Done with Portland Metro Market!

Buying & Selling Real Estate
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Done with Portland Metro Market!

Rocky Pe Benito
Gresham, OR · Member since 2017 · 25 posts · 7 votes

Hi Everyone,

I would like to get your thoughts on cash flowing areas right now, outside of the big markets. It's almost impossible to cash flow anything in the Portland metro area right now, and that includes the outskirts! I have read a lot about the idea of investing out of state, but I wanted to hear if any of you have any specific city/state you've had good luck with recently. I have no limitations as long as I can get some good deals that will cash flow. I'm looking for a 100k property on a fouplex. Don't laugh! : )  I was just researching New Jersey and there seems to be good deals out in that area and rents are very good.  Property taxes maybe high, however.

Any recommendation on where I should start researching?

Thanks in advance and Happy New Year!

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Chris Ramos
Flipper/Rehabber · South Jordan, UT · Member since 2016 · 142 posts · 37 votes
8y

Howdy

I personally invest in Utah - my home state and where all of my current rentals were purchased many years ago, so not as relevant. I also invested in rentals in Indianapolis between 2014 and 2016 but was getting priced out of the are, meaning to get the higher returns I was being forced into rougher areas and chose to quit buying there. 

Currently I buy in Michigan, my properties are hitting a true net return in the 8.5% to 12% range. If your going to buy in any market other than your home then it's homework, homework and more homework. Good contacts will speed up your process and help with your success. I went through multiple management companies, contractors, realtors, etc.... to find the few good ones that I have.

Probably the most important ingredient is the property manager, they can make or break your out of state investment. I would start by researching an area that is in an upswing and then start seeking out a good P.M., then once you find a good P.M. or any other piece of the puzzle I would hit them up for referrals as birds of a feather tend to flock together.

This reminds me of the first quality person I encountered in Detroit, he was and is a realtor who has always been up front and honest. He introduced me to two great P.M.'s and an excellent contractor. From there the contacts simply grew and grew, not saying the weeding out process stopped, not at all. You really need to keep your guard up when dealing with new contacts. If you're interested in Michigan I'd be glad to chat.

Good Luck

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  • Chris Ramos
    Flipper/Rehabber · South Jordan, UT · Member since 2016 · 142 posts · 37 votes
    8y

    Howdy

    I personally invest in Utah - my home state and where all of my current rentals were purchased many years ago, so not as relevant. I also invested in rentals in Indianapolis between 2014 and 2016 but was getting priced out of the are, meaning to get the higher returns I was being forced into rougher areas and chose to quit buying there. 

    Currently I buy in Michigan, my properties are hitting a true net return in the 8.5% to 12% range. If your going to buy in any market other than your home then it's homework, homework and more homework. Good contacts will speed up your process and help with your success. I went through multiple management companies, contractors, realtors, etc.... to find the few good ones that I have.

    Probably the most important ingredient is the property manager, they can make or break your out of state investment. I would start by researching an area that is in an upswing and then start seeking out a good P.M., then once you find a good P.M. or any other piece of the puzzle I would hit them up for referrals as birds of a feather tend to flock together.

    This reminds me of the first quality person I encountered in Detroit, he was and is a realtor who has always been up front and honest. He introduced me to two great P.M.'s and an excellent contractor. From there the contacts simply grew and grew, not saying the weeding out process stopped, not at all. You really need to keep your guard up when dealing with new contacts. If you're interested in Michigan I'd be glad to chat.

    Good Luck

    4Reply
  • Rocky Pe Benito
    OP
    Gresham, OR · Member since 2017 · 25 posts · 7 votes
    8y

    Hi Chris,

    Thank you for your post!

    Yes, I totally agree with you in that it will require a lot of homework investing out of state. I think it will help a lot though to know someone in that area.

    Which area(s) of Michigan are you currently investing in? Average rents and property management rates in those areas?

    Thanks again!

    1Reply
  • Joseph M.
    Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
    8y

    @Rocky Pe Benito , Portland market seems similar to the L.A market in regards to not really being able to cash flow. 

    What area is that 100 4plex in New Jersey? I'm guessing a very rough area. 

    Right now it seems most are investing in midwest markets for cash flow. 

    I had seen this Forbes article  recently which listed top markets for cash flow..midwest markets were at top no surprise. 

    https://www.forbes.com/forbes/welcome/?toURL=https...

    2Reply
  • Joseph M.
    Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
    8y

    @Chris Ramos   Happy New Year! 

    that's interesting to hear about being priced out of Indianapolis since the prices still look pretty low and property taxes seem pretty low too...but maybe the cheaper properties are really rough areas like you said. 

