Looking for the best out of state market!

San Francisco, California
Real Estate Agent
4yFollow

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 ?

11Reply
173 views

Most Popular Reply

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 Management4.9469 Reviews
WebsiteView Page
19Reply
See this reply in the discussion

76 Replies

Jump to latestLatest
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 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 ?

    I like Cleveland, and it's Subs. I am biased though. :) Cash flow very possible with bonus appreciation. Ultimately though it depends on what your looking to accomplish and what type of property you want to do it with. 
    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    4y

    One thing I would do is looking at some of the lists published.

    #1 Landlord friendly states.

    #2 Low unemployment states.

    #3 High growth states.

    #4 High income states.

    #5 High rent growth states.

    Something like this might give you a start.  Even though it is for multifamily, probably same basic principals apply.

    https://mf.freddiemac.com/view...

    5Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Shannon Park When researching a market, it is important to pay attention to the factors you highlighted above as well as what brings people to the city and what will continue to do so. If the price is relatively low/sqft and the city has a growing population and job market, the demand for homes will increase which leads to home appreciation. Also see how the specific market handles STR as that brings in a large section of rei investors and can drive prices up. Here is a quick analysis of my market. Paying attention to recent and upcoming capital investments by the city can also give you a good idea of where the money is flowing in the city and you can see if it is recovering or growing. Columbus, Ohio is a great market to invest in. The population has been growing here year over year over the last decade, it is home to The Ohio State University which has over 50,000 students that live here along with those that visit, and it also holds a diverse range of young professionals and traveling nurses to fill the demand of the multiple business corporations and hospitals stationed here. Tech companies are continuously moving here and establishing a footprint in Columbus as well. Intel is a great example, who is building the largest chip manufacturing plant in the US right here, and it will be a $20 billion dollar investment that brings a few new thousand jobs.

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
    5Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    4y

    @Shannon Park
    I would recommend looking at Columbus OH. It is a nice hybrid of Cashflow and appreciation. As for ways to narrow in on a market I would recommend looking at population growth and job opportunities. 

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    3Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Quote from @Patrick Drury:

    @Shannon Park
    I would recommend looking at Columbus OH. It is a nice hybrid of Cashflow and appreciation. As for ways to narrow in on a market I would recommend looking at population growth and job opportunities. 


     I agree. Columbus, Ohio is a great market to invest in.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    3Reply
  • Austin McClainBusiness Member
    Real Estate Agent · OH · Member since 2021 · 350 posts · 603 votes
    4y

    The Midwest has been a good market to invest in. Home prices are still affordable compared to other markets and it's growing as businesses continue to move here. 

    [email protected]614-710-4827
    1Reply
  • Steve Smith
    Member since 2020 · 217 posts · 167 votes
    4y
    I'd stay close to where I lived. Long distant rentals and deals are a pita
    4Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ 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.


     What kind of taxes are there?

    1Reply
  • Andre Crabb
    Investor · Tampa, FL · Member since 2017 · 205 posts · 92 votes
    4y
    Quote from @Shannon Park:

    Hi All! My name is Shannon and I live in San Francisco, CA. Currently 28 yo ...

    Hey Shannon, I'll shoot you a DM, I can help you compare your options pretty quickly :)

    0Reply
  • Kushaal Malde
    Lender · San Francisco · Member since 2019 · 113 posts · 49 votes
    4y

    @Shannon Park I live close by in the bay area as well and invest OOS in Northeast Ohio. Would be happy to discuss how I narrowed my search but it involved the following features: 1. diversified economy, 2. population density, 3. rent to price ratio, 4. landlord/business friendly.

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    4y

    I saw a couple people mentioning Cleveland. To me I don't like to get into what is better or worse when it comes to midwestern markets. It's like splitting hairs, they are all very similar.

    That said, what you buy in said market is where you will see your biggest swings in ownership experience. So if you do land on Cleveland or continue doing more due diligence on this market I think you'll get a lot of value in reading The Ultimate Guide to Grading Cleveland Neighborhoods so you've got a lay of the land so to speak.

    Good luck out there playa.

    2Reply
  • Andrew Lewis
    Real Estate Broker · Fairhope, AL · Member since 2017 · 32 posts · 18 votes
    4y

    @Shannon Park

    I’m a broker along the Alabama/Florida Gulf Coast and I can tell you that our tourism is booming and our price point is still a lower barrier than many other tourism destination spots. Generally speaking you will find great roi on short term rentals in addition to the massive appreciation we are seeing. Lastly, you can visit and stay in your own unit!

    A return on investment you can enjoy 🤙🏻🤙🏻

    0Reply
  • Spencer Smith
    Rental Property Investor · Mesa, AZ · Member since 2022 · 20 posts · 13 votes
    4y

    Looks like a good bit of advice has been given here already but just to add my own: Do some deep location analysis on certain cities/counties.  I recently followed the Joe Fairless method and dove into employment, vacancy, population, permits, etc etc data for 9 different markets.  The findings were quite surprising!  It helped me narrow down which locations I really want to dive in to.

    Pick some markets (7+), dive into the numbers, narrow it down to 1-2 and become an expert there.

    I'm currently on this journey as well.

    1Reply
  • Agraj Sobti
    Investor · San Jose, CA · Member since 2021 · 12 posts · 8 votes
    4y
    Quote from @Joe Hammel:

    @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.

