What has been your experience with out of state investing?

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What has been your experience with out of state investing?

Account Closed
Member since 2024 · 31 posts · 30 votes

Hi everyone, 

I live in California and have been meeting a lot of investors who prefer to invest out of state due to California being so expensive as well as the aggressive tenant protection laws we have here. I have heard both the good and the bad sides of investing out of state and so I am curious to know what other's experience has been?  I have mostly heard about LTRs specifically in Indiana, Alabama, Texas, Michigan, and Ohio but I am open to hearing anyone's experience anywhere. Would really like to hear your thoughts!

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Cliff BennerBusiness Member
Accountant · Denver, CO · Member since 2020 · 394 posts · 183 votes
1y

I live in Denver, CO and invest out of state, due to cost. It was challenging to start.

My realtor was not on my side and I trusted her to much, she said the house was fine, her husband did inspections and said it was fine and not to worry, the ARV was double the house value. We purchased this as a BRRRR on a Line of Credit, went to do a few fixes then refinance. We bought it for $90k they said it was worth $90k after $30k in repairs, then a second appraisal said $120k so we could get out of the Hard Money loan by getting a personal loan and maxing out our LOC again. My PM, who did not know my realtor, said the house looked good, nothing needed to be done, and got it rented.

Turns out both were terrible, the house needed new HVAC, AC, windows, Doors, Pipe fixes, Water Heater, electric line, I found all this out after my Tenant Sued us because of the house's condition.

We spent a 9 months of the tenants chasing off contractors before we got it repaired and the tenants out, then the judge granted us all our rent so we finally go that. Got a new PM who made us fix things and walked it with me(first time for me seeing the property), then we finally paid off all but the mortgage and now we cash flow about $400/month. 

Lots of lessons learned and we will be buying there again with our new team, but we now verify everything our team says and we keep an eye on everything more than ever. We are also quick to complain and fire if we have to. 


I discussed this on BP Podcast Episode #610 if you want to hear more. 

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  • Cliff BennerBusiness Member
    Accountant · Denver, CO · Member since 2020 · 394 posts · 183 votes
    1y

    I live in Denver, CO and invest out of state, due to cost. It was challenging to start.

    My realtor was not on my side and I trusted her to much, she said the house was fine, her husband did inspections and said it was fine and not to worry, the ARV was double the house value. We purchased this as a BRRRR on a Line of Credit, went to do a few fixes then refinance. We bought it for $90k they said it was worth $90k after $30k in repairs, then a second appraisal said $120k so we could get out of the Hard Money loan by getting a personal loan and maxing out our LOC again. My PM, who did not know my realtor, said the house looked good, nothing needed to be done, and got it rented.

    Turns out both were terrible, the house needed new HVAC, AC, windows, Doors, Pipe fixes, Water Heater, electric line, I found all this out after my Tenant Sued us because of the house's condition.

    We spent a 9 months of the tenants chasing off contractors before we got it repaired and the tenants out, then the judge granted us all our rent so we finally go that. Got a new PM who made us fix things and walked it with me(first time for me seeing the property), then we finally paid off all but the mortgage and now we cash flow about $400/month. 

    Lots of lessons learned and we will be buying there again with our new team, but we now verify everything our team says and we keep an eye on everything more than ever. We are also quick to complain and fire if we have to. 


    I discussed this on BP Podcast Episode #610 if you want to hear more. 

    Benner Stride52 Reviews
    WebsiteView Page
    8Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    1y

    Alyssa

    It is great if you have the correct team and have boots on the ground and meet them in  real life and vet them..:)

    2Reply
  • Account Closed
    OP
    Member since 2024 · 31 posts · 30 votes
    1y

    @Cliff Benner wow thanks for sharing! glad to hear you were able to work things out. I will definitely check out that podcast

    1Reply
  • Account Closed
    OP
    Member since 2024 · 31 posts · 30 votes
    1y

    @John Mason I've been hearing this a lot! how do you find your teams?

    0Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    1y

    @Account Closed you can search here for posts relevant  to the city you are interested in and also attend meetups and use Facebook groups but be cautious in vetting:)

    0Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    1y

    @Account Closed

    I grew up north of San Francisco and moved out to Reno, NV to live and invest. People are still sleeping on it! 

    I'm obviously bias now, but I've been investing in Reno for many years prior to becoming an agent. 

    We're right next to CA but get the benefits of no state income tax, 4th lowest property taxes, much more friendly landlord/tenant laws, no serious weather, proximity to Lake Tahoe, stable job growth/population growth, etc. 

