Investing in multifamily out of state

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Multi-Family and Apartment Investing
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Investing in multifamily out of state

Alexis York
Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes

I bought my first property a year ago, condo in las vegas. I am ready to buy another one, but I am leaning more towards duplex out of state some where in Florida. Is right now a good time to buy? 

I have a good amount of cash in my accounts. However I am a cocktail server here in Vegas and have difficulty getting approved sometimes for loans due to my tips being a big part of my income. 

Any tips reccomendations would be appreciated. 

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Steven Foster Wilson
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
4y
Quote from @Alexis York:

I bought my first property a year ago, condo in las vegas. I am ready to buy another one, but I am leaning more towards duplex out of state some where in Florida. Is right now a good time to buy? 

I have a good amount of cash in my accounts. However I am a cocktail server here in Vegas and have difficulty getting approved sometimes for loans due to my tips being a big part of my income. 

Any tips reccomendations would be appreciated. 


 Hi Alexis, 

Why Florida? Have you considered Ohio? Here are some states and trends for Columbus https://learn.roofstock.com/bl.... 

We also have a TON of huge corporations here like Amazon, Intel, The Limited, Chipotle,and more. These huge companies pay people to research different markets, populations, and estimated growths. There is a reason all of these companies are choosing to set up shop here. 

The price to rent ratio makes for great investments. Not to mention our appreciation has been 8% higher then the US national average, because of the high demand for affordable housing.

Just thought I would throw out another option. 

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  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Alexis York:

    I bought my first property a year ago, condo in las vegas. I am ready to buy another one, but I am leaning more towards duplex out of state some where in Florida. Is right now a good time to buy? 

    I have a good amount of cash in my accounts. However I am a cocktail server here in Vegas and have difficulty getting approved sometimes for loans due to my tips being a big part of my income. 

    Any tips reccomendations would be appreciated. 


     Hi Alexis, 

    Why Florida? Have you considered Ohio? Here are some states and trends for Columbus https://learn.roofstock.com/bl.... 

    We also have a TON of huge corporations here like Amazon, Intel, The Limited, Chipotle,and more. These huge companies pay people to research different markets, populations, and estimated growths. There is a reason all of these companies are choosing to set up shop here. 

    The price to rent ratio makes for great investments. Not to mention our appreciation has been 8% higher then the US national average, because of the high demand for affordable housing.

    Just thought I would throw out another option. 

    4Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y

    I actually have a few friends out there that invest in Ohio and make great returns. Something have been looking into. 

    Its been between Florida, Texas and Ohio. I just love Florida. lol! But of course wherever has the best deals. 

    0Reply
  • Simon Ashbaugh
    Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
    4y

    HI Alexis!

    I'd definitely dive a little deeper into researching Ohio markets. Columbus is a great hybrid market of cashflow and appreciation, and you won't be paying Florida prices. 

    2Reply
  • Austin McClainBusiness Member
    Real Estate Agent · OH · Member since 2021 · 348 posts · 602 votes
    4y

    Ohio has been a great market. It’s a growing area that has a lot of new tech-related jobs coming into the area.

    https://www.fool.com/investing/2022/02/15/why-are-so-many-companies-moving-to-ohio/

    [email protected]614-710-4827
    4Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Quote from @Alexis York:

    I bought my first property a year ago, condo in las vegas. I am ready to buy another one, but I am leaning more towards duplex out of state some where in Florida. Is right now a good time to buy? 

    I have a good amount of cash in my accounts. However I am a cocktail server here in Vegas and have difficulty getting approved sometimes for loans due to my tips being a big part of my income. 

    Any tips reccomendations would be appreciated. 


    It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.
    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    4y

    @Alexis York

    Investing in multifamily that is out of state requires specific attention to various factors like understanding the local market, cap rates, rents and other critical information.

    Do market analysis on current rents, potential rents, appreciation, etc.

    You need a team of local professionals like property managers, contractors, agents etc. 

    A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

    All the best!

    [email protected]832-776-9582Podcast Guest on Show #469
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  • Nick BelskyBusiness Member
    Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
    4y

    @Alexis York

    Florida is still a very hot market in most areas.  As others have mentioned, far better bang for you buck elsewhere.  At least for now.

    Also, use a DSCR loan and your income isn't a factor. Save yourself the headache.

    Cheers!

    [email protected]
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    2Reply
  • Annika Engelbrecht
    Real Estate Agent · Member since 2022 · 8 posts · 18 votes
    4y

    Like others said, I think that Ohio is a great market for renting especially considering the lower average home price compared to other areas. 

    The thing about Florida is that there are a lot of concerns with regard to Global Warming and the potential of it going underwater due to the rising sea level (that likely won't happen too soon, but whether you believe in it or not, it is something to be aware of). Additionally, the high likelihood of hurricanes in Florida cause higher home insurance rates which is something to account for. According to insurance.com, Florida has the third highest average home insurance rate in the US. Just some stuff to consider :)

    Regardless, I am sure that you will find success in whatever you do and I wish you the best. 

