What state to buy my first investment property to cash flow?

108 Replies

Hi Everyone - I'm new to BP and new to REI. I live in Southern California, as the market is super inflated. I am looking to make my first real estate investment as I have enough cash to either buy a cheap place in another state (40-50k) or buy a place that's a bit more expensive and get a loan as I have great credit.

Can anyone help with some advise on what state I should look into with good cash flow opportunities?  I appreciate all the help guys!

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There are any number of states.  Most of them are in the midwest.  Michigan would be my choice...as is the choice of many other CA investors.

Thanks @Joe Villeneuve appreciate the advise sir.  What zip codes do you look at in Michigan?

Originally posted by @Neil Patrick :

Thanks @Joe Villeneuve appreciate the advise sir.  What zip codes do you look at in Michigan?

 Too many to list.  I'm a west sider, so I look at these...as a start:

48239, 48240, 48197, 48150, 48152, 48154, ...and more

Originally posted by @Neil Patrick :

Hi Everyone - I'm new to BP and new to REI. I live in Southern California, as the market is super inflated. I am looking to make my first real estate investment as I have enough cash to either buy a cheap place in another state (40-50k) or buy a place that's a bit more expensive and get a loan as I have great credit.

Can anyone help with some advise on what state I should look into with good cash flow opportunities?  I appreciate all the help guys!

 I have often thought about looking in other areas that are cheaper also.   It's tough for me to pull the trigger with investing long distance.  Joe V has posted several times about how low the home prices are in Michigan.  He also stated they are not low income properties which is key for me.  I would avoid low income properties. 

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@Neil Patrick

Few things:

1.  Make sure you are only doing business with a company that is physically located in that market meaning the company and individual you are dealing with live in that market.  

2. Make sure they also own property in the market they are selling in.

3.  Work direct with the actual company provider.

4. Make sure they have licensed property management company for management.

You are better off using your funds to leverage and buy a nicer home.  You will have better long term success this way.   There are plenty of crummy markets where you can invest and get promised all the guarantees in the world, you will still fail long term. 

Good luck

Originally posted by @Neil Patrick :

Hi Everyone - I'm new to BP and new to REI. I live in Southern California, as the market is super inflated. I am looking to make my first real estate investment as I have enough cash to either buy a cheap place in another state (40-50k) or buy a place that's a bit more expensive and get a loan as I have great credit.

Can anyone help with some advise on what state I should look into with good cash flow opportunities?  I appreciate all the help guys!

(Disclaimer: I'm very new to rei myself.) But in my opinion you shouldn't totally write off socal, even if you do invest out of state. It's more expensive, yes, but the rents you could command are higher as well. It may be a lot more difficult than in other parts of the country but if you could find the right deal, even just one, it could work out very well for you. 

Originally posted by @Anthony H. :
Originally posted by @Neil Patrick:

Hi Everyone - I'm new to BP and new to REI. I live in Southern California, as the market is super inflated. I am looking to make my first real estate investment as I have enough cash to either buy a cheap place in another state (40-50k) or buy a place that's a bit more expensive and get a loan as I have great credit.

Can anyone help with some advise on what state I should look into with good cash flow opportunities?  I appreciate all the help guys!

(Disclaimer: I'm very new to rei myself.) But in my opinion you shouldn't totally write off socal, even if you do invest out of state. It's more expensive, yes, but the rents you could command are higher as well. It may be a lot more difficult than in other parts of the country but if you could find the right deal, even just one, it could work out very well for you. 

 If I'm not mistaken, California is known for it's tenant-friendly laws, which provides another reason for why fewer people invest there, correct?

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Originally posted by @Christopher Lee :
Originally posted by @Anthony H.:
Originally posted by @Neil Patrick:

Hi Everyone - I'm new to BP and new to REI. I live in Southern California, as the market is super inflated. I am looking to make my first real estate investment as I have enough cash to either buy a cheap place in another state (40-50k) or buy a place that's a bit more expensive and get a loan as I have great credit.

Can anyone help with some advise on what state I should look into with good cash flow opportunities?  I appreciate all the help guys!