    I know this is typical across the country now...with property prices going up ..but rents not going up enough... compressed cap rates and all that. 

    What part of Michigan do you invest in? On that list I posted Detroit area came in #2 , Cleveland #1 , Columbus #3 , Indianapolis #4 for ... "Investor Opportunity Rank". 


    Do you use financing for your MIchigan properties? If so what is your COC after financing?

    1Reply
  • Joseph M.
    Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
    8y

    @Rocky Pe Benito   . Not sure if you've heard about it yet..but there is a new book by an investor here on BP (David Greene) that is specifically about investing out of state. 

    I haven't read it..but on this thread people people are saying it's helpful. I also heard David Greene's recent podcast and it was a good one. He lives in the Bay Area of CA ...a very expensive market of course..but invests in various markets across the country. 

    https://www.biggerpockets.com/forums/25/topics/518360-introducing-long-distance-real-estate-investing-by-david-greene

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  • Chris Ramos
    Flipper/Rehabber · South Jordan, UT · Member since 2016 · 142 posts · 37 votes
    8y

    @Joseph M.  

    I invest in the fringes of Detroit, as far west as Inkster and as far east as Eastpoint and as far north as Pontiac.

    I like Warren as it'a solid city. Inkster is great because between myself and a handful of other investors we are literally buying up all of their rough houses and changing the look and feel of neighborhoods.

    Pontiac - has a ton of great things going on downtown which is helping increase the overall need for rental properties. I've invested in a commercial building downtown that is being converted from offices to condos. Single family homes rent quickly there if you have a quality product, not as much brick there as Detroit so not quite the same curb appeal but strong rentals nonetheless.

    2Reply
  • Rocky Pe Benito
    OP
    Gresham, OR · Member since 2017 · 25 posts · 7 votes
    8y

    @Joseph M. 

    Right now I'm just looking for any property that meets my budget, lol. I have no clue about the conditions of these properties other than photos.  Thanks for the article! That is actually very helpful with the research! 

    I'm a realtor in Oregon, so I probably will need to make new contacts wherever I decide to invest in, along with a mortgage broker, property management, etc.

    I haven't read the book yet, but hoping to check it out! 

    @Chris Ramos

    I might take you up on your offer to chat. Do you think my budget of 100k is doable in the areas you're currently investing in? I'm thinking it would probably require some or a lot of work.

    I just want to expand my investing career already. Portland metro is just too crazy and it just take forever waiting for the right deal. And when that opportunity rises, it will be a bidding frenzy with 10 investors! Even if I partner up with somebody, the property will still be too expensive. Maybe, maybe not. I don't have any experience with real estate business partnerships.  

    I have a 4-plex literally next to a "sister 4-plex." It used to be an 8-plex, and the two properties are literally mirror image. The owners of the "sister" are willing to sell it to me but are "comping" my property.  They want $609k for it. The average rent for 3 beds in the area is about $1350, 2-beds is about $1150. It would be cool to own the other one so I'll have the whole thing, but the price is just too much and mine is in a much better condition. I've been researching ways I can get it, such as a Master Lease Option or a business partnership with someone, but not quite there yet. 

    Thoughts?

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    just a word of caution 25k a door rentals in most parts of the US are going to be management challenges.. you cannot take your management experience in PDX and think that you can buy 25k a door rentals in ANY other market and have the same cash flow consistency.

    you can get consistency if you up your target some..  But be cautious of buy that 50k duplex.. with 600 rents.. paper tiger..

    you may want to check lower end Vegas...  and then pretty much any city east of the Mississippi river from the gulf coast to Canada will be interchangeable only issue will be winter weather and property tax's..

    a little sleeper area is NW Indiana you get Chicago vibe with Indiana tax's..

    Then you can also find tertiary communities that will work pretty well.  think Rural Ohio PA IN. GA

    AL   we did pretty well for instance in Kokomo IN.  and I have clients that I fund that are stacking up the rentals in all the cities surrounding INDY.  IE 20 to 40 miles out of the city in all directions..  

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  • Chris Ramos
    Flipper/Rehabber · South Jordan, UT · Member since 2016 · 142 posts · 37 votes
    8y

    @Rocky Pe Benito

    Yes you can buy good rentals in upcoming areas of Metro Detroit and surrounding areas for $100k.

    Jah Hinrichs is correct about the management experience of PDX vs. other areas. 

    The management company will help make or break your investment, assuming you have a good property in a decent area to begin with. 

