Cash Flow States out of California

[Amby Bhagtani]

I am in California and finding a cashflow property is hard. What states are people buying properties in today that yields cashflow? Serious investor here. 

[Remington Lyman]

Quote from @Amby Bhagtani:

I am in California and finding a cashflow property is hard. What states are people buying properties in today that yields cashflow? Serious investor here. 

 Columbus, Ohio is a great market to pick up cash-flowing, rental properties because of the lower home prices and demand from renters. JPMorgan Chase, Nationwide, Honda, L Brands, Huntington, and Amazon are just a few of the many companies that have thousands of jobs in the city.

New Albany is home to several major data centers including ones operated by Amazon, Google and Facebook, whose parent company, Meta, announced plans in the spring to expand its New Albany campus.

[Nate Sanow]

Oklahoma.  

[Lee Ripma]

I have a hard time beating the Kansas City MSA in terms of price to rent ratios, cash flow and appreciation, and being landlord friendly. Started investing here from CA and never looked back. 

[Jason Kudo]

It is certainly possible to cash flow in CA. I have multiple clients with LTR properties that were purchased as recently as 2019 that are cash-flowing well. Personally, once I am ready to let go of my primary residence that was purchased in 2019, it will cash flow with rents doubling my mortgage. It just takes a little patience during the hunt but it certainly can and is still being done. I will acknowledge that it is harder right now with bloated valuations in most real estate assets but as long as you stick with first principles and buy when the buying is good, you can make it work.

Also, I keep reading over and over from people with zero experience in CA real estate that CA is horrible to landlords. If we're talking worst-case scenarios then yes, the eviction process is lengthy but how often do we encounter worst-case scenarios? If you're encountering worst-case scenarios often, maybe a reassessment of your screening process and location strategy is in order. Sure, we need to be aware of the extreme end of the spectrum and be prepared for it but making decisions based on worst-case scenarios isn't the best outlook on life, in general, and if you do the upfront legwork of screening your tenants properly and avoid buying properties where worst-case scenarios are more likely to occur, you will be fine the good majority of the time. Don't let the threat of a small minority keep you from investing in an otherwise great state to invest in real estate. Investing as little as possible to make as much possible is the goal but we need to keep in mind that we get what we pay for.

[Bruce Woodruff]

Quote from @Jason Kudo:

Also, I keep reading over and over from people with zero experience in CA real estate that CA is horrible to landlords. If we're talking worst-case scenarios then yes, the eviction process is lengthy but how often do we encounter worst-case scenarios? 

No, most of us who are correctly calling out California for it's anti-business and anti-landlord policies are from Cali and moved away. It's the worst state in the country to do business in, I did for over 40 years.

And 2019 was a long time ago, RE wise. Try buying a house right now and making it cash flow. There is a really good reason people are taking their money elsewhere.

Having said that, if it works for you, keep it up and good luck to you!

[Jason Kudo]

Quote from @Bruce Woodruff:

Quote from @Jason Kudo:

Also, I keep reading over and over from people with zero experience in CA real estate that CA is horrible to landlords. If we're talking worst-case scenarios then yes, the eviction process is lengthy but how often do we encounter worst-case scenarios? 

No, most of us who are correctly calling out California for it's anti-business and anti-landlord policies are from Cali and moved away. It's the worst state in the country to do business in, I did for over 40 years.

And 2019 was a long time ago, RE wise. Try buying a house right now and making it cash flow. There is a really good reason people are taking their money elsewhere.

Having said that, if it works for you, keep it up and good luck to you!

 Noted. It didn't work out for you but there are plenty of people that are making it work in real estate and otherwise.

Agreed that 2019 was a long time ago RE-wise which is why I said stick with first principles and buy when the buying is good.

Good luck to you too!

[Bruce Woodruff]

Quote from @Jason Kudo:

Noted. It didn't work out for you but there are plenty of people that are making it work in real estate and otherwise.

Agreed that 2019 was a long time ago RE-wise which is why I said stick with first principles and buy when the buying is good.

Good luck to you too!

Actually it did work for me business wise in Cali, for many decades. It was a great place to be a business owner.

And it can still work of course for the savvy business people. You can make money anywhere.

I maintain it's just more difficult to operate a business there than in many other 'business friendly' states.

[Milton Chamberlain]

Hi! I am more than happy to show you the type of cash-flowing properties available in the Kansas City metro. Feel free to reach out 

[Dan H.]

Quote from @Bruce Woodruff:

Quote from @Jason Kudo:

Also, I keep reading over and over from people with zero experience in CA real estate that CA is horrible to landlords. If we're talking worst-case scenarios then yes, the eviction process is lengthy but how often do we encounter worst-case scenarios? 

No, most of us who are correctly calling out California for it's anti-business and anti-landlord policies are from Cali and moved away. It's the worst state in the country to do business in, I did for over 40 years.

And 2019 was a long time ago, RE wise. Try buying a house right now and making it cash flow. There is a really good reason people are taking their money elsewhere.

