Which state to consider next for OOS investing?

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Which state to consider next for OOS investing?

Anshul Pandey
Member since 2019 · 3 posts · 8 votes

I started last year and I have 5 units in Phoenix area and couple of primary (bought in 2014) and secondary home (bought in 2021) in Seattle which is where I am based. Phoenix is getting more and more expensive and numbers aren't working very well there anymore. 

What state should I consider and explore? 

Investment goal: 50 Units by 2025 

Primary goal: Cash flow

Looking for about ~200 per door. 

Any pointers would be super helpful. 

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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
5y

@Anshul Pandey

What about an analytical way to pick an out of state market? You’re really looking for B class areas in the path of progress. So is there a way to find those? Yes, I did this analysis for you so that you don’t need to spend the time trying to research areas. Briefly here is that methodology and the list. Feel free to DM me for a link to the complete article.

Filter for MSAs that have 150k plus people and are within 50 miles of a major airport (1M or more flights per year). 

Only look at zip codes that have a least 3k housing units (target rich environment) and a median home value of 100-250k. Rank by number of housing units that meet those criteria.

Here is the list by housing units. 

  1. Houston, TX
  2. San Antonio, TX
  3. Las Vegas, NV
  4. Philadelphia, PA
  5. Indianapolis, IN
  6. Jacksonville, FL
  7. Phoenix, AZ
  8. Tucson, AZ
  9. Orlando, FL
  10. Fort Worth, TX
  11. Charlotte, NC
  12. Minneapolis, MN
  13. Columbus, OH
  14. Miami, FL
  15. Louisville, KY
  16. Dallas, TX
  17. Kansas City, MO
  18. Oklahoma City, OK
  19. Omaha, NE
  20. Albuquerque, NM

Why not pick a few areas off this list and then find submarkets that work for you? That is what I did… I invest in Kansas City and it's a great market. 

Having a great PM and a great agent is key! I know you can be successful in any of these markets, so get going! 

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  • Stone Jin
    Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
    5y

    @Anshul Pandey

    We are based in Phoenix and invest both locally and out of state in Ohio. Depending what you want to buy you should definitely be getting more than $200 per door in Ohio. We buy b houses in A school districts and average $400-500 a door for single families.

    5Reply
  • Joseph Schweizer
    Investor · Member since 2020 · 291 posts · 592 votes
    5y

    Hi @Anshul Pandey!

    I made an investment in Kansas City, MO (see post below). This market is growing and might be worth it for you to look into.

    https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

    Best Wishes!

    2Reply
  • Frank Rodrigues
    Investor · Kansas City, MO · Member since 2021 · 110 posts · 65 votes
    5y

    Anshul,

    I agree with @Joseph Schweizer. KC is a great place and has been for years. Here is a quick look at what's going on in that market currently. Feel free to PM if you have any questions. I hope that helps and best of luck!

    1Reply
  • Melinda McDonald
    Property Manager · Kansas City · Member since 2021 · 58 posts · 42 votes
    5y

    Hi -

    Just echoing what has been said so far.  KC is a great market for investing.  @Caleb Brown is a wonderful resource to guide you to the best neighborhoods and properties.  Let me know if I can be of any assistance.

    Melinda

    2Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    Happy to chat!

    0Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Anshul Pandey

    What about an analytical way to pick an out of state market? You’re really looking for B class areas in the path of progress. So is there a way to find those? Yes, I did this analysis for you so that you don’t need to spend the time trying to research areas. Briefly here is that methodology and the list. Feel free to DM me for a link to the complete article.

    Filter for MSAs that have 150k plus people and are within 50 miles of a major airport (1M or more flights per year). 

    Only look at zip codes that have a least 3k housing units (target rich environment) and a median home value of 100-250k. Rank by number of housing units that meet those criteria.

    Here is the list by housing units. 

    1. Houston, TX
    2. San Antonio, TX
    3. Las Vegas, NV
    4. Philadelphia, PA
    5. Indianapolis, IN
    6. Jacksonville, FL
    7. Phoenix, AZ
    8. Tucson, AZ
    9. Orlando, FL
    10. Fort Worth, TX
    11. Charlotte, NC
    12. Minneapolis, MN
    13. Columbus, OH
    14. Miami, FL
    15. Louisville, KY
    16. Dallas, TX
    17. Kansas City, MO
    18. Oklahoma City, OK
    19. Omaha, NE
    20. Albuquerque, NM

    Why not pick a few areas off this list and then find submarkets that work for you? That is what I did… I invest in Kansas City and it's a great market. 