    Concerning you sister four plex. If it's something you really want then remember if you can't get the PRICE you want then maybe you can get the TERMS you want. I'd see if you can do some creative seller financing with the owner, you don't sound too Emotionally attached to it, (which is a good thing) so if nothing else it would be some good experience in negotiating and thinking outside of the box to see if you can create a win-win for you and the seller. But keep this in mind, as you get closer to making it a reality don't change your position - meaning don't get emotionally attached to it otherwise you'll start to make concessions that you shouldn't. Write down what works for you and then see how you need to go about making it work for the seller.

    Good Luck

    0Reply
  • Michelle Clark
    Florham Park, NJ · Member since 2017 · 69 posts · 17 votes
    8y

    New Jersey market is hot right especially Newark, NJ the rents is decent the area is on the rise to becoming a good place to live. ARV is 75% market value and under. Now is the best time to invest in Newark before the prices go up. I currently manage 30 properties in Newark.

    1Reply
  • Neal Collins
    Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
    8y

    @Rocky Pe Benito If your adjacent owners are comping your 4-plex, why don't you show them how the condition of the two properties and rent rolls differ. Then figure out how much it is worth to you having a much larger parcel with 8 units on it rather than 4. I'd second the other poster's suggestion about assessing price vs. terms. Having 8 doors in one spot can be nice rather than having them spread out all over town.

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    $25k per door. Thats about 12% of the US median home price. The median used car price is $15k. So 12% of that is $1,800. A $25k rental probably works as well as an $1,800 car. Nothing wrong with low end rentals, just go in with your eyes wide open, as you will probably end up losing money on it over time.

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  • Rocky Pe Benito
    OP
    Gresham, OR · Member since 2017 · 25 posts · 7 votes
    8y

    @Jay Hinrichs

    That is actually a great input regarding your "word of caution.." I maybe getting a little desperate and need to push the break a bit. I like my 4-plex right now because it's in a very nice neighborhood. Sure, I paid market price for it (yikes!) but I have had great experience with it so far. Turn-key was the ideal situation for me being a brand new landlord and new to investing.

    @Neal Collins

    I've already presented those info. but they still want 609k for it. Their rent rolls are way below market, not even close to mine, and my property is in a much better condition. I guess they didn't care or thought I'd pay their asking price. They're probably banking on the "emotional attachment," thus I'm the perfect candidate for it. I still want the property though.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Rocky Pe Benito  good luck in your hunt OOS can work.. again just caution you on thinking that tenant quality works in reverse exponentially.. when you get out of PDX your in a whole nother world.

    PDX because of how this city and state has grown simply does not have the wide valuations of real estate. you can't drive down any street here and see 5 board ups or abandoned homes.. this is what you will find when you look at 25k doors across the country.. not to mention war zones which again is what your going to encounter at those price points.. we simply do not have that here in PDX and if your from here and have not travelled much its quite a shocker..

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  • David Weintraub
    Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
    8y

    Now is the best time to invest in Newark?  I mean, it might be! 

    0Reply
  • Jay Bhatt
    Tarrytown, NY · Member since 2016 · 79 posts · 43 votes
    8y

    @Jay Hinrichs NWI has gotten quite competitive too. The big local players seem to be selling off their properties.

    @Rocky Pe Benito What Jay has mentioned here is quite true about  lower end rentals.  Getting a deal is difficult in any market right now. Someone has mentioned the new BP book which I am reading right now and would recommend for sure if you plan to start as OOS investor.

    I am out of state investor from NY investing in NWI. Feel free to reach out if you have any specific questions. Good Luck!

    0Reply
  • Izzi S.
    Berkley, MI · Member since 2015 · 29 posts · 3 votes
    8y
    Chris, curious who you use for PM In Michigan and what cities your invest in.
    0Reply
  • Jefferson Smith
    Portland, OR · Member since 2017 · 107 posts · 27 votes
    8y

    As far as the adjacent fourplex, sounds like it might be a matter of being in occasional communication, waiting, and making a deal at the right moment.  

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    8y
    Originally posted by @Rocky Pe Benito:

    Hi Everyone,

    I would like to get your thoughts on cash flowing areas right now, outside of the big markets. It's almost impossible to cash flow anything in the Portland metro area right now, and that includes the outskirts! I have read a lot about the idea of investing out of state, but I wanted to hear if any of you have any specific city/state you've had good luck with recently. I have no limitations as long as I can get some good deals that will cash flow. I'm looking for a 100k property on a fouplex. Don't laugh! : )  I was just researching New Jersey and there seems to be good deals out in that area and rents are very good.  Property taxes maybe high, however.

