring, not carpeting (too easy to trash)
  • Same basic paint for everything
  • No garbage disposals for them to break
  • Only spring-type doorstops also with plate on the wall
  • Glue rubber mats under sinks to prevent water damage
  • Sheet aluminum on walls around stovetops, for easy grease removal
  • Towel racks - screw 1x3 to wall studs, then screw rack to that
  • Install low-profile downspout ext, not aluminum that always disappear
  • Plan on cleaning gutters and leaves up in the fall as tenants won't
  • Avoid garage door openers

3) Have a great application screening process:

  • Check credit for evictions & convictions, utility collections
  • Focus on employment/income stability
  • Require bank or debit card statement - you'll be surprised what they spend their money on!
  • Make surprise visit to their current home to see how they treat it - that's how they'll treat yours!
  • Deliberately have a few challenges in your screening process - it will weed out "entitlement mentality" problems

4) Allow payment plans, but create system to track when payments due, so they don't keep falling further behind

  • You will need to call them on due dates or they will fall further behind
  • Be prepared to give a strong NO when asked if you will change rent due dates to "make it easier" for tenants to pay rent based upon their SSI or paycheck dates. This shows total lack of budgeting and is a sign they will only fall further behind with more excuses.

5) Have a defined eviction process, but allow 3-5 days of flexibility for inevitable slow-pays.

6) Find handymen that live in an area only 1 Class higher than your property. Sending a Class A handyman to a Class C or D property will waste your money. Send Class B to C and Class C to D. They will also get along better with the tenants.

Let us know what questions we can answer for you.

[email protected]248-209-6824
Logical Property Management4.9462 Reviews
WebsiteView Page
19Reply
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  • James WilcoxBusiness Member
    Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 603 votes
    4y
    Quote from @Shannon Park:

    Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo and have around 100k ready to invest. I am very new to real estate and currently do not own any properties. I and am looking for a market that will possible provide me some cash flow + appreciation. I am honestly very overwhelmed with which state I should be looking in. I hear mixed reviews about investing in Texas because of the high property tax. But I know a good deal works well in any market. Texas, Indiana, Kentucky, Wisconsin, Tennessee, Florida? How do I narrow down my search ?


    Investor friendly agents please reach out to me! I'd be happy to receive any guidance and work with someone who can find me a good deal in a good market. Thank you so much!

    @Shannon Park It is great that you are well on your way to being a good investor and you have the right mindset! My advice is not to focus not so much on which state is better over another. That is definitely wise to look at big picture but set up your specific buying criteria and go from there. All real estate is local and all markets have their advantages and disadvantages. Your "best" market will fit your investing goals perfectly and one that sparks your interests or passions. Find the market that you can build the best team in. Being out of state, your team will make or break your investment goals. Surrounding yourself with the real estate leaders in an area will make your far more successful in your particular market of choice then min-maxing some numbers on a spreadsheet. Reaching out to the local investor friendly agents is certainly a good start. I personally like KY but I am pretty biased lol.

    REI James w/ eXp Realty54 Reviews
    WebsiteView Page
    2Reply
  • Wade Woo
    Real Estate Consultant · Manassas Park, VA · Member since 2019 · 74 posts · 19 votes
    4y
    Quote from @Shannon Park:

    Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo and have around 100k ready to invest. I am very new to real estate and currently do not own any properties. I and am looking for a market that will possible provide me some cash flow + appreciation. I am honestly very overwhelmed with which state I should be looking in. I hear mixed reviews about investing in Texas because of the high property tax. But I know a good deal works well in any market. Texas, Indiana, Kentucky, Wisconsin, Tennessee, Florida? How do I narrow down my search ?


    Investor friendly agents please reach out to me! I'd be happy to receive any guidance and work with someone who can find me a good deal in a good market. Thank you so much!There is a lot of factors that goes into finding the best market for out of state investing.  The main one is investing for cash flow or for growth/appreciation because you can't be the best at both at the same time so you will need to choose.   

    In order to narrow down your search for the best market you will need to decide whether you want cash flow or appreciation more because they can't be both the best at the same time.

    You will need to find out where are most people migrating to?

    There are a whole lot of other factors to consider when it comes to choosing the best market: i.e. the price/rent ratio, the average value in the market, the crime rate, the type of property: single or multi family, long or short term, buy and hold or flip.  It depends what you want.  DM me if you want to discuss some more.

