Out of State Investing

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General Real Estate Investing
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Out of State Investing

Justin Carter
Rental Property Investor · Chicago, IL · Member since 2019 · 35 posts · 23 votes

Hello, I am based in the metropolitan DC area and looking to invest out of state as this market is very expensive and it's hard to find a good deal. Does anyone have any experience investing in the Midwestern states? Was considering looking into markets such as Detroit, MI, Cleveland, Oh, St. Louis, MO, etc as from my understanding cash flow tends to be higher in those markets. I am primarily focused on cash flow vs appreciation at this point in time. Any thoughts on investing in those markets would be greatly appreciated.


Also, by chance does any have any contacts of real estate agents they can share in any of those markets?

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
3y

Invest locally

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  • Sara Frank
    Realtor · Baltimore, MD · Member since 2020 · 255 posts · 182 votes
    3y
    Quote from @Justin Carter:
    Quote from @Russell Brazil:

    Invest locally


     DC is way too expensive - almost nothing pencils with these rates. I’ve been taking a good look at Baltimore. Are you familiar with the DC area at all? Any submarkets or suburbs you think are worth taking a look at? Again, I’m prioritizing cash flow over appreciation here. 


     There are good parts of Baltimore, it depends on how much youre wanting to spend and your risk tolerance. In general I dont think it's a good idea to spend less than 100k unless you are BRRRing. I have a lot of clients who live in NOVA or DC and invest in Baltimore, it's long distance prices but you can still drive up and lay eyes on it if need be. 

    1Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    3y
    Quote from @Justin Carter:

    Hello, I am based in the metropolitan DC area and looking to invest out of state as this market is very expensive and it's hard to find a good deal. Does anyone have any experience investing in the Midwestern states? Was considering looking into markets such as Detroit, MI, Cleveland, Oh, St. Louis, MO, etc as from my understanding cash flow tends to be higher in those markets. I am primarily focused on cash flow vs appreciation at this point in time. Any thoughts on investing in those markets would be greatly appreciated.


    Also, by chance does any have any contacts of real estate agents they can share in any of those markets?

    Hey Justin, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!

    [email protected]614-300-7535
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  • Marcus R.
    Real Estate Agent · Denver CO · Member since 2019 · 210 posts · 333 votes
    3y

    Hey @Justin Carter - This topic comes up pretty frequently so you may be able to find some good 2023 information on this if you decide to invest out of state.  If you invest out of state I would lean on area you have info on like a former college town, family in the area, partner's hometown etc...It's really hard to get ahead without local inside knowledge.  You can lean on local realtors for this info but need a way to do your own research on their information. 

    IMO invest locally.  There has to be some opportunities within 2 hours driving distance that may make sense. 

    1Reply
  • Jessie Dillon
    Investor · Hopedale, MA · Member since 2021 · 321 posts · 213 votes
    3y

    hi! im located in MA and am investing in chicago for the cashflow. the worst deal there looks amazing to me through the lens of a MA girl hahaha. i was very resistant to going long distance, but am so happy i did. i had also looked into those cities you listed, but the partner i was buying this last one with was ultimately most comfortable with chicago as she travels there for work sometimes. one thing to just keep in mind is that it's the c/d areas that look best on paper anywhere, and look AMAZING in those cities, but you have to factor in increased volatility due to nonpayment, late payments, etc.

    1Reply
  • Doug Spence
    Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
    3y

    @Justin Carter I also live in a high-cost-of-living area (San Diego) and invest out of state. Don't let the low prices deceive you though, because it can be a lot of work. Generally speaking the cheaper the property and the rougher the area, you'll attract lower quality tenants, its more management intensive, and thus more expensive for you, the owner. 

    I don't want to discourage you though! It's very possible to do this successfully. I own three SFH's in Milwaukee, Wisconsin that I purchased a few years ago and they're doing great. I've also done two out of state BRRRR's and two flips in Oklahoma, and I own a SFH in Pensacola, FL that used to be my primary residence. I've never been in those homes, and my first two Milwaukee properties were purchased without setting foot in the state!

    Investing out of state is an extremely lucrative strategy, but you have to be very clear on what you want, and very intentional about putting the right team together to realize your vision. 

    Good luck and keep us all updated on your progress!