     @Drew Sygit @Joe Hammel I am an out of state investor looking to buy rental investment properties. I was looking at Detroit properties on Zillow and Redfin and was pleasantly surprised by the numbers. Either of you interested in getting on a call sometime soon? Would love to hear about your opinions on the Detroit RE market and get any leads/referrals from you :) 

    2Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    4y

    @Joe S.

    Taxes are fine.

    You will pay between $1k-$3k per year for these properties.

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5380 Reviews
    WebsiteView Page
    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    @Agraj Sobti

    Sure, we can't DM here, but you can email or call us:)


    [email protected]248-209-6824
    Logical Property Management4.9469 Reviews
    WebsiteView Page
    0Reply
  • Felix Cheng
    Member since 2022 · 5 posts · 5 votes
    4y
    Quote from @Kushaal Malde:

    @Shannon Park I live close by in the bay area as well and invest OOS in Northeast Ohio. Would be happy to discuss how I narrowed my search but it involved the following features: 1. diversified economy, 2. population density, 3. rent to price ratio, 4. landlord/business friendly.

     Hi @Kushaal Malde can I DM to ask how you narrowed down to Northeast Ohio and how your journey has been?

    Thanks

    0Reply
  • Haven Garber
    Flipper/Rehabber · Salem, OR · Member since 2014 · 9 posts · 12 votes
    4y

    @ vincent roache

    we are looking to invest in Ohio, either Columbus or Cleveland. Do you have any boots on the ground people, including real estate agents for the area that you would recommend?

    2Reply
  • James Wenzel
    Investor · TX · Member since 2020 · 57 posts · 60 votes
    4y

    Lots of great states to invest in Real Estate.  I typically focus on major metros that are landlord friendly (super important, 1 law could kill a deal), growing population, lots of jobs, low supply of doors (builders cant keep up), look at Uhaul stats to help.  I have personally invested in Texas (San Antonio, Houston, Austin, Dallas Ft Worth area), Florida, Arizona, Georgia, and I also like the Carolinas.  I heard Indiana is also good, just have never invested there.  I have invested in long term rentals, short term rentals, and syndications.  With 100k, you can buy your own deal, but I would also look at investing in commercial real estate syndications if you are busy.  Those are passive investments and I am typically seeing 2x your money at 3-6years.  The best way to evaluate those deals is to meet a bunch of syndicators in those areas and get on their deal flow list.  I get 5-10 a week from different folks and just choose the best one to invest my capital in.  I put 80% into cash flowing assets, then the other 20% into other RE stuff.  

    2Reply
  • Joe Miller
    Real Estate Broker · Columbus, OH · Member since 2021 · 203 posts · 247 votes
    4y

    Hate to bandwagon but I am with the Columbus guys. Our market is growing exponentially and there is such a strong backbone to our rental market between OSU's campus and 2 out of 3 of the biggest hospitals in OH.

    We are the fastest growing city in Ohio! Obviously am biased though because I love this city. Best of luck!

    3Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Shannon Park I recommend going with the market you best understand and have the best connections in. Great deals are made, not found.

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    2Reply
  • Gloria N GearBusiness Member
    Realtor · Indianapolis IN · Member since 2018 · 464 posts · 339 votes
    4y

    Look for economic diversity, growing population, low taxes, landlord friendly.  Indianapolis checks all these boxes.  Would be glad to have a conversation with you about it.

    1Reply
  • Colton Hahn
    Specialist · Member since 2021 · 322 posts · 273 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 ?


     I would #1 find out what my criteria are for a market. What exactly are you looking for? Are you looking for a long term investment? Cash flowing short term? 

    Once you have that, it will narrow it down. 

    I will say, that we exclusively invest in the midwest and its the turtle vs the hare approach. We have found an audited 31%+ IRR in the midwest over the last 12 years.

    Let me know if you have questions how to achieve that!

    1Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    4y

    @Shannon Park I agree that there is opportunity in every market, but only with the right strategy. Flipping can work in CA but I wouldn't consider CA for cash flow. I agree that TX is not an ideal market for cash flow because of the high property taxes and insurance. There are much better markets for cash flow. Typically, the best markets for cash flow are the Midwest and Southeast. That's primarily do to the affordable prices and good rents. The place to start is by eliminating markets with high property taxes and laws that are hostile towards landlords. The drill down and look at metropolitan areas that have growing populations, jobs, income and modern/diverse economies. Look for cities in which businesses are investing in, moving in to and expanding in. I personally like Indianapolis, Kansas City and Davenport, IA. We're active in all three markets.

    1Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    4y

    @Shannon Park the reality on the ground is that you will find people who are successful in EVERY market. People say "you can't find cash-flowing deals in the SF Bay Area" all the time, but I do. People say the taxes in Texas will kill cash flow, but people make it work. This is your first deal, you should not be looking to hit it out of the park at your first "at bat". Your focus should be to get on base and not strikeout. 

    You can do all the analysis you want and look at employment growth, housing demands, taxes, etc. and you should, but once you get past the basic analysis you need to look at intangibles like what support you will have in that market. Once you have a few properties under your belt, then you can get more sophisticated. 

    Remember the first time you drove a car... It was not about driving the fastest or longest, it was about making sure you did not hit anything. 

    Good luck!

    -Arlen

    10Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free