    2Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    4y

    @Shannon Park there's some truth to the saying that a good deal works in any market but it all depends on your objectives. Not all markets will fit your criteria and objective. You have to tailor your strategy to your market. Generally, high priced i.e. CA or markets with high property taxes and homeowners insurances don't lend themselves well to a cash flow objective. Other objectives may be a better fit however. If your goal is cash flow, then you're going to do best in more affordable markets with solid rents and low operating expenses such as property taxes and insurance. You should also look for markets with strong population growth, job growth, modern/diverse economies and favorable landlord/tenant laws that are business friendly. I like Midwest markets such as Indianapolis, Kansas City and the Quad Cities, We've been active in Indy and KC for about 10 years and just recently expanded in to the Quad Cities. Also, narrow your search down to metropolitan areas rather than states. 

    5Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @Shannon Park find a market you can drive to.  It will be so much easier to get started there than to try to get started in Texas.  I have to believe there's a market within 2-4 hours of you that will cash flow.  You can go look at properties in person, meet agents, meet property managers, etc.

    3Reply
  • Lexey Vezzoso
    Real Estate Agent · Boise, ID · Member since 2019 · 192 posts · 184 votes
    4y

    Hi Shannon!

    How exciting that you are going to start investing in real estate!

    Finding your market depends on what your overall goals are such as cash flow vs. appreciation, property management involvement (how hands on do you want to be), do you want single or multi family etc. 

    I'd be happy to jump on a call with you to talk about this more and help guide you in any way that I can. I work with a lot of investors from out of state and can help walk you through some different scenarios if needed. 

    Good Luck!

    -Lexey 

    4Reply
  • Nick GiulioniPro Member
    Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
    4y

    Hi Shannon, I'm from California but started my real estate journey here in Indianapolis. Now, I have almost a hundred doors. I would love to help/share my experiences and chat with you more if you're interested.

    7Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    4y

    This is like asking where the best pizza is. It's basically everywhere and it's locally understood. Do this to help yourself get started on markets:

    1. make a list of every place you have ever lived or went to school (this gives you a competitive advantage of knowledge of the area over other areas you have never even been to)

    2. make a list of every town your best friends and trusted family lives (this gives you a competitive advantage of boots on the ground and eyes you trust so you can at least have somoene you already know be a vetting mechanism)

    3. take those lists and compare them with the lists you are making from your research

    4. start with the towns that crossover into both lists.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
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  • Rob Bergeron
    Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes
    4y

    My clients are doing well here in Louisville. Happy to jump on a call to discuss. 

    0Reply
  • Felix Cheng
    Member since 2022 · 5 posts · 5 votes
    4y
    Quote from @Nick Giulioni:

    Hi Shannon, I'm from California but started my real estate journey here in Indianapolis. Now, I have almost a hundred doors. I would love to help/share my experiences and chat with you more if you're interested.


     Hi Nick, I'm just starting from CA. I would def love to hear your story if you are willing to share.

    Much Appreciated :)

    1Reply
  • Lauren CutchenBusiness Member
    Real Estate Agent · The Woodlands, TX · Member since 2019 · 226 posts · 85 votes
    4y

    @Shannon Park Congrats on the decision to invest in real estate! Having that much to put down in my area (North Houston, suburbs) will get you in many doors. We are experiencing a tremendous growth in population and like everywhere, the market is appreciating a lot. I would love to message you and see if this area might be a good fit. 

    [email protected]832-406-4239
    Lauren Cutchen 513 Reviews
    WebsiteView Page
    2Reply
  • Mallory Klindt
    Real Estate Broker · Iowa City, IA · Member since 2020 · 21 posts · 38 votes
    4y

    Hi Shannon! We cover Eastern Iowa with a focus on Cedar Rapids/Iowa City. We've been investing since 2008. Own 19 rentals of our own now and it's been a very stable market with both cash-flow and appreciation. Nothing that makes you wealthy overnight! Just a strong, stable build year-over-year. We have a mix of Corporate Headquarters, Universities, and Teaching Hospitals all within a 45-minute radius that really drive the stability!

    3Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Shannon Park I would think about the end and work backwards. Do you have a specific goal that you want to hit? When do you want to hit it, 10, 20, 30 years? From there you can back into a general outline of where you want to invest.

    3Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    Metro Detroit offers many options for meeting the 1% Rule and relatively high ROI.

    Follow our "Deep Dive" series we're doing about Metro Detroit cities and City of Detroit Neighborhoods: https://www.biggerpockets.com/...

    The two most common mistakes we see investors make, over & over again, are:

    1) Not understanding and running their own ROI numbers

    2) Not having a clear understanding of the type of asset a property is

    In our opinion, your best team member should be your Property Management Company (PMC). They have to deal with any property you buy every month until you sell or terminate them. Everyone else on your team will be transaction-based and not really involved after a purchase.