    Any recommendation on where I should start researching?

    Thanks in advance and Happy New Year!

     Hi Rocky, 

    Have you taken a look at any cities in the Midwest?  That are is getting lot of attention at the moment.  There are still great deals to be had and good returns.  A lot of investors from California, New York etc... have started to put a laser focus on areas like Columbus, Ohio.   Lot's of revitalization and new development and opportunities for short and long term buy and hold scenarios.  Good luck with everything!!

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  • Rocky Pe Benito
    OP
    Gresham, OR · Member since 2017 · 25 posts · 7 votes
    8y

    @Jefferson Smith

    Yes, it's basically a waiting game. I'm not going to pay their asking price. If I were to spend that much I'll look for a better deal somewhere else, locally or OOS. Thanks!

    @Robert Ellis 

    I have, but am still learning the ropes of OOS. By the time I'm ready, those markets will probably be saturated by other investors, lol. Thanks!

    0Reply
  • Aaron B. Lewis
    Real Estate Broker · Detroit, MI · Member since 2017 · 103 posts · 50 votes
    8y

    @Rocky Pe Benito you would be wise to spend more time researching the opportunities here in Detroit.

    I have a standing offer to anyone on BP to call me out with deals here and compare. 

    DETROIT HAS THE BEST (low acquisition cost vs cashflow from rental) of any market. The same can be said for flips however those are more strategic and need some skills and insights to find the right areas.

    I am here to help.

    For example. I bought a property for 1k and rented it for maybe 1.5 years at $1,100/mnth (I maybe put 5k into it)

    0Reply
  • Ali Tayeh
    Detroit, MI · Member since 2017 · 10 posts · 4 votes
    8y

    @Aaron B. Lewis 

    "The same can be said for flips however those are more strategic and need some skills and insights to find the right areas."

    I have been analyzing some areas in Detroit for a potential rehab project. I already secured the fund and narrowed the targeted area to small sections within two zip codes. Any advice about a good area to do a flip in (under $ 60K)...

    1Reply
  • Ashley Hamilton
    Rental Property Investor · Detroit, MI · Member since 2015 · 82 posts · 548 votes
    8y
    I COULDN'T AGREE MORE DETROIT IS THE BEST PLACE TO INVEST RIGHT NOW. I'M WILLING TO COMPARE DETROIT DEALS AS WELL.

    Originally posted by @Aaron B. Lewis:

    @Rocky Pe Benito you would be wise to spend more time researching the opportunities here in Detroit.

    I have a standing offer to anyone on BP to call me out with deals here and compare. 

    DETROIT HAS THE BEST (low acquisition cost vs cashflow from rental) of any market. The same can be said for flips however those are more strategic and need some skills and insights to find the right areas.

    I am here to help.

    For example. I bought a property for 1k and rented it for maybe 1.5 years at $1,100/mnth (I maybe put 5k into it)

    0Reply
  • Ashley Hamilton
    Rental Property Investor · Detroit, MI · Member since 2015 · 82 posts · 548 votes
    8y

    HELLO,

    @Rocky Pe Benito IF YOUR READY TO START NOW, CALL OR EMAIL ME. I HAVE TURNKEY DEALS AVAILBLE RIGHT NOW. YOU CAN CLOSE BY JANUARY 25TH AND RECEIVE RENT FEBURARY 1ST. YOU WOULDN'T HAVE TO DO ANYTHING BUT PURCHASE THE PROPERTY THE REST WILL BE HANDLE FOR YOU AND YOU'LL RECEIVE A CHECK EVERY MONTH WITH LESS THAN 1 HOUR WORTH OF WORK .

    ASHLEY ELITE PM, LLC

    0Reply
  • Angelo Mart
    Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
    8y

    I own Cash Flowing property rented to Section 8 tenants in a local inner city here. I love it but its def not for everyone. A 4-Plex in my city going for $370,000 with $10,000/year in taxes in a rough area now. The property taxes in NJ are the highest in America and I know this as I worked in property tax appeals cases. Overall, unless you are in the inner cities doing section 8 then there is NO money to be made out in NJ. A 4-Fam in a nice area is $700,000 with no cash flow or equity in it, the returns are terrible right now. Recently I have purchased the book on Out of State Real Estate Investing from biggerpockets. After I complete my new rehab flip I am working on here in NJ I will be purchasing out of state. I done some research and Detroit, Ohio, Nashville areas are some good cities to make a return on investment. NJ is the last place I would invest right now

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