    I still have family in CA however so I visit often, and investors can drive to their properties if needed from Northern CA.  

    It doesn't make sense for everyone as we're not a cheap market, but I'm always surprised how many people from CA never even consider it! 

    Whatever you decide, best of luck to you! 

    415-233-1796
    3Reply
  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    1y

    Here are some good examples of some peoples stories investing OOS: 

    https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

    https://www.biggerpockets.com/forums/48/topics/1159104-overl…

    I always recommend starting out close to you, even if that means more affordable places in CA. 

    415-233-1796
    3Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
    1y
    Quote from @Account Closed:

    Hi everyone, 

    I live in California and have been meeting a lot of investors who prefer to invest out of state due to California being so expensive as well as the aggressive tenant protection laws we have here. I have heard both the good and the bad sides of investing out of state and so I am curious to know what other's experience has been?  I have mostly heard about LTRs specifically in Indiana, Alabama, Texas, Michigan, and Ohio but I am open to hearing anyone's experience anywhere. Would really like to hear your thoughts!


     Hey Alyssa, mentioning Ohio got me attracted to reach out about the Greater Cincinnati area! Cash flowing market that is doing well for itself! Let me know if you have interest in the Cincinnati market!

    [email protected]859-443-4952
    Sam McCormack Realtor
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    0Reply
  • Account Closed
    OP
    Member since 2024 · 31 posts · 30 votes
    1y

    Thanks @John Mason!

    0Reply
  • Account Closed
    OP
    Member since 2024 · 31 posts · 30 votes
    1y

    Thanks @Jake Andronico, I appreciate your insight! Will definitely check that market out

    1Reply
  • Account Closed
    OP
    Member since 2024 · 31 posts · 30 votes
    1y

    @Sam McCormack good to know! I'll check out that market

    1Reply
  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    @Account Closed

    In hindsight, I rushed into my first investment. I quickly chose one of the first 'investor-friendly' agents I found, bought the cheapest duplex on the market, and only interviewed a single property management company.

    Looking back, I wish I had taken the time to connect with more local investors in the area and leveraged their experiences to help me avoid some costly mistakes.

    After two years, I sold that underperforming duplex and reinvested closer to home. One positive takeaway: I did my homework on the market itself. Huntsville, AL, showed—and continues to show—strong appreciation. Thanks to this equity growth, we were able to recover much of our initial cashflow loss. Lessons learned!

    [email protected]443-812-0357
    Schwartz Realty Group5118 Reviews
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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Account Closed a view from the support side!

    We deal with a lot of OOS investors. Unfortunately, many come to us AFTER they bought. Some, after they got burned by another PMC.

    #1 problem? The investor expectations aren't met.

    Why?

    1) They naively expected Class A results from the Class B/C/D property they bought.
    2) They didn't do enough market research to even know they bought a Class B/C/D property.
    3) They didn't do enough due diligence on the members of their team: agent, PMC, inspector, etc. So, they got taken advantage of.
    4) They didn't do enough research on comparable properties before doing repairs - so went either overboard or slumlord, instead of properly Maintaining to the Neighborhood.

    The other challenge we encounter often is investors expecting perfection. They don't really read their management contracts, or focus on the wrong parts. They don't take time to understand the business and work with their PMC on solutions.

    If you'd like to understand more about all this, DM us.

    [email protected]248-209-6824
    Logical Property Management4.9465 Reviews
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    4Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y
    Quote from @Account Closed:

    Hi everyone, 

    I live in California and have been meeting a lot of investors who prefer to invest out of state due to California being so expensive as well as the aggressive tenant protection laws we have here. I have heard both the good and the bad sides of investing out of state and so I am curious to know what other's experience has been?  I have mostly heard about LTRs specifically in Indiana, Alabama, Texas, Michigan, and Ohio but I am open to hearing anyone's experience anywhere. Would really like to hear your thoughts!


    Hey Alyssa, 

    I would say try to figure out what market you want to be in by talking to other people's experience and then go from there. I invest here in Columbus, Ohio and have 4 doors that give me decent cash-flow and still looking to add more units here. Very optimistic about the appreciation here with businesses such as Intel, Microsoft, Google, etc moving here. Let me know how I can help. 

    [email protected]614-490-1163
    Kerlous Tadres | Reafco Real Estate541 Reviews
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    3Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y

    Hey Alyssa, when looking into markets.. I would first decide on whether you want appreciation, cashflow, or a mix of both. If you want cashflow.. look for markets with low entry prices and higher rent averages. If you want appreciation, identify markets with expanding industries, positive growth trends, and bright economic forecasts. 