    We're in the Metro Detroit area, so you may want to follow our blog here on BP, but at least read the following posts:

    How to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

    In our experience you will need to:

    1) Learn to "Maintain to the Neighborhood", not your personal standards

    2) Tenant-Proof everything you can

    • Hard surface flooring, not carpeting (too easy to trash)
    • Same basic paint for everything
    • No garbage disposals for them to break
    • Only spring-type doorstops also with plate on the wall
    • Glue rubber mats under sinks to prevent water damage
    • Sheet aluminum on walls around stovetops, for easy grease removal
    • Towel racks - screw 1x3 to wall studs, then screw rack to that
    • Install low-profile downspout ext, not aluminum that always disappear
    • Plan on cleaning gutters and leaves up in the fall as tenants won't
    • Avoid garage door openers

    3) Have a great application screening process:

    • Check credit for evictions & convictions, utility collections
    • Focus on employment/income stability
    • Require bank or debit card statement - you'll be surprised what they spend their money on!
    • Make surprise visit to their current home to see how they treat it - that's how they'll treat yours!
    • Deliberately have a few challenges in your screening process - it will weed out "entitlement mentality" problems

    4) Allow payment plans, but create system to track when payments due, so they don't keep falling further behind

    • You will need to call them on due dates or they will fall further behind
    • Be prepared to give a strong NO when asked if you will change rent due dates to "make it easier" for tenants to pay rent based upon their SSI or paycheck dates. This shows total lack of budgeting and is a sign they will only fall further behind with more excuses.

    5) Have a defined eviction process, but allow 3-5 days of flexibility for inevitable slow-pays.

    6) Find handymen that live in an area only 1 Class higher than your property. Sending a Class A handyman to a Class C or D property will waste your money. Send Class B to C and Class C to D. They will also get along better with the tenants.

    Let us know what questions we can answer for you.

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    19Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    4y

    @Shannon Park

    Metro Detroit.

    Purchase: $80-$140k

    Rent: $1100-$1600

    Roi: double digit

    Cash flow: $200-$400/door

    Appreciation: double digit (right now)

    Vacancy: 3-4%

    Markets: B, C+

    Ring cities of Detroit.

    I love my portfolio here. Rest of the nation is struggling for cash flow and it’s everywhere here.

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5380 Reviews
    WebsiteView Page
    5Reply
  • Irene Nash
    Realtor · Member since 2018 · 138 posts · 174 votes
    4y

    @Drew Sygit Just wanted to say thanks for the very helpful and practical post about rentals in the Detroit area.

    2Reply
  • Felix Cheng
    Member since 2022 · 5 posts · 5 votes
    4y
    Quote from @Joe Hammel:

    @Shannon Park

    Metro Detroit.

    Purchase: $80-$140k

    Rent: $1100-$1600

    Roi: double digit

    Cash flow: $200-$400/door

    Appreciation: double digit (right now)

    Vacancy: 3-4%

    Markets: B, C+

    Ring cities of Detroit.

    I love my portfolio here. Rest of the nation is struggling for cash flow and it’s everywhere here.


     Hey Joe, it's great info.

    I have one question tho, when I looked up, I found the vacancy is like 8% in Detroit, does it mean only the Detroit proper? and how is the job market + population growth given the city has been in decline for the past decades. Thx

    2Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    @Felix Cheng @Joe Hammel

    The decline of Detroit is old news - just Google "Detroit revival" and read for yourself:)

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    2Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    4y

    @Felix Cheng

    @Drew Sygit

    Yes, as Drew mentions, look into the Detroit Revival.

    I’m sure you can find different numbers for most anything somewhere and 8% may have been a number at some point and time, but in recent years it’s low single digits.

    Even with Detroit Proper picking up momentum, that’s likely where you’re seeing your data. Detroit Proper has seen a slow decrease in past years.

    As for jobs,

    Metro Detroit does just fine. It hosts 16, Fortune 500 companies. The two largest being hospitals and auto industries. Michigan is well known for auto but hospitals are actually even bigger. If you start googling them you will see. Some of the hottest investor markets are the cities in the suburbs of Metro Detroit located near a hospital or auto maker, or BOTH if you’ve really found a good one.

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5380 Reviews
    WebsiteView Page
    3Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    @Felix Cheng

    @Drew Sygit

    We also have the two largest lenders in the country headquartered here and 3 of the top 10. They've created tens of thousands of jobs, along with several Amazon warehouses.

