What states would you recommend a newbie whose trying to get into out-of-state RE investing?

8 Replies

I'm an amateur RE investor, but I'm trying to get more into investing this year. Only problem is that I live in a pretty expensive area (LA), & I can't afford buying too much here.

I want to buy a few MFRs out-of-state, but I'm obviously nervous and unsure of where the better markets are, especially as an amateur like me. I'm definitely willing to take some risk, but overall, I'm afraid I'll be taken for a ride by some agent and then my money will be washed down the drain :( 

Ideally, I'm looking to buy 2-3 MFRs for 40-70k, and have them managed by a communicative and competent PM company. I would love to hear your guys' thoughts on what cities/states I should look into that would provide the best cash-on-cash ROI for my budget & level of experience.

@Daigo Kurosaki  

  I believe that price point for a multi family  IE 40 to 70k  will  put you square in the middle of C or D class.. which will have greater risk compared to better neighborhoods.  You may want to check closely into this.. If your buying existing multi you should be able to get Actual numbers from past years performance this helps greatly determining the future.

Make sure you watch the taxes and insurance costs from whatever state you pick!

Also look at long term value and market potential. 

Thanks for the advice @Jay Hinrichs   . At what price point do you think I would be able to get into the "B" class of MFRs? And what states would that be?

Instead of buying 2-3 MFRs for 40-70k, I could change my strategy and instead start looking for 1-2 slightly nicer MFRs. The last thing I want is to own 3 MFRs in a criminal-ridden neighborhood :)

Very helpful and useful tips, @Elizabeth Colegrove  !

I have a quick question: how do you evaluate long-term value and market potential for out-of-state cities? Are there any tools/searches/websites that you would recommend? 

It's hard enough for me to understand what areas Near me are going to be up-and-coming :) I'm curious how someone more experienced goes about analyzing long-term value and market potential. It's definitely something I struggle with. 

I work with a number of investors from CA here in Michigan

@Daigo Kurosaki  

To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

Paul

Wow, thank you Account Closed  -  very helpful link!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here