Need help identifying out of state market to invest

36 Replies

BP Fam -

I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

I have a couple of asks:

1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

2) What tools do you use to identify market trends? 

3) Connect with anyone who does something like this now

Thanks. 

Chad A.

    Originally posted by @Remington Lyman :

    @Michael Veloso I would highly suggest Columbus. Just take a look at our population and job growth.

    Thanks for recommending Columbus. I've been considering Ohio myself, Cleveland, specifically, but I will look into Columbus. 

    Curious: what other indicators do you look for aside from population and job growth?

    @Albert Chun I have been to Columbus about a dozen times so I have seen a steady growth in the area. Plus a lot of companies now have corporate offices in that area so that makes me think more jobs to come. I wish I had some specific data to send to you but ultimately it is more of my opinion.

    @Chad Acerboni

    1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 


    Good job catching on to the whole cashflow market thing. Here are some of the ones I like... Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other secondary or tertiary markets) where the Rent-to-Value Ratios are under 1%. 

    2) What tools do you use to identify market trends?

    Just analyze a lot of deals and keep it in a spreadsheet. Macro economics are used by the faint of heart looking for a reason not to invest. As long as you are cashflowing you are essentially hedging yourself.

    3) Connect with anyone who does something like this now

    I can help if you have specific questions.

    @Albert Chun

    I know a few guys in Columbus. Good TK market.

    Like folks have said here, Ohio is great. The whole mid-west is a great place to start for cash flowing properties. Also consider areas of the South.

    Cities like Indianapolis, St Louis, Cincinnati, Kansas City, Cleveland, Atlanta, Huntsville, Birmingham, etc. You mentioned wanting to buy a fourplex. Some cities have a dearth of residential MFH, other are swimming in it. Kansas City, for example, doesn't seem to have a large supply of what you're looking for. Cleveland seems to be swimming in duplexes, however.

    The best thing to do is to start looking at individual properties in markets, really quickly run some numbers on that property. Eventually you'll notice some trends. Take a look at numbers you have to calculate profitability. Do you notice certain ratios seem to hold up, or that taxes in one area are high compared to another?

    Guys, I am a bit confused. One of you indicated that population growth is important, which apparently caused you to look at Cleveland. Yet, a simple search on city data reveals that Cleveland has lost almost 20% of its' population since 2000. I am sure this is within city limits and the suburbs are doing better. I promise you, though, Cleveland is not a growth market...

    Someone else suggests an investment hurdle of 5% population growth, and that Indianapolis fits that margin. While Indy is the #2 Mid-West market in my opinion, behind Columbus, the population has only grown 10.5% in 19 years since 2000 according to City Data...

    Now, I know these numbers likely don't include the suburbs. But, this should be enough to get you to run from Cleveland as fast as you can. And Indianapolis is a place you'd better know intimately if you are going to buy there.

    Just to give you a sense of some sort of baseline, Mariacopa county in Phoenix, which is now the #1 growth county in the country, grew about 1.7% last year. The county is home to 4.3M population and added about 75,000 more last year. This is what growth looks like, guys.

    Originally posted by @Chad Acerboni :

    BP Fam -

    I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

    I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

    I have a couple of asks:

    1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

    2) What tools do you use to identify market trends? 

    3) Connect with anyone who does something like this now

    Thanks. 

    Chad A.

       Detroit and surrounding suburbs! 

      Have many partners and investors from Southern California you can connect with local to you that will share their experiences and our processes. 
      @Isaura Orellana

      Multifamily would be the way to go. If you’re looking for appreciation, Cashflow and a great Return Detroit would be the way to go. 

      Originally posted by @Michael Kay :

      Like folks have said here, Ohio is great. The whole mid-west is a great place to start for cash flowing properties. Also consider areas of the South.