    3Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    3y

    @Justin Carter Iḿ in the DC area and itś more about the strategy, deal, and the numbers. Anything will work if you get it for the right numbers. If you are looking on the MLS trying to get a deal to work in DC its slim pickings. However, if you get an off market deal that needs renovations those numbers can pan out great in addition go high appreciation. People buy all over the area and make it work. Parts of Prince Georges County, Deanwood and Congress Heights there is so much potential. If you float outside of DC maybe a half hour to and hour and a half the flood gates are open. Baltimore, Harford County, St Maryś County, Hagerstown and many more. I[m a firm believer in not being that far from your investments but many make the long distance stuff work. Just depends on the person.

    3Reply
  • Brandon L.
    Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
    3y
    Quote from @Justin Carter:

    Hello, I am based in the metropolitan DC area and looking to invest out of state as this market is very expensive and it's hard to find a good deal. Does anyone have any experience investing in the Midwestern states? Was considering looking into markets such as Detroit, MI, Cleveland, Oh, St. Louis, MO, etc as from my understanding cash flow tends to be higher in those markets. I am primarily focused on cash flow vs appreciation at this point in time. Any thoughts on investing in those markets would be greatly appreciated.


    Also, by chance does any have any contacts of real estate agents they can share in any of those markets?

    Good evening, I agree DC and NOVA can be expensive, but it’s not expensive for everything. It really depends on your goals and what you want to accomplish. 

    Some people just want to buy a few rentals that they can work on paying off over the next 15-20 years while they work a 9-5. Then in retirement the paid off assets become check writing machines. 

    You have to ask yourself, do you want to be some real estate mogul with 100+ rentals or are you just looking for something simple to supplement your retirement? 






    0Reply
  • Adriana Rego
    Miami, FL · Member since 2019 · 35 posts · 21 votes
    3y

    @Nathan Harden great advice. I made the mistake of investing in Detroit and Flint because the houses were turnkey and cheap. Didn’t go as well as planned. Tenant pool is the main issue

    1Reply
  • Eudith VacioPro Member
    Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
    3y

    Hey @Justin Carter 👋🏼

    I invest in south side of Chicago AND Northwest Indiana. Chicago is more tenant-friendly do as @Jessie Dillon mentioned, you have to do your due diligence depending on which area you invest in! Northwest Indiana is more landlord-friendly and in my opinion has higher cash flow. 😃 

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    3y
    Quote from @Justin Carter:

    Hello, I am based in the metropolitan DC area and looking to invest out of state as this market is very expensive and it's hard to find a good deal. Does anyone have any experience investing in the Midwestern states? Was considering looking into markets such as Detroit, MI, Cleveland, Oh, St. Louis, MO, etc as from my understanding cash flow tends to be higher in those markets. I am primarily focused on cash flow vs appreciation at this point in time. Any thoughts on investing in those markets would be greatly appreciated.


    Also, by chance does any have any contacts of real estate agents they can share in any of those markets?



    So we have some experience in the MidWest States.   We use to have a lot of investments in St. Louis. Mostly single families and small multifamilies. But we found the market there were not enough micro markets. What I mean by that is in larger cities there are many and varying markets, thus providing different opportunities, especially as the economy turns/fluctuates. With that said if you decide on St. Louis the closer you are to Washington University the better. 

    Another MidWest Market you may want to explore is Columbus Ohio. It's attracting tech jobs because of the Universities and thus creates Real Estate Opportunties. 
    312-681-7487
    1Reply
  • Arif Sheikh
    Investor · Baltimore · Member since 2023 · 21 posts · 11 votes
    3y
    Quote from @Justin Carter:

    Hello, I am based in the metropolitan DC area and looking to invest out of state as this market is very expensive and it's hard to find a good deal. Does anyone have any experience investing in the Midwestern states? Was considering looking into markets such as Detroit, MI, Cleveland, Oh, St. Louis, MO, etc as from my understanding cash flow tends to be higher in those markets. I am primarily focused on cash flow vs appreciation at this point in time. Any thoughts on investing in those markets would be greatly appreciated.


    Also, by chance does any have any contacts of real estate agents they can share in any of those markets?



    Hello and welcome! Investing out of state can indeed be a great strategy to find more affordable and potentially high cash flow properties, especially when your local market is competitive like the DC area.