    Good luck!

    4Reply
  • Brian Walters
    Las Vegas, NV · Member since 2019 · 173 posts · 78 votes
    4y
    Quote from @Alexis York:

    I bought my first property a year ago, condo in las vegas. I am ready to buy another one, but I am leaning more towards duplex out of state some where in Florida. Is right now a good time to buy? 

    I have a good amount of cash in my accounts. However I am a cocktail server here in Vegas and have difficulty getting approved sometimes for loans due to my tips being a big part of my income. 

    Any tips reccomendations would be appreciated. 


     Just curious, if you're looking for mutli-family, why not look in Vegas?  I know this town isn't known as being the best for multi, but curious your thoughts.  I'm new to investing, actually looking at condos for my first investment, so our paths sounds similar.  Happy to discuss in 1 on 1 in direct  messages on here as well if possible.

    1Reply
  • Jordan Murrell
    Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
    4y

    Hi Alexis,

    Congratulations on your first property and the thoughts of buying another!! 

    When investing out of state, there are a few things that are needed and one being a strong team that you can TRUST. I have purchased out of state and had great experiences and also very bad experiences. I have an array of questions to ask realtors and lenders (I am in the mortgage business) before you decide to make the decision to trust them with a purchase thousands of miles away. 

    Also, in regards to your tip income, if you are reporting them on your taxes, a lender will be able to average the tip income over 2 years to use towards your qualifying income. Let me know if you need any thing and good luck!

    2Reply
  • Mohit Asthana
    Investor · New York City · Member since 2016 · 45 posts · 22 votes
    4y

    Congrats on the condo and having a good income! 

    I can shed some light on out of state investing. I own 37 units in Cleveland metro right now and I'm from out of state (CA/NY) and have bought 45. Mostly C/C- areas and some D (wouldn't recommend). 

    You gotta ask yourself how much work you want to do and how hands on you want to be. With 37 units, I'm not exactly "passive" but it's a business at the end of the day. 

    Happy to answer more in depth. 

    1Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Simon Ashbaugh:

    HI Alexis!

    I'd definitely dive a little deeper into researching Ohio markets. Columbus is a great hybrid market of cashflow and appreciation, and you won't be paying Florida prices. 


     Thank you! I will look more into this :)

    0Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Wale Lawal:

    @Alexis York

    Investing in multifamily that is out of state requires specific attention to various factors like understanding the local market, cap rates, rents and other critical information.

    Do market analysis on current rents, potential rents, appreciation, etc.

    You need a team of local professionals like property managers, contractors, agents etc. 

    A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

    All the best!


     Thank you so much i appreciate it!

    0Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Mohit Asthana:

    Congrats on the condo and having a good income! 

    I can shed some light on out of state investing. I own 37 units in Cleveland metro right now and I'm from out of state (CA/NY) and have bought 45. Mostly C/C- areas and some D (wouldn't recommend). 

    You gotta ask yourself how much work you want to do and how hands on you want to be. With 37 units, I'm not exactly "passive" but it's a business at the end of the day. 

    Happy to answer more in depth. 


     Lets hear it! 

    0Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Jordan Murrell:

    Hi Alexis,

    Congratulations on your first property and the thoughts of buying another!! 

    When investing out of state, there are a few things that are needed and one being a strong team that you can TRUST. I have purchased out of state and had great experiences and also very bad experiences. I have an array of questions to ask realtors and lenders (I am in the mortgage business) before you decide to make the decision to trust them with a purchase thousands of miles away. 

    Also, in regards to your tip income, if you are reporting them on your taxes, a lender will be able to average the tip income over 2 years to use towards your qualifying income. Let me know if you need any thing and good luck!


     We get a tip compliance, I am with the Culinary Union. So depends if you work day/swing shift, we are taxed a tip rate. However I feel that I make much more than it says I do on paper, But I am not sure if me going back and claiming more would be the best option. 

    1Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Nick Belsky:

    @Alexis York

    Florida is still a very hot market in most areas.  As others have mentioned, far better bang for you buck elsewhere.  At least for now.

    Also, use a DSCR loan and your income isn't a factor. Save yourself the headache.

    Cheers!


    DSCR loan, thank you!!

    0Reply
  • Sasha MohammedPro Member
    Lender · Costa Mesa, CA · Member since 2018 · 337 posts · 245 votes
    4y

    Speaking for the lending side - your income/ tips are only going to be a factor if you're going with a traditional full-doc mortgage. IF you can go this route (typically, lenders will give you credit for your tips based on a 2-year average, plus YTD), you will get the lowest rates, lowest points/ fees, and overall best terms. 

    if you cannot qualify full-doc or with an income-based loan type, look into DSCR lending. typically, it is slightly higher in the rates, and you will pay points to obtain the loan... but this allows the lender to qualify you off the rents received from the property as opposed to your personal "ability to repay".

    what @Wale Lawal mentioned above about having a local team is VERY smart. not just once you purchase the property, but also while you're shopping for the right deal.