Having said that, if it works for you, keep it up and good luck to you!

 I am not claiming that the rental policies are not tenant friendly.  I complain about many of the rental policies, especially the Covid eviction moratorium in San Diego County as it was the most excessive moratorium in the country (which I find surprising as San Diego is fairly moderate politically for CA - the county board of supervisors who created the moratorium consists of 3 democrats and 2 republicans).

However, San Diego has one of the lowest delinquent rent rates in the country and one of the lowest eviction rates in the country.

This is because there is a huge housing shortage with very low vacancy rate.  A tenant that has an eviction will never be able to rent any of our units.  A tenant that does not get strong LL recommendations will never be able to rent one of our units. Poor tenants find it very hard to find decent housing.

My point is the LL has a built in advantage as a result of the housing shortage in my market.  The laws (as stupid as some may be) mostly attempt to balance the relationship.

My family has had rentals since the 1970s.  We have yet to 1) need to go through the full eviction process 2) pay cash for keys to get rid of a bad tenant.  3) have ever had a tenant get more than one month delinquent on rent even with the outrageous COVID eviction moratorium.

In summary, there are some LL unfriendly laws and policies, but due to the housing shortage and properly screening tenants the unfriendly LL policies seldom are an impact.  Granted there are some crazy horror stories that do occur (and get a lot of press), but they are very rare.

[Bruce Woodruff]

Quote from @Dan H.:

Quote from @Bruce Woodruff:

Quote from @Jason Kudo:

Also, I keep reading over and over from people with zero experience in CA real estate that CA is horrible to landlords. If we're talking worst-case scenarios then yes, the eviction process is lengthy but how often do we encounter worst-case scenarios? 

No, most of us who are correctly calling out California for it's anti-business and anti-landlord policies are from Cali and moved away. It's the worst state in the country to do business in, I did for over 40 years.

And 2019 was a long time ago, RE wise. Try buying a house right now and making it cash flow. There is a really good reason people are taking their money elsewhere.

Having said that, if it works for you, keep it up and good luck to you!

 I am not claiming that the rental policies are not tenant friendly.  I complain about many of the rental policies, especially the Covid eviction moratorium in San Diego County as it was the most excessive moratorium in the country (which I find surprising as San Diego is fairly moderate politically for CA - the county board of supervisors who created the moratorium consists of 3 democrats and 2 republicans).

However, San Diego has one of the lowest delinquent rent rates in the country and one of the lowest eviction rates in the country.

This is because there is a huge housing shortage with very low vacancy rate.  A tenant that has an eviction will never be able to rent any of our units.  A tenant that does not get strong LL recommendations will never be able to rent one of our units. Poor tenants find it very hard to find decent housing.

My point is the LL has a built in advantage as a result of the housing shortage in my market.  The laws (as stupid as some may be) mostly attempt to balance the relationship.

My family has had rentals since the 1970s.  We have yet to 1) need to go through the full eviction process 2) pay cash for keys to get rid of a bad tenant.  3) have ever had a tenant get more than one month delinquent on rent even with the outrageous COVID eviction moratorium.

In summary, there are some LL unfriendly laws and policies, but due to the housing shortage and properly screening tenants the unfriendly LL policies seldom are an impact.  Granted there are some crazy horror stories that do occur (and get a lot of press), but they are very rare.

Dan, you are obviously a very astute, experienced and talented RE investor. Jason is too, I can tell by reading your guys posts.

I am not surprised that you have had little if no issues with tenants, I would be shocked if you had!

But just the fact that CA had such excessive moratoriums and restrictions is a sign. [Note that the SD City Council went left along time ago, those 2 'Republicans' are uber liberal, so that (R) means nothing.]

And this topic is about what a new or average investor would/should do as far as investing in or out of that state, and in that regard, I think the negative views are pretty relevant.

[Dustin Street]

@Amby Bhagtani

A lot of people already said it, but Kansas City is a great place for BRRRRs right now! We actually have a lot of out of state investors setting up shop here because of our favorable market conditions. If you want, I can show you some examples of good BRRRRs here in KC

[Jay Thomas]

It is not an easy task for many individuals to invest in the California real estate market. With the constantly increasing prices, it has become increasingly difficult for those who are just starting out to purchase property in a highly competitive climate. Cash buyers have the advantage of paying full market price and bidding up on properties - making it even more challenging for other buyers. Thankfully, there are alternative solutions available that can help people get into the California real estate market. These include taking out loans, working with a real estate agent or broker, investing in rental properties, or utilizing investment clubs to pool resources and buy multiple pieces of property at once. By taking advantage of these options, individuals can find ways to overcome the high costs associated with buying a home in California and still remain competitive in the market. Investing in rental properties can also be a lucrative way to build wealth over time, as rental income often appreciates faster than other investments and allows investors to offset their cost of living expenses. Finally, an investment club may allow for more diversified investments and pooled resources that can help individuals take advantage of opportunities in the California real estate market.

No matter which option you choose, it is important to understand that investing in the California real estate market is not for the faint of heart.