    Having a great PM and a great agent is key! I know you can be successful in any of these markets, so get going! 

    Podcast Guest on Show #373
    11Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    @Lee Ripma

    I too like Las Vegas but you’ll have toss toss your median home price of $100-$250k in the trash. That was years and years ago. We’re at $405k now. 

    I would narrow it down this way. 

    No state income tax leaves you with

    • Wyoming.
    • Washington.
    • Texas.
    • South Dakota.
    • Nevada.
    • Florida.
    • Alaska.
    • subtract SD and AK for snow/freezing temps
    • Subtract Florida for hurricanes and high insurance
    • Subtract Texas for high property taxes and some areas with bad foundations/soil conditions
    • you could say that also leaves Washington and Wyoming but I’m subtracting them for weather and other personal reasons. 

    • That leaves the low property tax, no income tax, cheap utilities, no weather related expenses, tile roofed, stucco sided, median property age under 20 years, cheap insurance and solid foundations Las Vegas properties with lots of entertainment, very cheap flights and a good quality of life. 
    7Reply
  • Anshul Pandey
    OP
    Member since 2019 · 3 posts · 8 votes
    5y

    This is great info and this is the reason I love this community. 

    Other important factor that I did not mention was lower property taxes. I have not explored KC before, so I will check that out. But taxes was the reason I did not explore TX but am actually very interested in NV, either LV or Reno. I haven't done too much research for both of these areas nor have I visited these places before (I know :)) 

    Ohio is definitely interesting. 

    3Reply
  • Jai Reddy
    Edmond, OK · Member since 2012 · 456 posts · 270 votes
    5y

    @Bill Brandt

    Would you consider ‘areas with good schools' within a city? Prices tend to be higher where schools are relatively better rated. Any insights from being a longtime investor in SFH?

    1Reply
  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    5y

    @Anshul Pandey Echoing what @Stone Jin said, Toledo is a great cash flow market that has a much lower entry point than many places in Ohio and the Midwest in general. There are bread and butter C and C+ properties as well as the A and B class properties that will make your jaw drop at how far you money will go. Columbus is a good place to go in Ohio if you're looking for more appreciation, as well as parts of the other bigger cities of Cleveland/Cincinnati.

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    2Reply
  • Shera Linares
    Investor · Foothill Ranch, CA · Member since 2021 · 35 posts · 25 votes
    5y

    @Anshul Pandey

    I agree!! The market analysis alone in this post is GOLD and has confirmed that I’m on the right track with my analysis of Ohio being a good area to invest in.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y

    with what appears to be a robust wherewithal why don't you concentrate on buying apartment building of 30 to 50 doors one transaction and your goal is met.. It can be a logistical nightmare owning multiple doors in multiple states..  

    I will Echo @Bill B. on Vegas though with low on going maintenance and some of the lowest prop tax's in the US when you run ALL the numbers you can get a pretty solid return.. I would only Buy A and B class though.. low end Vegas is not different than any other HOODY D / C class in other parts of the country. 

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    8Reply
  • Joel Fischer
    Henderson, NV · Member since 2016 · 84 posts · 21 votes
    5y

    @Jay Hinrichs …Wondering about people’s thoughts on Indiana. Seems like the numbers work real well many deals. Problems there?

    2Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    5y

    @Anshul Pandey

    Casa grande AZ

    Arizona City AZ (this little city has plenty of small Multifamily)

    Eloy AZ

    Florence AZ

    South Phoenix

    3Reply
  • Liwen Gu
    Real Estate Broker · Salem, OR · Member since 2017 · 101 posts · 43 votes
    5y

    I agree with buying a larger multifamily or smaller properties all in around the same area rather than scatter them all over the country. It makes management a lot more efficient and easier to build a reliable team. 

    3Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    @Jai Reddy

    Hey Jai, I’ve really seen almost zero property value difference based on school quality. Personally, having graduated 35 years ago from the Midwest I feel like the schools are horrible. But I don’t know if that’s a 2020 thing or a vegas thing or a 2020 vegas thing. 

    I know even my friends of average means send their kids to private school. My experience with private school kids (think charter school for kids that really want to learn as opposed to expensive tuition schools.) is the same as with the many Mormans I meet here. They are the friendliest and most respectful people you will ever meet. So if the schooling as as good or better than public schools and the kids turn out better, win win. 