    GL!

    [email protected]949-351-1338
    2Reply
  • Justin Moy
    Investor · Kansas City, MO · Member since 2020 · 400 posts · 278 votes
    4y

    I think it's still a great time to buy. Out of state can be tough until you really get set with your team over there. From a lending perspective as well, if you have rental experience in managing properties and collecting rents, you can use that projected income from a duplex to help you qualify on these loans. I've heard most lenders say 2 years of rental experience to be able to use projected rents as income for the loan. Just something to think about if it's possible to start this clock in Vegas where it might be easier for you to manage and get this experience!

    1Reply
  • Mohit Asthana
    Investor · New York City · Member since 2016 · 45 posts · 22 votes
    4y
    Quote from @Alexis York:
    Quote from @Mohit Asthana:

    Congrats on the condo and having a good income! 

    I can shed some light on out of state investing. I own 37 units in Cleveland metro right now and I'm from out of state (CA/NY) and have bought 45. Mostly C/C- areas and some D (wouldn't recommend). 

    You gotta ask yourself how much work you want to do and how hands on you want to be. With 37 units, I'm not exactly "passive" but it's a business at the end of the day. 

    Happy to answer more in depth. 


     Lets hear it! 

    Underwrite new property taxes and insurance when going out of state. Make sure you call the police (non-emergency hotline) to understand what the safety of the neighborhood is. 

    Parts of Cleveland also have high taxes and LEAD certification stuff. 

    Columbus is a great option as well, but it all depends on your price range. 

    1Reply
  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    4y

    Alexis,

    The Insurance Market in FL is in turmoil for a number of reasons.  I would get quotes on some representative properties to get a feel for the current rates in FL.  Also, check with the agent(s) to get an idea of what is expected for rate increases.  

    1Reply
  • Felipe Stefanoni
    Investor · MD FL WV · Member since 2020 · 38 posts · 21 votes
    4y

    Hi Alexis!

    I also love FL, but I have been looking in other states because with the current IR and with FL being so hot it becomes hard to find good opportunities.
    Definitely search other markets and I 100% agree with Alexis about the insurance market in FL being a turmoil.

    If you have concerns about using a conventional loan, you can also consider hard money with 30 years fixed. They normally don´t look at DTI or your finances, but the downside is they are normally more expensive.

    1Reply
  • Ryan Deasy
    Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
    4y

    @Alexis York

    you may do well with a "low doc" loan. this will not require (generally) any tax returns etc. it makes it alot easier for people with income that is hard to verify or back up, etc. happy to share more

    1Reply
  • Alexis York
    OP
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 38 posts · 18 votes
    4y
    Quote from @Ryan Deasy:

    @Alexis York

    you may do well with a "low doc" loan. this will not require (generally) any tax returns etc. it makes it alot easier for people with income that is hard to verify or back up, etc. happy to share more


     i would love to go more in depth about this if you dont mind! Thank you

    0Reply
  • Matthew Tregoning
    Property Manager · Melbourne, FL · Member since 2019 · 353 posts · 150 votes
    4y

    Hey Alexis,

    I think a DSCR loan could help solve your problem. I have purchased a few properties here in Florida using this product as my military salary didn't help much when qualifying for conventional loans. With this loan product they qualify the loan mainly based on the performance of the property rather than your personal ability to pay the loan. You will have a higher interest rate, but this is a great option to get approved with Debt-to-income ratio challenges. I recently used this product to purchase a short term rental / AirBnB here on the Space Coast (closest beach to the East of Orlando) and my property is doing great so far.

    Let me know if you have any questions,

    Matt

    1Reply
  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    4y

    @Alexis York. Your best bet would be to talk to a local lender where you plan to purchase and have them look over your income and how much you are actually claiming. I spent many years in the restaurant business and I always tried to teach my employees to claim more tips for reasons you are experiencing, but the temptation of quick cash was generally too much. 

    It may take some time to get you on track to do conventional financing, but there are options out there like DSCR, bank statement and income only that may be options. They do come with higher rates typically, but fit the bill for what will get you off the sidelines and on to your second property. I have a few great lenders that would be happy to at least have a conversation with you to get things started.

    As for the market, the best time to buy is always 5 years ago. So waiting for the market gods to align with better rates, more inventory, less competition and falling prices is never a good strategy. I'd be happy to go over whats happening in the Central Florida market (Orlando and surrounding areas) if that is something you are considering. 

    Best of luck to you!

    1Reply
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