[Keeva Hartzell]

I am currently helping around 15 out of state (some from California) investors find cash flowing properties in and around Kansas City. I may be biased but it is one of the hottest markets to invest in right now or at least seeming that way. Feel free to shoot me a message and we can talk more about this. 

[Leona Usaty]

Quote from @Amby Bhagtani:

I am in California and finding a cashflow property is hard. What states are people buying properties in today that yields cashflow? Serious investor here. 

Hey Amby, My name is Leona; I am a Realtor and CEO of Leona Estates; my team is working for investors; I will be happy to connect and be your source for cash flow property; feel free to contact me.
Leona

[Derrek H.]

Quote from @Lee Ripma:

I have a hard time beating the Kansas City MSA in terms of price to rent ratios, cash flow and appreciation, and being landlord friendly. Started investing here from CA and never looked back

Intriguing - I've looked at Kansas City pre-pandemic. But I couldn't get a good sense of the long term RE appreciation rates. I am also looking to invest outside of CA. If you have any data or weblinks on appreciation that can be shared on the Kansas City MSA can be shared, I'd greatly appreciate it! 

[Alex Olson]

Quote from @Derrek H.:

Quote from @Lee Ripma:

I have a hard time beating the Kansas City MSA in terms of price to rent ratios, cash flow and appreciation, and being landlord friendly. Started investing here from CA and never looked back

Intriguing - I've looked at Kansas City pre-pandemic. But I couldn't get a good sense of the long term RE appreciation rates. I am also looking to invest outside of CA. If you have any data or weblinks on appreciation that can be shared on the Kansas City MSA can be shared, I'd greatly appreciate it! 

 KC is a great market. I have some data points I can send you. Dm me. 

[Dustin Street]

Quote from @Derrek H.:

Quote from @Lee Ripma:

I have a hard time beating the Kansas City MSA in terms of price to rent ratios, cash flow and appreciation, and being landlord friendly. Started investing here from CA and never looked back

Intriguing - I've looked at Kansas City pre-pandemic. But I couldn't get a good sense of the long term RE appreciation rates. I am also looking to invest outside of CA. If you have any data or weblinks on appreciation that can be shared on the Kansas City MSA can be shared, I'd greatly appreciate it! 

 KC Has many high appreciating neighborhoods! 

https://www.neighborhoodscout....

[Emma Vallery]

Hello! Columbus and neighboring suburbs are a great place to look to invest in real estate. It is a growing city and home values are going up. Home values have rose about 16% percent in the past year and are going to continue to rise along with population. Franklinton is a great place to start as it is an up and coming area that has several large redevelopment projects, including Gravity, the Scioto Peninsula, and The Mondrian. Intel is coming to Columbus which is going to employ 10,000 new workers bringing a lot of new people to Columbus. Investing in surrounding areas to the new Intel, which will be located in Upper Arlington, Columbus, would create serious cashflow. 

[Steven Foster Wilson]

Quote from @Amby Bhagtani:

I am in California and finding a cashflow property is hard. What states are people buying properties in today that yields cashflow? Serious investor here. 

 Hey Amby, I have multiple units in Cleveland giving me steady returns, if you need help finding a good neighborhood to start on, let's connect and discuss how I can help you out.

[Scott Allen]

@Amby Bhagtani

Columbus, OH for steady appreciation, growth, and cash flow. Cleveland, OH for more cash flow.

[Rick Albert]

California can work depending on your goals and available cash. I'm working with clients on buying SFRs and converting garages to ADUs. We are also looking in the surrounding counties where it is more landlord friendly and higher chances of appreciation.

Outside of that, it has been tough unless you go to the Alabamas of the world where if you look in C class neighborhoods, you can make it work.

[James Wise]

Quote from @Amby Bhagtani:

I am in California and finding a cashflow property is hard. What states are people buying properties in today that yields cashflow? Serious investor here. 

Welcome aboard. Saw Cleveland was on your short list so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides Cleveland. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

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 lose 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.
• Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

[Harrison Chow]

I like Columbus, OH and I am biased lol! There are several potential reasons why someone might consider investing in real estate in the Columbus, Ohio market. Some potential benefits of investing in real estate in Columbus include:

1. Strong economic growth: Columbus has a strong and diversified economy, with a number of major employers in fields such as healthcare, education, and technology. This can help to support demand for housing and potentially increase property values over time.
2. Affordable housing: Compared to many other major cities, housing in Columbus is relatively affordable. This can make it a more attractive market for real estate investors looking for good value.
3. Positive population growth: Columbus has seen a steady increase in population over the past few decades, which can help to increase demand for housing and drive property values up.
4. Strong rental market: Columbus has a strong rental market, with a relatively high number of renters compared to other cities. This can make it a good market for investors looking to buy rental properties.
5. Access to amenities: Columbus is a mid-sized city with a range of amenities, including cultural attractions, sports teams, and a number of universities. This can make it an attractive place to live and potentially drive demand for housing.

Let me know how I can help!