    Ps. All this is being said as a guy who met his wife late in life and never had kids. So maybe a vegas parent will weigh in with better info. But all that being said no, I haven’t seen a school quality price effect here. 

    1Reply
  • Ashlie Greising
    Austin, TX · Member since 2013 · 47 posts · 12 votes
    5y

    @Carlos Gonzalez Interesting. I currently buy and hold SFH but I'm looking to transition into multi-family. I'll check out the AZ market.

    0Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    5y

    @Ashlie Greising Those little cities I mentioned above have a lot of small-multifamily properties and they're semi-new-builds 2004 many fourplexes, triplexes and duplexes. Im using this to transition to big multifamily.

    1Reply
  • Derrick LindPro Member
    Rental Property Investor · Hayward, CA · Member since 2019 · 31 posts · 11 votes
    5y

    @Carlos Gonzalez, I just looked on Zillow and Redfin. I found a total of 2 MF for sale in those towns. Just 2 in AZ City. Do you see something different? Do you mean off-market?

    1Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    5y

    @Derrick Lind

    You have to check the market everyday.

    Lately those small Multifamily they’ve been selling FAST!

    If you just checked right now expecting to find 10 deals then something is wrong.

    Investors are buying them FAST!

    Check the market everyday

    0Reply
  • Steve R.
    Member since 2017 · 93 posts · 44 votes
    5y

    @Anshul Pandey

    Take a look at San Antonio, TX. You can buy just outside of city limits to get relatively lower property tax and you can cash flow ~400-500/ door if you buy in the right areas with really good schools. I love San Antonio RE market.

    0Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Lee Ripma:

    @Anshul Pandey

    What about an analytical way to pick an out of state market? You’re really looking for B class areas in the path of progress. So is there a way to find those? Yes, I did this analysis for you so that you don’t need to spend the time trying to research areas. Briefly here is that methodology and the list. Feel free to DM me for a link to the complete article.

    Filter for MSAs that have 150k plus people and are within 50 miles of a major airport (1M or more flights per year). 

    Only look at zip codes that have a least 3k housing units (target rich environment) and a median home value of 100-250k. Rank by number of housing units that meet those criteria.

    Here is the list by housing units. 

    1. Houston, TX
    2. San Antonio, TX
    3. Las Vegas, NV
    4. Philadelphia, PA
    5. Indianapolis, IN
    6. Jacksonville, FL
    7. Phoenix, AZ
    8. Tucson, AZ
    9. Orlando, FL
    10. Fort Worth, TX
    11. Charlotte, NC
    12. Minneapolis, MN
    13. Columbus, OH
    14. Miami, FL
    15. Louisville, KY
    16. Dallas, TX
    17. Kansas City, MO
    18. Oklahoma City, OK
    19. Omaha, NE
    20. Albuquerque, NM

    Why not pick a few areas off this list and then find submarkets that work for you? That is what I did… I invest in Kansas City and it's a great market. 

    Having a great PM and a great agent is key! I know you can be successful in any of these markets, so get going! 

     That is a great post! For me finding handyman/contractors to do the make ready has been my biggest challenge for out of area properties. How did you crack the contractor code?

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Bill B.:

    @Jai Reddy

    Hey Jai, I’ve really seen almost zero property value difference based on school quality. Personally, having graduated 35 years ago from the Midwest I feel like the schools are horrible. But I don’t know if that’s a 2020 thing or a vegas thing or a 2020 vegas thing. 

    I know even my friends of average means send their kids to private school. My experience with private school kids (think charter school for kids that really want to learn as opposed to expensive tuition schools.) is the same as with the many Mormans I meet here. They are the friendliest and most respectful people you will ever meet. So if the schooling as as good or better than public schools and the kids turn out better, win win. 

    Ps. All this is being said as a guy who met his wife late in life and never had kids. So maybe a vegas parent will weigh in with better info. But all that being said no, I haven’t seen a school quality price effect here.

    the Sheldon Adelson School over in Summerlin does create some value propositions for those homes in close proximity from what i see although I doubt it would be as much as say a high ranking public school..  I know in our area here in Oregon and for sure in the SF Bay Area public school rankings have a direct correlation to property values.

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    0Reply
  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    5y

    @Stone Jin Great insight here so far. I sent you a message re: OOS investing advice if you don’t mind sharing a few tips.

    0Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Joe S. I talk about it on my podcast, I use local partners on my projects. Then find a few good ones and a good local PM. There is always some trial and error. 

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    0Reply
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