      Cities like Indianapolis, St Louis, Cincinnati, Kansas City, Cleveland, Atlanta, Huntsville, Birmingham, etc. You mentioned wanting to buy a fourplex. Some cities have a dearth of residential MFH, other are swimming in it. Kansas City, for example, doesn't seem to have a large supply of what you're looking for. Cleveland seems to be swimming in duplexes, however.

      The best thing to do is to start looking at individual properties in markets, really quickly run some numbers on that property. Eventually you'll notice some trends. Take a look at numbers you have to calculate profitability. Do you notice certain ratios seem to hold up, or that taxes in one area are high compared to another?

      Hi Michael, thanks for sharing these bits of wisdom. Very helpful. Could you point me, a newcomer, to a formula, or some variables that you calculate profitability? When you cited the reference for taxes, I'm not sure how to calculate that. For example, is it something you pay per year, and divvy out the cost each month to ensure you can afford it? Also, would the tax rate be on the price you sold it for, or its current price - say, after a rehab?

      Originally posted by @Alex K. :
      Originally posted by @Chad Acerboni:

      BP Fam -

      I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

      I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

      I have a couple of asks:

      1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

      2) What tools do you use to identify market trends? 

      3) Connect with anyone who does something like this now

      Thanks. 

      Chad A.

         Detroit and surrounding suburbs! 

        Have many partners and investors from Southern California you can connect with local to you that will share their experiences and our processes. 
        @Isaura Orellana

        Multifamily would be the way to go. If you’re looking for appreciation, Cashflow and a great Return Detroit would be the way to go. 

        Hi Alex, what do you think are some of the reasons or indicators that are causing the appreciation/cashflow, etc in Detroit? 

        Well, it would be out of country but you could try a number of markets in Ontario, Canada; a lot people outside of Canada invest there. Toronto has historically low vacancy and the population is growing fast than any other city in North America, but obviously you would have some things to consider if you were interested. This sums up some of what to expect but you'd want to do plenty of research.

        Originally posted by @Albert Chun :
        Originally posted by @Alex K.:
        Originally posted by @Chad Acerboni:

        BP Fam -

        I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

        I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

        I have a couple of asks:

        1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

        2) What tools do you use to identify market trends? 

        3) Connect with anyone who does something like this now

        Thanks. 

        Chad A.

           Detroit and surrounding suburbs! 

          Have many partners and investors from Southern California you can connect with local to you that will share their experiences and our processes. 
          @Isaura Orellana

          Multifamily would be the way to go. If you’re looking for appreciation, Cashflow and a great Return Detroit would be the way to go. 

          Hi Alex, what do you think are some of the reasons or indicators that are causing the appreciation/cashflow, etc in Detroit? 

          Hello Albert, there are many factors to take into consideration with many new developments and redevelopment of the city being at the top. Construction everywhere you go. All blight on its way to demolition. 

          Same people That wouldn’t touch Detroit with a 10 foot  are starting to move back to certain areas. 

          The crowds have changed and it’s not like what it once was. 

          Many big corporations coming to Detroit and setting up shop including tech industry. 

          Detroit was once one of the biggest and most thriving cities in America and it did hit rock bottom after the crash and bankruptcy. The only way to go is up once you hit rock bottom. 

          There is 10 new developments all throughout the city taking place on top of the new Chrysler plant. 

          It is the Motor City after all  and now with the autonomous vehicles coming into play with major corporations working on this in Detroit I see more appreciation on its way. 


          The comeback it has made so far is extraordinary and it’s not halfway there.  

          I can only share my experience which has been phenomenal. I am also local to Detroit (30 min commute) which allows me and anyone else local to Detroit to see what’s happening instead of reading about it in an article. 

          The other things to consider are abundance of fresh water, Access and ports to international waters. 

          I mean where else can you buy a house for 10k that needs full rehab board it up wait until the next season and sell for double if not more. 

          The cost of new construction not everyone can afford including some bigger corporations. Why not revitalize a solid structure for $40.00-$50.00 a sq. Ft as opposed to building ground up which will run $100-$150 sq. Ft. 