    The Midwestern states you mentioned—Detroit, MI, Cleveland, OH, St. Louis, MO—are known for their affordability and often offer better cash flow opportunities compared to high-priced coastal markets. However, as with any out-of-state investing, thorough research is essential.

    Here are a few tips to consider:

    1. Market Research: Dive deep into these markets to understand their local dynamics, job growth, population trends, and crime rates. Tools like local real estate forums, Census data, and reports from respected organizations can provide valuable insights.
    2. Local Real Estate Agents: Finding a reliable local real estate agent is crucial. They can help you navigate the market, identify investment properties, and connect you with other local professionals like property managers and contractors. BiggerPockets itself has a directory of real estate agents in various markets.
    3. Network with Investors: Joining local or online real estate investment groups can help you connect with experienced investors in those markets. They can provide valuable advice, referrals, and insights into the local investment landscape.
    4. Property Management: Since you'll be investing from a distance, consider property management companies with experience in the specific market. They can handle day-to-day operations and tenant relations on your behalf.
    5. Visit in Person: If possible, visit the area in person to get a feel for the neighborhoods and meet with potential partners or real estate professionals. It can provide a better understanding of the local market.

    Lastly, regarding contacts for real estate agents, you might want to post a request in the BiggerPockets Marketplace, where members often share recommendations for real estate professionals in various markets.

    Remember that while cash flow is a significant focus, it's also essential to have a long-term strategy in mind. Properties in these markets may offer less appreciation potential than high-cost areas, but they can still build wealth over time through rental income and gradual appreciation.

    Good luck with your out-of-state investment journey! Feel free to ask more questions as you explore these markets." 🏡💼 #RealEstateInvesting #OutofStateInvesting

    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    3y
    Quote from @Nicholas L.:

    got it.  someone call these folks and give them the easy button.

    https://www.biggerpockets.com/forums/12/topics/1111808-strug...

    https://www.biggerpockets.com/forums/311/topics/1137430-insp...

     I agree, @Nicholas L. - these people don't live in reality if they think an out of state BRRRR is a good first investment. It's not as simple as "get your core 4" and it's no problem. Gotta get off of the computer screen and put your feet in a mess of a property to really feel the stress, anxiety, and weight of the work, money, and risk that it takes to successfully pull that off. It's not a good idea for someone starting out, and anyone who would recommend that is either incompetent or a little unethical.

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Travis Timmons

    thanks for the sanity check.

    1Reply
  • Nathan Harden
    Real Estate Agent · Puyallup, WA · Member since 2022 · 551 posts · 379 votes
    3y
    Quote from @Adriana Rego:

    @Nathan Harden great advice. I made the mistake of investing in Detroit and Flint because the houses were turnkey and cheap. Didn’t go as well as planned. Tenant pool is the main issue


     Did you end up backing out of Detroit, if so, where did you expand to?

    0Reply
  • Adriana Rego
    Miami, FL · Member since 2019 · 35 posts · 21 votes
    3y

    @Nathan Harden I had 1 in Detroit 3 in Flint and 1 in River Rouge - have sold Detroit and River Rouge still own 3 in Flint 2 of which have actually done well. I’ve moved on to Kansas City and FL.

    2Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    3y

    You can invest in Baltimore City, or Baltimore County. 

    it is right next to you and you can always drive down in an hour. Do multiple deals, feel comfortable, and then go out of state.

    Out of state could be very profitable if you find the right team, or it can be nightmare.

    0Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    3y
    Quote from @Adriana Rego:

    @Nathan Harden great advice. I made the mistake of investing in Detroit and Flint because the houses were turnkey and cheap. Didn’t go as well as planned. Tenant pool is the main issue


     I'd have to disagree on tenant pool being the issue in Detroit. I have 12-doors there and live in California. It's been fantastic for me.

    The main issue in Detroit is people chase the lowest priced options and then end up with a bad property manager that doesn't do a good job screening tenants. Or the fact that they purchased the cheapest, decent looking houses ends them up in D Class areas where you can't find a good tenant. 

    If you stay in C Class or better areas you will have no issues finding strong tenants in Detroit. 

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    Definitely come invest in Chicago @Justin Carter!  Trying to understand why your signature thing says Chicago, but you are based in DC?

    My partner @Jason James did some investing in Detriot and his brother is in St. Louis....he might be a good person to connect with in those markets.

    [email protected]
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