Looking for the best out of state market!
New to Real Estate · San Francisco, CA · Member since 2021 · 2 posts · 15 votes
Looking for the best out of state market!
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votesMetro 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.
Logical Property Management4.9469 Reviews
76 Replies
- Realtor · Provo, UT · Member since 2020 · 374 posts · 270 votes4y
I am biased toward Utah, but it is an extremely strong market. Cash flow is lower here currently but appreciation potential is massive.
See my forum post on the Utah market for a more in-depth look.
- Real Estate Agent · Arlington, TX · Member since 2019 · 47 posts · 64 votes4y
Quote from @Arlen Chou:
@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
Well said @Arlen Chou
- Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes4y
Hi @Shannon Park our clients are doing STR in Charlotte and cash flowing 12-18%. Looks like you've already got great pieces of advice here. Best of both worlds appreciation and cash flow.
- 4yNick GiulioniPro MemberRental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
Hi Shannon, welcome to the real estate industry! I'm from California too but I have started my real estate journey here in Indianapolis. Now, I have more than a hundred doors. I would love to help/share my experiences and chat with you more if you're interested.
- 4yMilton ChamberlainPro MemberReal Estate Agent · Kansas City, MO · Member since 2019 · 236 posts · 108 votes
Hi!
I am very active in the Kansas City Metro. If you would ever like to chat about what is available, hit me up!
- Member since 2022 · 1 post · 0 votes4y
Quote from @Spencer Smith:
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.
What tools or websites did you use to conduct your analysis? I'm super new, no experience and only signed up/heard of BP a week ago.
Quote from @James Wilcox:
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.
James- What neighborhoods in Lexington and Louisville should investors consider? Any insight appreciated. Thanks.
- 4yJames WilcoxBusiness MemberReal Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 603 votesI will answer this in DM
Quote from @Ryan Kuja:
Quote from @James Wilcox:
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.
James- What neighborhoods in Lexington and Louisville should investors consider? Any insight appreciated. Thanks.
REI James w/ eXp Realty54 Reviews - Real Estate Agent · Orlando, FL · Member since 2021 · 65 posts · 53 votes4y
Hello Shannon! I would definitely consider Florida. If your goal is quicker cash flow you can opt for STR in the Kissimmee/Davenport area (closest cities near Disney that permit STR), or you can invest in partial short-term rentals (6 months or so) near the beach for snowbirds. There is also a lot of opportunity in the Tampa market, it was voted the number one growing city in the country last year! A lot of people are moving to Florida ever since the pandemic so anywhere you decide I am sure it will be profitable. Feel free to contact me if you have any questions!
- Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes4y
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,
I recommend Columbus, Ohio. The price to rent ratio makes for great investments. Not to mention our appreciation has been 8% higher then the US national average, because of the high demand for affordable housing. We also have a Lotta big companies moving here which brings four jobs and the need for more housing. I always like to look out where huge corporations are trying to move because they hire people to research different areas that would be good to invest in. We have companies like Amazon, The Limited, Intel, and more.
- Real Estate Agent · Cave Creek, AZ · Member since 2019 · 6 posts · 4 votes4y
Detroit is a good market.
- Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes4y
Investor traffic is increasing in Arkansas. Housing here is still quite affordable and taxes are relatively low. Here you will tend to invest more on the cash flow side of the cash flow-appreciation spectrum. We tend to lag behind national averages, but that just means our $/sq ft is still "low"!
If you have any questions, don't hesitate to ask! I'm an investor-agent.
- Flipper/Rehabber · Tampa, FL · Member since 2018 · 56 posts · 16 votes4y
Hi Shannon,
It depends mostly on what strategy you're looking at trying your hand at. I would highly recommend Tampa, as we have a fantastic market for both short and long term rentals. Happy to discuss any time. Please feel free to reach out.
- Real Estate Agent · Member since 2019 · 569 posts · 257 votes4y
Panhandle of Florida is great! Destin to 30A will be an appreciation play. Navarre Defuniak Freeport and Panama City beach will provide better cash flow but less appreciation. Area is beautiful and family friendly.
Military bases all around.