          Of course there are pockets and areas which are more desirable than others and you have to know the market and invest wisely. 

          As far as cash flow goes you can’t get any better for example : I have a rental in Dearborn ( a Detroit suburb) which I paid 80k for 2 years ago that’s renting at 1000 a month. Of course I had to finance this property and am only cash flowing around 300 per month. 

          On the other hand I have a place in Southwest Detroit Near Mexicantown that costed me around $28,000 all in including repairs etc.(2018) and I'm collecting $900 a month from This SFH. Tenants never missed a payment or have been late and I don't see them going anywhere for a while and if they do it will be filled back up in no time. If I were to sell right now I would get atleast $60-70,000 for it or I have the option to pull out 80% of the 60k to be conservative that's still $48,000.

          I prefer to just let it ride until I have 15-20 of these Detroit properties cashflowing that will all appraise between 50k-100k. That’s when I’ll do a blanket loan on all of them and buy a nice apartment complex or something similar. 

          Where else in the nation can you do this right now other than Detroit? 

          Originally posted by @Alex K. :
          Originally posted by @Albert Chun:
          Originally posted by @Alex K.:
          Originally posted by @Chad Acerboni:

          BP Fam -

          I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

          I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

          I have a couple of asks:

          1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

          2) What tools do you use to identify market trends? 

          3) Connect with anyone who does something like this now

          Thanks. 

          Chad A.

             Detroit and surrounding suburbs! 

            Have many partners and investors from Southern California you can connect with local to you that will share their experiences and our processes. 
            @Isaura Orellana

            Multifamily would be the way to go. If you’re looking for appreciation, Cashflow and a great Return Detroit would be the way to go. 

            Hi Alex, what do you think are some of the reasons or indicators that are causing the appreciation/cashflow, etc in Detroit? 

            Hello Albert, there are many factors to take into consideration with many new developments and redevelopment of the city being at the top. Construction everywhere you go. All blight on its way to demolition. 

            Same people That wouldn’t touch Detroit with a 10 foot  are starting to move back to certain areas. 

            The crowds have changed and it’s not like what it once was. 

            Many big corporations coming to Detroit and setting up shop including tech industry. 

            Detroit was once one of the biggest and most thriving cities in America and it did hit rock bottom after the crash and bankruptcy. The only way to go is up once you hit rock bottom. 

            There is 10 new developments all throughout the city taking place on top of the new Chrysler plant. 

            It is the Motor City after all  and now with the autonomous vehicles coming into play with major corporations working on this in Detroit I see more appreciation on its way. 


            The comeback it has made so far is extraordinary and it’s not halfway there.  

            I can only share my experience which has been phenomenal. I am also local to Detroit (30 min commute) which allows me and anyone else local to Detroit to see what’s happening instead of reading about it in an article. 

            The other things to consider are abundance of fresh water, Access and ports to international waters. 

            I mean where else can you buy a house for 10k that needs full rehab board it up wait until the next season and sell for double if not more. 

            The cost of new construction not everyone can afford including some bigger corporations. Why not revitalize a solid structure for $40.00-$50.00 a sq. Ft as opposed to building ground up which will run $100-$150 sq. Ft. 

            Of course there are pockets and areas which are more desirable than others and you have to know the market and invest wisely. 

            As far as cash flow goes you can’t get any better for example : I have a rental in Dearborn ( a Detroit suburb) which I paid 80k for 2 years ago that’s renting at 1000 a month. Of course I had to finance this property and am only cash flowing around 300 per month. 

            On the other hand I have a place in Southwest Detroit Near Mexicantown that costed me around $28,000 all in including repairs etc.(2018) and I'm collecting $900 a month from This SFH. Tenants never missed a payment or have been late and I don't see them going anywhere for a while and if they do it will be filled back up in no time. If I were to sell right now I would get atleast $60-70,000 for it or I have the option to pull out 80% of the 60k to be conservative that's still $48,000.

