Living in an EXPENSIVE market.. Where to Invest OOS for MFP!?

18 Replies

Trying to figure out an area to focus on and get in the MULTI FAMILY game.  We live in the northwest and we'd love to dive in a more affordable market..

We've got a handful of candidates narrowed down by affordability, knowledge by association and places that just resonate/excite with us.  Cincinnati (OH), Memphis (TN), Philly (PA), Kansas City (MO), as well as the southwest (AZ, but NM specifically) are places that the numbers look great but our lack of area knowledge is making us hesitate.

Open to suggestions of where to focus on and/or establish relationships and build teams in order to obtain properties that cash-flow (preferably with higher potential to appreciate obviously).

Any outstanding realtors in the greater Seattle area that can find me a house-hackable multi-family property so I can stay local?

What say you forums?

You live in one of the best markets in the country.  I'd stick there, but the traditional multi-family opportunity probably doesn't exist.  People bid up the properties, because they made money on appreciation.  Can you try some secondary places like Tacoma or Spokane?

There are good investing spots in Cincinnati and Philly. 

@Patrick Britton there's my current problem. I have a job that allows me to 'drive for dollars' so I'm compiling a list of multi-family properties to cold call. We currently reside in a SFR and have lined up financing which would max us out at roughly 500k for a secondary residence. Our plan is to find something local that we could 'house hack', turning our current residence into a rental while we add value into something that we could ideally find under our budget but it's going to take some grinding to find something that meets the criteria! Did I mention we have 3 kids? Hahaha.

@Brian Ploszay   originally I thought that we would need to live in the residence (hence wanting to stay in or near Seattle proper, we currently reside in Burien) to qualify for financing but I don't think that is the case.  As a 'newbie' investor it seems less daunting to try and establish connections and a team out of state in a more affordable market to begin our RE investment journey.

Originally posted by @Brian Ploszay :

You live in one of the best markets in the country.  I'd stick there, but the traditional multi-family opportunity probably doesn't exist.  People bid up the properties, because they made money on appreciation.  Can you try some secondary places like Tacoma or Spokane?

There are good investing spots in Cincinnati and Philly. 

  I would say Philadelphia is also a bidding war zone for multifamily right now. To the point that the property doesn't cash flow. Maybe in some high risk zones you can find something .

Most investors like to keep these units for income or after retirement. The owners get a few letters or faked government documents or even certified mail every week. If he is serious he will contract to a realtor who can get top prices for them.   I suspect with all restricted stock options from these tech giants it is a very competitive market near King County. So you need to talk to a local realtor.

House hack means you live in one unit as principle home and rent out others.  So you have a job lined up in these cities?

Hi @Brian Erickson ,

I'm a local agent and would be happy to chat with you.  There are opportunities in our region, especially for house hacking.  You might need to look a little bit north or south, but they do exist.  Each neighborhood has it's own ups and downs and I would caution you to stay out of Seattle city limits if possible.

- Jake

@Brian Erickson of the markets that you mention, I like Kansas City. I've been active in KC for several years and consider it one of the best cash flow markets but in addition to cash flow, it has strong economic and demographic fundamentals. KC has a growing population, growing jobs, and diverse industry which some of the markets that you mention do not. I'd be happy share my insights and experience if you want to reach out.

@Sam Shueh   My family and I are down to house-hack if we can find something close enough to my job that is currently in Seattle because most of the properties are going for prices that don't make sense from a cash-flow perspective.  Therefore, hunting and securing a deal under market value that needs work that we could live in OR deciding on a more affordable market out of state seem like the only two options.

Other out of town markets seem more opportunistic to be able to purchase and cash-flow immediately compared to the Seattle area.

@Karl Krauskopf eastern Washington as well as Idaho have also been on my potentials list.   My grandfather actually used to own a real estate business in Deer Park, WA.  I'm still in the beginning stages of researching potential markets but like everyone says (and is somewhat natural I imagine) that starting off you're always drawn to areas closer to you even though the process is pretty much the same whether you're 10 miles or 1000 miles from your investment.

Congrats on your first property!  That is so exciting and something we're definitely looking forward to and pumped about no matter where we may end up in the beginning.

@Mike D'Arrigo thank you for the heads up.  I like the general price points from what I've seen just scratching the surface in the Kansas City market.  Do you have a variety of investments in the city or specialize in MFP?  The general statistics for the city and growth look positive as well.  I feel like one of the hardest decisions at this point is just narrowing an area down to focus on!

@Brian Erickson as a starting point, I recommend deciding what class of neighborhood and property that you're most comfortable with. Once you've established that criteria, it will be much easier to choose a location. I highly recommend staying out of low end, cheap neighborhoods. This asset class will not perform well for an out of state investor. We do anything from and A to C class property with B class most typical. I like areas with rents of $950 and above, however, you can also do well with C class properties with rents of $800-$900. The key to those properties is good tenant screening and property management. Feel free to reach out if I can be of any help.

Originally posted by @Jay N. :
@Mike D'Arrigo I am a new MFH investor as well from the Bay Area and would love to get some insights in the KC market and RE investing.

Would it be ok if I PM you?

Jay

Jay, feel free to PM me or give me a call.

Yes,

@Karl Krauskopf , looks like we are going to hit a home run with your first one. Very excited for you and look forward to working with you to build your portfolio. And to those seeking buy and holds, Spokane has a great market, I feel almost untouched and the vacancy rates are well below 1%. If you are interested in learning more of what Spokane has to offer PM me or I am sure Karl has some good insight.

Thanks,

Good morning bp family,

I’ve noticed a lot talk about Kansas and Seattle, please do not forget about Spokane. I would say 99.9% if my out of state clients are happy with my service. I not only find the property, i shoot video of the property to send to clients, write up the offer, negotiate the offer and see that the transaction closes with out any snags. Additionally, for an additional cost, I  screen tenants, get application signed, meet with tenants, maintenance workers, anything and everything to get the tenant into the unit ASAP to see the unit is not empty for more than a couple of days. If you have questions regarding this process, I’m sure @Karl Krauskopf t would be more than happy to answer the process and how successful we were.

@Karl Krauskopf

Thank you,

@Brian Erickson
What size multi r you looking at? My partner in my most recent deal has been invested in the Memphis region since 2010 so we see the best deals coming out of there currently.
If you want to get a piece of the larger stuff you can Pm me. If you are looking for smaller stuff in this area contact @David Hutson for best referrals in that market for agents.