COC returns will be around 10-20%
Past appreciation Destin to 30A: 70-100% in 2 years
Navarre to Freeport appreciation: 40-60% in 2 years
- Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes4y
Hi @Shannon Park Here is some choices : https://www.biggerpockets.com/... . Additionally I did a presentation on this a few weeks ago, just dm and I can send you the link if you are interested. Otherwise link above is good start!
- Realtor · Northampton, MA · Member since 2022 · 48 posts · 33 votes4y
As you can from the variety of posts, the options are endless. We invested in two vacation short term rental properties in FL (Orlando & Destin). Both cash flow positively and have appreciated superbly. Managing from out of state has not been a problem. You just put together a team on the ground (AC, electrician, plumber, housekeeper, handyman). I use VRBO and airbnb and we are 85-90% rented. With your budget you could easily put down 20% and fully furnish an AIRBNB and do any needed upgrades. We had to paint, replace AC, water heater. appliances, and flooring. I picked places that I could imagine vacationing in. Looking to purchase a third. I would review the posts and see which ones you are most drawn to. If you decide to go the airbnb route, you can learn a lot about nightly rates, seasonal rates, and vacancy by reviewing properties on airbnb and vrbo. Best of luck!
- Lender · Northwest Indiana · Member since 2021 · 55 posts · 26 votes4y
Hey Shannon,
Congrats on being ready to invest!
I live in Northwest Indiana. This area, being located so close to Chicago has a lot going for it. Property taxes are low. My clients properties are cash flowing and appreciating. If you want to jump on a call Id be happy to answer any questions you have about our area.Mitch
- 4yEudith VacioPro MemberReal Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
Hey Shannon!
You're definitely on the right path by asking this question on here. I live in Chicago and invest here in the city AND also Northwest Indiana. Believe it or not, I work with a lot of out of state clients that have the same goal as you - appreciation and cash-flow. I love NWI - that is Whiting, Hammond, East Chicago, heck even Gary IN.
If you want to know more information, feel free to reach out! best of luck :)
- Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes4y
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 ?
Here's how we narrowed down our search when we started investing out of state :
1. Could we establish a good network in the location (realtors, legal, investors, wholesalers, contractors, management companies....)
2. Could we get a direct flight to the location
3. Is the location large enough to have multiple submarkets. We wanted to stay away from small towns/cities where the market was all the same.
4. Can we meet our hurdle rate numbers (ROI) in that market or submarket
Regarding the States on your list- We've invested in DFW, San Antonio & Orlando. I believe there are opportunities in Milwaukee but we've never pulled the trigger. We've evaluated cities in Indiana but could never make the numbers work. - 4yJoshua JanusBusiness MemberRealtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
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 ?
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. The appreciation rate in Columbus has been 8% higher than the national average over the last year. 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.
Another example of economic growth is the upcoming Ohio State University Wexner Medical Center Inpatient Hospital which is a 1.9million square foot hospital that will bring over 800 new beds and a thousand new jobs.
https://abc6onyourside.com/news/local/new-osu-hospital-expected-to-transform-health-care
Here are a few more recent investments https://www.10tv.com/article/money/business/hydrogen-power-company-hyperion-bringing-700-jobs-to-columbus/530-25907aab-5517-4661-a9f3-d2ed2d5be6b0
https://news.wosu.org/news/2022-02-08/rumpke-to-build-50-million-recycling-facility-in-columbus
Check out The Complete Guide to the Columbus, Ohio Real Estate Market which goes through the market here is a whole and can guide you to the areas that are most affected by this growth.
- Member since 2018 · 64 posts · 39 votes4y
Quote from @Ricardo Hidalgo:
Panhandle of Florida is great! Destin to 30A will be an appreciation play. Navarre Defuniak Freeport and Panama City beach will provide better cash flow but less appreciation. Area is beautiful and family friendly.
Military bases all around.
COC returns will be around 10-20%
Past appreciation Destin to 30A: 70-100% in 2 years
Navarre to Freeport appreciation: 40-60% in 2 years
@Ricardo Hidalgo You left out Pensacola!!! :) I definitely agree with you. All along the Gulf Coast is hot right now, especially with all the retirees moving down here. Pensacola is great because a lot of the real estate here is still "on sale" so to speak. We've worked with a lot of people who move from California, and end up buying 3 investment properties for the price they sold their home for in Cali.
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