Los Angeles, CA · Member since 2018 · 3 posts · 2 votes
Hi everyone,
I’ve got about $80k to spend on my first investment property. Preferably looking for a turnkey place ready for renters. I don’t intend to ever see the property, just want to buy it remotely, and let a prop management group do the rest while I sit back and make a little money on it. So I’m here asking to see if anyone recommends a particular city or state to do this in.
@Luke Capozzoli What I'd suggest is that before you jump in and select a property, that you visit the market and the team you are considering working with. Investing out of state carries additional risks, part of mitigating those risks is to be thorough in your due diligence. Turnkey is relatively passive, but not entirely. Make sure the property management is solid and has an outstanding track record if possible, with longer tenant occupancy. Turnovers are likely to be one of your greatest cost - expenses and loss of income.
If you are going to buy with cash, be sure to still get an appraisal to make sure the property is worth what you are paying. And of course always get a 3rd party inspection.
As far as locations, there are lots of markets - primarily in the midwest and southeast - where you can do well for cash flow at least on paper. More important than the market is picking the right team to work with.
@Luke Capozzoli You should consider more than just the cashflow you will be getting. Do you want to purchase a property that cash flows more but may not appreciate much naturally or are you okay with less cash flow but higher natural appreciation? This will narrow down your choices in where you should invest.
Everyone will probably recommend the city/state they invest in because they know the area and already have a team in place. It really just comes down to the deal you get and whether you trust the team you've assembled to handle any issues that arise.
Hey, @Luke Capozzoli, Kansas City has some great deals and some unique opportunites available all the time. I'm here in KC with a team of professionals on the ground. I'd be happy to share some of our knowledge, wisdom, and experience with you. :)
@Luke Capozzoli Congrats on making the decision to start in REI! I've been OOS investing in Indianapolis for over 3 years. It's SO VERY IMPORTANT to RESEARCH and trust the TK company you decide to work with. Search the forums, search Google, just do your due diligence no matter what market you're looking in. PM me if you want to talk more.
We've been working hard here in the land of milk and honey (Cleveland, OH) for 20 years. We've helped a lot of OOS investors connect with great cash flowing rentals here.
For 80k in Cleveland you can get a duplex that's bringing in $1,300+ a month in rents. Or you can use the 80k as a down payment on a fourplex that's getting $30,000 in annual rents. It's a great time to be in Cleveland.
@Sammy Lyon is from LA as well and is just starting to invest in Cleveland. Sammy has done a ton of research and decided on Cleveland. I'm sure Sammy would be willing to share some insight.
If you want to look into Cleveland, I'd love to be a resource for you!
Hey @Luke Capozzoli, there's quite a few of us in LA who are investing out of state -- I'm assuming you meant out of state with $80k :) -- including @Shiva Bhaskar. Would love to meet up and talk strategies if you'd like!
@Luke Capozzoli What I'd suggest is that before you jump in and select a property, that you visit the market and the team you are considering working with. Investing out of state carries additional risks, part of mitigating those risks is to be thorough in your due diligence. Turnkey is relatively passive, but not entirely. Make sure the property management is solid and has an outstanding track record if possible, with longer tenant occupancy. Turnovers are likely to be one of your greatest cost - expenses and loss of income.
If you are going to buy with cash, be sure to still get an appraisal to make sure the property is worth what you are paying. And of course always get a 3rd party inspection.
As far as locations, there are lots of markets - primarily in the midwest and southeast - where you can do well for cash flow at least on paper. More important than the market is picking the right team to work with.
I've seen a lot of people already mention what I'd like to suggest as well. Make sure you find a good Turnkey company to work with, especially if they have an in house PM team, it makes it all the easier as well. A lot of companies will try to take a deal by deal mentality and will not want to work with you after they've nickel'd and dime'd you for all they can.
That being said, there are a lot of reasons to go with the Turnkey route as well. The right company can truly be a passive income partner. You can be as involved or not as you want to be. They are familiar with what areas of town are growing. They can often keep costs down by taking a standardized approach to renovating the property. And they can handle the headache that is tenant screening and placement as well. They can be a complete one stop shop for a lot of your needs as well.
Do some research and find people who are familiar with the markets and sub-markets of the city you are wanting to purchase in. Here in KC especially, there are some rather undesirable neighborhoods right next to very desirable ones. And to OOS investors, that's hard to identify without boots on the ground.
Feel free to PM me and pick my brain if you'd like!
@Luke Capozzoli It's not quite as easy as that. Before picking a market, I recommend that you clearly and specifically define your objectives and what kind of return you are looking for, then find the markets that best help you achieve that. You don't necessarily have to see the specific property before you buy but your really should spend time in your market of choice and understand the neighborhoods and build a relationship with the team you are working with. Turn key can be a great way to go for someone like you that doesn't want to be real hands on but you need to work with a fully vetted and trusted turn key company. There are good ones and bad ones in many different markets.
