Help please for a new Pro-Member! Selecting a market "paralysis analysis" for long-distance real estate investing near a major metro area. (current WA State Resident). Based on the below, my two asks are:

1). For the comments, do folks have any suggestions or thoughts they would like to share?

2. Related to the previous, is there a real estate investor in a long-distance market that owns a duplex or apartment who's been through this already? Please be sure to state this at the beginning of your comment.

I am a real estate investor, and I am struggling with analysis paralysis in identifying a long-distance market as WA state is too expensive; my criteria are clear in that I want to start with a duplex that is 2:1 or 3:1, a second bath preferred. My three investments and expertise have all been duplexes. My first fourplex will be my second investment after I BRRR the duplex to minimize financial risk if I have challenges stabilizing the property, the rental market, or finding a good property manager. Cashflow is king in case this is a bubble. Still, I want to be near a large metro area with historical population growth and a robust and diverse job market. I am open to nearby cities within a 30 min commute or less to catch the appreciation from the slower subsequent expansion wave from the metro area.

I struggle with deciding whether to invest in a more affordable market under 130K or a more expensive one. For example, in the Midwest market, Columbus, Ohio is very reasonable, often below 130K. Though also affordable, I have reservations with the North East based on population decline and high taxes as the US is showing a migration pattern of folks going South and West. Super-hot markets like San Antonio, Tampa, and Atlanta are enticing. Still, if I focus on hot markets like these, where prices are 180-250K and above with more competition, I will have to look in these areas' suburbs while avoiding high crime areas as I need to stay at a 20% down 180K max purchase price with an additional 30k set-aside and budgeted for renovation for BRRR. This approach anticipates identifying a market that will experience a wave of outward development from a metro area based on my DC living experience and being an investor and resident in both Seattle and Everett, WA.

My goal is to select an out-of-state market to begin building my core four, making offers, and closing on my first duplex well before summer.

All this said, I acknowledge that I am at the beginning of my learning curve as an out-of-state real estate investor earnestly seeking feedback and advice from fellow knowledge seekers, peers, and accomplished investors.

Faith is the "eternal elixir" which gives life, power, and action to the impulse of thought! Think and Grow Rich, revised edition. Napoleon Hill

Have you considered flight time or ease of getting to your chosen market? If you're looking long term, Florida is a risky bet due to climate change and the more near-term impact that rising insurance rates will have in those areas.

@Taylor L. Excellent point on increasing flood risk insurance costs in FL. Regarding flights, that is a fair point too, I did not give it as much weight thinking that once I had a good property mgmt. company in place I would visit annually at most, but it is a consideration. Thank you!

Hey @Lee K. I would go where you have a strong representative team.  If you have your core 4 in place, you should find yourself in a strong area for investments.  I am an Out of Area investor and if I did not have a strong core, my portfolio would not be as healthy and strong as it is.  I had some bumps along the way, but once I took care of the issue, I found myself in a better place!  Just sent you a PM as well.

Originally posted by @Lee K. :

Help please for a new Pro-Member! Selecting a market "paralysis analysis" for long-distance real estate investing near a major metro area. (current WA State Resident). Based on the below, my two asks are:

1). For the comments, do folks have any suggestions or thoughts they would like to share?

2. Related to the previous, is there a real estate investor in a long-distance market that owns a duplex or apartment who's been through this already? Please be sure to state this at the beginning of your comment.

I am a real estate investor, and I am struggling with analysis paralysis in identifying a long-distance market as WA state is too expensive; my criteria are clear in that I want to start with a duplex that is 2:1 or 3:1, a second bath preferred. My three investments and expertise have all been duplexes. My first fourplex will be my second investment after I BRRR the duplex to minimize financial risk if I have challenges stabilizing the property, the rental market, or finding a good property manager. Cashflow is king in case this is a bubble. Still, I want to be near a large metro area with historical population growth and a robust and diverse job market. I am open to nearby cities within a 30 min commute or less to catch the appreciation from the slower subsequent expansion wave from the metro area.

I struggle with deciding whether to invest in a more affordable market under 130K or a more expensive one. For example, in the Midwest market, Columbus, Ohio is very reasonable, often below 130K. Though also affordable, I have reservations with the North East based on population decline and high taxes as the US is showing a migration pattern of folks going South and West. Super-hot markets like San Antonio, Tampa, and Atlanta are enticing. Still, if I focus on hot markets like these, where prices are 180-250K and above with more competition, I will have to look in these areas' suburbs while avoiding high crime areas as I need to stay at a 20% down 180K max purchase price with an additional 30k set-aside and budgeted for renovation for BRRR. This approach anticipates identifying a market that will experience a wave of outward development from a metro area based on my DC living experience and being an investor and resident in both Seattle and Everett, WA.

My goal is to select an out-of-state market to begin building my core four, making offers, and closing on my first duplex well before summer.