(Disclaimer: I'm very new to rei myself.) But in my opinion you shouldn't totally write off socal, even if you do invest out of state. It's more expensive, yes, but the rents you could command are higher as well. It may be a lot more difficult than in other parts of the country but if you could find the right deal, even just one, it could work out very well for you. 

 If I'm not mistaken, California is known for it's tenant-friendly laws, which provides another reason for why fewer people invest there, correct?

That I don't know. I'm sure there are lots of investors here on BP that are very experienced and knowledgeable on the California market. 

And while you guys may have uber friendly tenant laws in Cali, perhaps more so than many other states, it seems tenants are generally given an upper hand anyway no matter where one is. Im just saying, if the math works, no matter where you are, it works. And maybe you would be rewarded for a more difficult search with better returns than say in Michigan or elsewhere. Just my opinion. From a total newbie.

@Neil Patrick welcome to BP.  Definitely look into Cleveland Ohio, great inventory of single, multi-fam and commercial.  Also a big attraction for CA investors.

@Neil Patrick

I grew up in SoCal, and now live in Oregon. All of my REI is out of state because of the price barriers that exist here and up and down the West Coast. For my buy and hold I target the range of about $85-$125k for SFR and finance them. I am getting good cash on cash returns and they are very passive investments. I avoid the low price properties ($30-50k) because I consider them very risky, likely to need a lot of maintenance, and attract unreliable tenants. There might be exceptions to this, but at a distance it is hard to identify those exceptions.

@Neil Patrick

There are soooo many places you can invest and get nice returns in the united states but I would look at investing in your Team or Property manager before looking at a specific area because your PM can make or break your investment in a good or bad area. Trust me I see it happen all the time with investors who invest out of state.

Another suggestion I would look into using the $50k you have and invest in Costa Mesa I understand the prices are much higher and cash flow will be much less than other areas but you gain a lot of experience by doing that close to home.

As for tenant laws..Family and I have not had tenant issues in CA. The biggest issue in CA is just the price of housing in general. I am in the Bay Area where the cost of a house even in ****** neighborhoods is outrageous. 

Originally posted by @Joe Villeneuve :
Originally posted by @Neil Patrick:

Thanks @Joe Villeneuve appreciate the advise sir.  What zip codes do you look at in Michigan?

 Too many to list.  I'm a west sider, so I look at these...as a start:

48239, 48240, 48197, 48150, 48152, 48154, ...and more

Thanks @Joe Villeneuve. Do you have a local realtor and PM company you would recommend?

Thanks,

Claude

Welcome Neil! I love Costa Mesa. I almost took a side job as a professor at OCC so I was down there a few times talking with them. I loved driving through! Great area.

I've always bought out-of-state. My properties are in Atlanta right now, but I don't recommend there as much as it had a lot more opportunity when I was buying. There are quite a few markets, just depends on what kind of property and returns you are most interested in. Philly and Birmingham are big, Houston and Dallas, Trenton, Chicago, Indy... A lot depends on if you prefer SFR or MFR, if you want newer and nicer or higher returns, etc. Either way, lots of opportunity out there!

@Neil Patrick . I got my start in Real Estate investing in October 2014. Investing out of state is not as difficult as you may think. I would recommend using a complete turnkey company that is stationed in the actually city. It keeps things simple. As for your finances I would use the $50k cash for down payments and buy 4-5 properties around $40-55k. Your total cash flow could be over $1000/month bet easily...if you play your cards right and choose the right market.

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@Jason Horton

 thanks for the reply sir.  What are the good zip codes in Cleveland that are not low income areas?

@all

@Joe Villeneuve

 thank you sir, are those zip codes in lower income areas?

@Ali Boone thanks so much, costa mesa is the best isn't it!

Hi Neil,  Just reading over the other states and cities.  Closer to home for you, would be Salt Lake City, UT.  West Valley City and other areas have a lot to offer.  Great place to do business if you like out door activities?  If you are interested ? Property Management Systems is a turn key operation with everything in place to help you.  You can check out the web site.  Best of luck!

Martin Carstens

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