In general, the ones to avoid are the ones that:
Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)
Don't allow for your own independent property inspection
Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)
Require you to pay for any renovation upfront
Sell only in cheap. low end neighborhoods
Don't accurately represent the neighborhood/property classification
Don't have consistent rehab standards for all properties
If cash flow is your goal, I highly recommend looking closely at Indianapolis and Kansas City. I've been active in both markets since 2010. I'd be happy to help in any way I can if you want to reach out.
@Luke Capozzoli I wholeheartedly agree with @Mike D'Arrigo - It's best start off by defining your goals. Jumping into a market (or 'onto' a property) before answering the 'tangible goal' question can result in a lot of wheel-spinning. Everything else (markets, neighborhoods, teams, resources, etc.) should trickle down from your set objectives.
I'm very biased towards Indianapolis because of the work my team has been doing over the past few year in the area. Happy to help if you want to chat!
*Disclaimer: I am not an investor myself but I'm very familiar with the real estate landscape in my area*
I am currently a student in Ann Arbor and just about every property in my area are rental properties for off campus student housing. The main concern with this is typically in regards to maintenance and upkeep, especially with the amount of turnover in tenants. However, you indicated that you planned to hire a prop management group regardless and this will help you significantly with student housing.
There are two main reasons why student housing, especially in Ann Arbor, is a good fit for you.
1) Student housing properties are cash cows, when you have half a dozen students living in a house with the average household income around $150K (University of Michigan), they each have a lot of income to pay rent. This drives up rent rates exponentially in relation to the quality of the property itself. For example, my roommates and I have a 2 bedroom, 1 bathroom apartment that is less than 500 sq ft. Between the four of us, we pay approximately $2,249 in rent.
2) Not exactly sure of the numbers, but appreciation in Ann Arbor is very high. Especially if you are looking for a long term property, this is a huge plus. Ann Arbor is home to one of the greatest schools in the country (a little bias right there) and many students tend to stay or come back to the area. There is a really high concentration of tech startups in the area as well and this process of highly skilled individuals coming and staying in Ann Arbor is really beneficial to the real estate market. This article is a really good read as well -> https://www.mlive.com/news/ann-arbor/index.ssf/201...
Again, take everything I said with a grain of salt because I am obviously a bit biased, but I do think the market is worth looking into.
Hi everyone,
I’ve got about $80k to spend on my first investment property. Preferably looking for a turnkey place ready for renters. I don’t intend to ever see the property, just want to buy it remotely, and let a prop management group do the rest while I sit back and make a little money on it. So I’m here asking to see if anyone recommends a particular city or state to do this in.
Tons of turnkey markets out there. Many are well represented by sellers & turnkey operators here on BiggerPockets (myself included) The most popular markets are
Cleveland
Toledo
Memphis
Birmingham
KC
Indy
Detroit
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
@Luke Capozzoli hi Luke some great areas in Michigan where you could not only buy a house but possible two and get 10-13% return on your investment. Definitely give Michigan a good hard look as it is a great state for owners and tenant laws, and also becoming a very desirable area to live because of Grand Rapids and Detroit’s booming employment. If you want to learn more about Michigan and what it have to offer as an property investment state hit me up. I would love to help you go and learn on your path for financial freedom, an investor, property manager and real state agent. Thanks.
@Luke Capozzoli honestly you are setting yourself up to be defrauded and or ripped off. I would never blindly buy something and then again blindly hand the management over to someone else.
Don't invest that way. Just my opinion. Do some homework and do a value add strategy. You will likely end up paying above retail for a site-unseen, turnkey property.
Hi everyone,
I’ve got about $80k to spend on my first investment property. Preferably looking for a turnkey place ready for renters. I don’t intend to ever see the property, just want to buy it remotely, and let a prop management group do the rest while I sit back and make a little money on it. So I’m here asking to see if anyone recommends a particular city or state to do this in.
This could work for your 10th investment with the same successful TK provider. I'd want to personally visit the first few properties and providers. It is still a people business and you can't trust unless you have verified. 80k should not be treated lightly, sight unseen with strangers you may have better odds at a casino! All the best.
I am a fan of student housing. College kids party a bit but they (or their parents at least) are usually worried about their credit score & will pay for any damages caused by said partying.
Hi everyone,
I’ve got about $80k to spend on my first investment property. Preferably looking for a turnkey place ready for renters. I don’t intend to ever see the property, just want to buy it remotely, and let a prop management group do the rest while I sit back and make a little money on it. So I’m here asking to see if anyone recommends a particular city or state to do this in.
This could work for your 10th investment with the same successful TK provider. I'd want to personally visit the first few properties and providers. It is still a people business and you can't trust unless you have verified. 80k should not be treated lightly, sight unseen with strangers you may have better odds at a casino! All the best.
Not necessary to personally walk it, but it doesn't hurt. You should at the very least have a 3rd party inspector inspect it though. That along with video & an appraisal & you should be good to go.