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    1Reply
  • Loren Polito
    Real Estate Agent · San Antonio, TX · Member since 2017 · 109 posts · 81 votes
    4y

    @Shannon Park

    Hi Shannon,

    I am from the Bay Area as well but just moved out to the San Antonio area with my family to focus on multifamily investing. Like you I was interested in investing out of state and I landed in San Antonio and I am very happy I did. Deals are harder to come by that make sense but it’s definitely possible and on top of that you will be able to enjoy the appreciation as well. I don’t see the San Antonio market slowing down anytime soon. I would love you talk more and please let me know if you have any questions.

    2Reply
  • Leslie Pappas
    Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes
    4y
    Quote from @Shannon Park:

    Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo and have around 100k ready to invest. I am very new to real estate and currently do not own any properties. I and am looking for a market that will possible provide me some cash flow + appreciation. I am honestly very overwhelmed with which state I should be looking in. I hear mixed reviews about investing in Texas because of the high property tax. But I know a good deal works well in any market. Texas, Indiana, Kentucky, Wisconsin, Tennessee, Florida? How do I narrow down my search ?


    Investor friendly agents please reach out to me! I'd be happy to receive any guidance and work with someone who can find me a good deal in a good market. Thank you so much!


     Hi Shannon,

    There plenty of opportunities outside CA, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

    A very good source of local analysis is rereport.com

    3Reply
  • Daniel JongMin Kim
    Member since 2022 · 9 posts · 2 votes
    4y

    Hi Shannon,

    I have referred a few people to my associates who work with investors in Houston. They are well acquainted with CA based investors and besides my people there are many full service property management firms in cities like Houston for out of state property owners. If anyone needs referrals contact me!

    1Reply
  • Andrew Scott
    Member since 2020 · 6 posts · 5 votes
    4y
    Quote from @Shannon Park:

    Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo and have around 100k ready to invest. I am very new to real estate and currently do not own any properties. I and am looking for a market that will possible provide me some cash flow + appreciation. I am honestly very overwhelmed with which state I should be looking in. I hear mixed reviews about investing in Texas because of the high property tax. But I know a good deal works well in any market. Texas, Indiana, Kentucky, Wisconsin, Tennessee, Florida? How do I narrow down my search ?


     Hi Shannon, 

    My wife and I are in a similar boat. We are looking to invest in Texas and/or Florida. We are trying to figure out which out-of-state market is the best for us. 

    1Reply
  • Vincent R.
    Member since 2021 · 24 posts · 13 votes
    4y

    I'm from CA. I dont have $100k though. That gives you options!

    I started in Cleveland because the GRM/ rent-to-purchase price ratio is good for cash flow. A good house in a decent neighborhood can easily pay for itself and future maintenance (I dont want to save personal income to pay for maintenance on an investment property. It should pay for itself). I stayed out of the lowest priced neighborhoods to hopefully avoid crime. I also didnt venture into the tip top neighborhoods because... if I had that much up-front money I likely would've chosen a market other than Cleveland.


    Columbus is projected to "improve" more than Cleveland. Maybe look in that metro. 


    Ohio does have relatively high property taxes. I look at that as allowing me to write off more expenses (not a 1-to-1 ratio. Less property taxes would be better).


    If I had more funds, I would probably explore outside of Ohio, but I do feel, if you buy right, it should be relatively safe in the short term (5-10 years cover all expenses). If you are planning longer term or if you don't mind potentially pouring more personal income into your investment property (instead of into additional properties), then other states/markets might be better. 

    Lastly, keep in mind that a lot of markets have appreciated quicker than salaries have risen so the affordability factor MAY start to be relevant in further appreciation.

    Resource I like:  https://sparkrental.com/best-c... - lower GRM = pay for itself, easier (doesn't necessarily = good market... job/population trends not accounted for)


    For what it's worth... I like Dallas, TX. Jobs, population growth, rent-to-price, need for housing all = good market.

    1Reply
  • Travis Primm
    Real Estate Agent · Austin, TX · Member since 2019 · 5 posts · 7 votes
    4y

    It can be intimidating in a high cost market, but if you don't own a primary residence, I would recommend trying to take a look at house hacking the SF market. 

    Utilizing the financing options (FHA) for primary residences, lowering your own living expenses, and working on principal paydown would be a huge win.

    You mention it with being "overwhelmed", so the biggest thing will be gaining confidence in the process in general. Whichever suggestion you see on here, I'd recommend you go with the one that is the most motivating for you personally. Good luck!

    Feel free to DM me if you want to relate as I recently started REI in 2019 and was anxious myself as I was living in CA for a while accumulating capital like yourself.

    2Reply
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