All this said, I acknowledge that I am at the beginning of my learning curve as an out-of-state real estate investor earnestly seeking feedback and advice from fellow knowledge seekers, peers, and accomplished investors.

Faith is the "eternal elixir" which gives life, power, and action to the impulse of thought! Think and Grow Rich, revised edition. Napoleon Hill

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

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.

As many of the others said, wherever you buy make sure you have a good team in place. I see that you already have a few markets in mind. Having conversations with locals on the area and ultimately they will be able to help you form a team. Just make sure you are working with an investor-focused realtor. Good luck! @Lee K.

@Lee K. , outside of flight time, what are flight costs?  Lets say you buy 10 doors in a market, and can get $200/door/mo. Netting $2000/month or $24,000/yr.  But to fly there costs you $1,500, a hotel is a couple hundred for a night, you have meals, rental cars, etc.  Your once a year trip is now $2,000-$2,500 or 10% of your net.  When you are starting out, you might be making quarterly trips, and the more you buy in a market, he more frequently you will likely need to be there.

I do not invest out of state actively, but I do value my time.  Direct flights are a must, hub cities are ideal.  I want to be able to make same day trips, fly out in morning, back in my own bed that night.  Ideally, I have a tie to that area anyways, family, good friends, etc that I can get an unbiased view of neighborhoods from someone not financially tied to me doing deals in the area.

@Mike Mocek, thanks for the encouragement, and I agree 100% with you on the core four. Once I have identified the market, I will have a laser focus on that.  Thanks for the PM.

@Remington Lyman , so true as long as you have the four. I used the BP Data Downloads pulling the "Market Finder Spreadsheet," it was helpful after I filtered it down to markets under 250K adding rent-to-price ratio, vacancy rate, population growth, and unemployment rate.  Ohio, the East Coast, GA, FL, TX are the top cities that fall favorably in the mentioned categories. It gave me direction; the encouragement to narrow it down is helpful.

Thanks, @Brandon Goldsmith , your exactly right on the conversations; my goal is to follow these comments back and check out folks' profiles for potential conversations. They have already demonstrated they are active on BP and interested.

@Evan Polaski , thanks for taking an analytical business approach to numbers/$ regarding the question of visiting my out-of-state property. Your comment and @Taylor L. 's have influenced me enough that I will be looking at direct flights and flight costs as significant criteria for my market selection. Thank you both!   

@Lee K.

The southern US may be popular now but it’s going to be more susceptible to climate change disasters. I bought in Indianapolis but also looked at Ohio.

@Cathryn Sta  Yes, regarding climate change, I was not taking it seriously enough as a criterion, but based on the responses to my post, I will. I am glad you mentioned Indianapolis, IN. I was born and raised in Indiana, having lived and maintained networks in Indianapolis and Lafayette. I did an initial analysis and was turned off by the age and condition of the homes. Also, when working through google maps street view to check out the properties and neighborhoods, I was disappointed to see the roads and sidewalks' poor state. Indy also seems to have a fairly high crime rate compared to other markets. I loved Indianapolis when I lived there, and perhaps I need to give it a fresh look. I am very curious as to why you settled on Indy instead of Ohio? Thank you again for sharing.

I disagree with people here saying that having your "core 4" is the most important. You can find a real estate agent, contractor, lender, prop manager in any market literally in an hour. Go where you can find the most off market deals. Period. Having your core 4 won't really help you find these deals especially if you are a newb out of state investor. Your core 4 will be keeping these deals themselves are giving them to people who have a solid track record of buying. Having a solid marketing plan that can generate lead and deal flow is the most important thing you can have as a real estate investor. Not your core 4. 

Hey Lee!

Thanks for sharing- when we first started out we really wanted our target markets to be close by so that we could go to the property whenever we would like. This would save you time, energy, and money. 

We decided to go with the markets in our state to begin- however if you are in a market that is not doing too well- think about picking the closest one that would still be a great market to invest in however would not require a tremendous amount of time to get there. 

@Lee K.

Honestly the only reason I picked Indy over Ohio was because I met a real estate agent in Indy that I connected with.

@Lee K. As an investor in Gig Harbor, WA, I am in the same situation you are. I decided to invest out of state for the same reasons you outline about the cost of investing in the Seattle metropolitan area and Washington State generally. I have recently made a couple of out of state investments in different markets (Kansas City & Nashville where cashflow and appreciation are still somewhat balanced) and am looking at others as I see deals come in from a couple of realtors I found. So far it has worked out pretty well, but I had to do the real "heavy lifting" in the work to find realtor "partners" who would be able to represent my interests and also - this is key - own their own investment property. I also checked that they had a network of in-market partners/team members (eg. prop managers, contractors, etc.). Once I was able to find someone I felt met my expectations, it went very well but it was quite a lot of effort. Once that trust was established, it made it a lot easier to start looking at properties in earnest. Hope that is helpful. 