            I prefer to just let it ride until I have 15-20 of these Detroit properties cashflowing that will all appraise between 50k-100k. That’s when I’ll do a blanket loan on all of them and buy a nice apartment complex or something similar. 

            Where else in the nation can you do this right now other than Detroit? 

            Wow, thank you so much for that response! I appreciate the information, insight, and your hustle!!! I'll definitely look more into Detroit. I know you're local, but are there any online resources that you can point me to, especially in terms of desirable neighborhoods to invest in?

            @Chad Acerboni

            I'm closing today on my first out of state BRRRR in Indianapolis. FINALLY!

            There’s lots of good markets. Most of them have fairly similar attributes as far as the numbers go. When I first started researching markets I made the mistake of obsessing over the macro economic aspects. What I should have been focused on was finding the right people, not the right product. Once I finally realized my mistake things started to come together. 

            Birmingham was my first choice, but I couldn’t build a team down there for the life of me. After months of trying I decided to change my approach. Instead of looking for a market, I would look for people that were willing to be my boots on the ground. The market they were in would be of secondary importance. Didn’t take long to find what I needed. 

            Price to rent ratios, Taxes, jobs, population growth.  I think any market that meets these big 4 is a safe bet. 

            Originally posted by @Jonathan Hulen :

            @Chad Acerboni

            I'm closing today on my first out of state BRRRR in Indianapolis. FINALLY!

            There’s lots of good markets. Most of them have fairly similar attributes as far as the numbers go. When I first started researching markets I made the mistake of obsessing over the macro economic aspects. What I should have been focused on was finding the right people, not the right product. Once I finally realized my mistake things started to come together. 

            Birmingham was my first choice, but I couldn’t build a team down there for the life of me. After months of trying I decided to change my approach. Instead of looking for a market, I would look for people that were willing to be my boots on the ground. The market they were in would be of secondary importance. Didn’t take long to find what I needed. 

            Price to rent ratios, Taxes, jobs, population growth.  I think any market that meets these big 4 is a safe bet. 

            So true Jonathan! I’ve narrowed down my options to 4 markets with lower entry points that I’m interested in and open to invest: Indianapolis, Cleveland, Detroit and Pittsburgh. Note I have done the research on the macro and tons of forums and articles reading to come to these options.

            I’m now in the process of getting referrals and trying to develop a team. And honestly, the market I can do that first, will be the one I’ll invest first. 

            Originally posted by @Jason Carter :

            @Jonathan Hulen Congrats and nice pivot on the strategy. I've abandoned some markets for the same reason. Sometimes the team just doesn't align. Best of luck in Indy! 

            @Jason Carter 

            Thanks man! I appreciate you trying to help me out back in January. I guess B-ham wasn’t meant to be. I think it worked out for the better. 
             

            Originally posted by @Chad Acerboni :

            BP Fam -

            I currently live in Southern California and I'm looking to invest in my first multifamily property. (Duplex, Triplex, or Fourplex) However, I'm looking for it to be out of state. Being in this area, I do not want to invest a majority of my other assets and I'm not sure I want to syndicate on my first investment. I have been searching out of state, the prices are cheaper and it seems I can get into the market easier for what I want to put down.

            I'm aware of property taxes in different states, the expenses of hiring a management company  to run, etc. 

            I have a couple of asks:

            1) When looking out of California, what would be a good market to start prospecting based on your opinion/experience? 

            2) What tools do you use to identify market trends? 

            3) Connect with anyone who does something like this now

            Thanks. 

            Chad A.

               Midwestern cities that don't have too many investors is a great place to start. Cleveland is still pretty untapped by investors. Many more are looking into it, but prices are still very low! 

              @Tom Ott i purchased one of my rental properties in cleveland just recently and i can tell you that currently the market here is fairly inflated and it's difficulty to find deals that make sense ...i'm currently thinking of pivoting to Columbus, Ohio for this very reason...i'm unsure of where exactly in cleveland you're referring to that is "untapped" as i've been fairly frustrated this summer