@Duane Alexander , thanks for saying the unsaid counterpoints and truths/doubts that have been crowding the back of my brain regarding the core four principles. The cold truth is, I have been thinking that working through conventional financing and a real estate agent as the entry price of entering an out-of-state market to establish a network for folks I can count on. That "magically" we would all be good to each other, building each other's business and wealth as it is mutually beneficial. My wife is Caribbean, and I am a former Peace Corps volunteer from St. Lucia with some dear Lucian friends living in Atlanta. Talk to me more about the solid marketing plan to generate leads and deal flow; you have my attention.

Thanks, Cathryn, appreciatted and makes sense, 1/2 the battle is having someone you can trust in the market. For the same reason, as I have friends in Indy, I started there when I started my hunt for the out-of-state market.  Lee  

Originally posted by @Cathryn Sta :

@Lee Klejnot

Honestly the only reason I picked Indy over Ohio was because I met a real estate agent in Indy that I connected with.

Yes, amen, Jeffrey, that has been my plan from the beginning to stay in the local market, but then I found myself stuck even after moving out of Seattle to Everett. In Everett, Duplexes are now 600K (low end) with rents still in the 1,600-1,800 range; it blows the 1% rule and my mind. I am tired of doing owner-occupied financing to reduce my interest rate by 1% and reduce my downpayment requirement. The closest market, staying within 180K is TX. I appreciate your comment.


Originally posted by @Jeffrey Donis :

Hey Lee!

Thanks for sharing- when we first started out we really wanted our target markets to be close by so that we could go to the property whenever we would like. This would save you time, energy, and money. 

We decided to go with the markets in our state to begin- however if you are in a market that is not doing too well- think about picking the closest one that would still be a great market to invest in however would not require a tremendous amount of time to get there. 

Char, I am so thankful for feedback from a fellow WA resident to validate my challenges! Thank you for validating my concern and criteria for an agent THAT THEY OWN INVESTMENT PROPERTY. You also perfectly summarized my expectation for an agent in the market I select. (ps, I wonder if BP will take this and copy it into their next book 😊). It is helpful, sending you a colleague request now 😊.

Originally posted by @Char Tovar :

@Lee Klejnot As an investor in Gig Harbor, WA, I am in the same situation you are. I decided to invest out of state for the same reasons you outline about the cost of investing in the Seattle metropolitan area and Washington State generally. I have recently made a couple of out of state investments in different markets (Kansas City & Nashville where cashflow and appreciation are still somewhat balanced) and am looking at others as I see deals come in from a couple of realtors I found. So far it has worked out pretty well, but I had to do the real "heavy lifting" in the work to find realtor "partners" who would be able to represent my interests and also - this is key - own their own investment property. I also checked that they had a network of in-market partners/team members (eg. prop managers, contractors, etc.). Once I was able to find someone I felt met my expectations, it went very well but it was quite a lot of effort. Once that trust was established, it made it a lot easier to start looking at properties in earnest. Hope that is helpful. 

@Duane Alexander

.. Exactly right. It’s all about sourcing deals and being new from out of state doesn’t help.

“What is the plan to develop a source of leads to deals?”

What has been most successful for you Duane? I’d be really interested in your thoughts.

Thanks.

@Lee K. I'm trying to understand what your true criteria is...

You say $180k is your max purchase price, but then mentioned up to $250k?

You plan on doing 20% down and doing BRRRR, does this imply you want a discounted property that can be purchased off the MLS, and still has enough margin for significant forced equity?

Cashflow is king, but how much cashflow?

@Lee K.

Personally I think Ohio is a great place. This is an unpopular opinion in the Bay Area, where I am from, but I have enjoyed all my visits there. For its size, it has a lot of well known cities and each one has vibes. Lots of sports and great beer! I know those are not reasons to invest there, but I think it’s an underrated place to live.

Thanks, Steve, for your question; I used 250K as a criterion to sort through the BP Data Downloads "Market Finder Spreadsheet" eliminating all cities with median house price above 250K. After that first cut, I added additional criterion columns, including RTP ratio, vacancy rate, population growth,...I reviewed the remaining markets, cross-checking them on Realtor.com to ensure they are target-rich with properties in the 180K max range ready for BRRR. In terms of cashflow, good question, I am running the BRRR calculator on listings in Columbus, OH, San Antonio, TX, and Tampa, FL to see the cash flow potential. To be honest, I don't know what good cash flow is yet in these markets, but I will be running numbers today; my hunch is nothing less than $200 per unit while aiming for $400. I am assuming 10% prop mgmt., 10% vacancy, 5% maintenance, 5% for major capital expenses using the BRRR calculator. 

Originally posted by @Steve W. :

@Lee Klejnot I'm trying to understand what your true criteria is...

You say $180k is your max purchase price, but then mentioned up to $250k?

You plan on doing 20% down and doing BRRRR, does this imply you want a discounted property that can be purchased off the MLS, and still has enough margin for significant forced equity?

Cashflow is king, but how much cashflow?