    I personally moved to Ohio from Florida because I liked the mix of cashflow and appreciation that the Ohio markets presented. 

    You can be successful anywhere you just need a strong and loyal team working with you!

    [email protected]614-662-1652
    Reafco - Samuel Diouf528 Reviews
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    2Reply
  • Greg ParkerBusiness Member
    Realtor, Contractor, Property Manager · Montgomery AL and Kowaliga, AL · Member since 2017 · 669 posts · 536 votes
    1y

    @Account Closed

    You can look up investor-friendly agents and PM's on BP in the area you choose.  Talk to all of them and see which ones you like, fly to town and meet them, look at some examples and numbers on current deals.  They also need to have a reliable contractor that knows how to price and work on rentals.  

    [email protected]
    MGM Property Pros LLC
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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    1y

    I bought 10 crack shacks out of state in the last year in Nowhere, Arkansas. I didn't know a thing about this town. Lol. Took 8 of them sight unseen other than a few pics of them. They all came with tenants and from tired landlords. Price range from 22k-75k. I found handymen and people to work on them. It's easy to self manage them so far. The cash flow is only 5k/month (not including cap ex, maintenance and vacancies), but it's enough to pay for my kids in college. However, appreciation is very low in cheap areas. So I'll be lucky to get 1%/year appreciation. I've got 19 SFR in a better appreciating area (Dallas). Those appreciate well but cash flow is only around $200-$300/month when I first buy them with 20% down.

    2Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    1y

    It's difficult but not impossible. You have to get on a plane (or drive if close enough) before and after purchase to fully understand what you are getting into and getting to know locals face to face. 

    The best litmus test for me is the "Would you live there?" filter. If you would not, I'd recommend passing. The quality of the property and the tenant pool you will be renting to out of state matters more than you think. I also recommend buying a property at or above the median home price for that market (assuming a cheap market). The cheap houses are tempting; however, if we're on the other side of the greatest run up in home price appreciation in my lifetime, and a property can still be had for under $100k, the appreciation upside is going to be very limited. 

    You make outsized returns from leverage + appreciation (in rent and in value). Buy the property you most want to own 10 years from now...not the cheap one that cash flows day 1 on paper.

    I hope that helps and I could go on. Please reach out if you think that I could be a resource. I have absolutely nothing to sell.

    6Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    1y
    Quote from @Jake Andronico:

    @Account Closed

    I grew up north of San Francisco and moved out to Reno, NV to live and invest. People are still sleeping on it! 

    I'm obviously bias now, but I've been investing in Reno for many years prior to becoming an agent. 

    We're right next to CA but get the benefits of no state income tax, 4th lowest property taxes, much more friendly landlord/tenant laws, no serious weather, proximity to Lake Tahoe, stable job growth/population growth, etc. 

    I still have family in CA however so I visit often, and investors can drive to their properties if needed from Northern CA.  

    It doesn't make sense for everyone as we're not a cheap market, but I'm always surprised how many people from CA never even consider it! 

    Whatever you decide, best of luck to you! 

    Also an excellent police force there.

    3Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y

    My team works with a lot of OOS investors here in Milwaukee, Wisconsin. Here is what we have found and I will probably catch some heat for some of the things I have to say, because it does not sound "investor-friendly". But I can't recommend something I would not do as an investor myself, so here it goes:

    1.) OOS investing has operational inefficiencies, because you work remote. You can't even drive by and look at a tree before you decide if it needs to be trimmed up or cut down.

    2.) OOS investing is more expensive. You have to pay people to do things for you, you would normally do yourself. A cheap PM will cost you more than a good PM, and that's 8% - 10% of rent.

    3.) Paint and carpet are tough enough to organize remotely. Clients will tell us they are glad they did take our advice on this. At least for the first one.

    4.) Don't buy in the hood. Aim for at least median price. Personally we buy in neighborhoods that are slightly above median, which does not look great on your cash flow spread sheet, but it works much better over the years, financially and for your sanity.

    5.) You are competing with local investors. We have over 10,000 landlords in Milwaukee and at least a couple thousand active investors at any point in time.

    6.) You don't need to find the best city to invest in the US. A great team will get you a better return over time in a mediocre market, than a mediocre team in the best market.

    7.) It only makes sense to invest remote if you have a large economic delta between where you live and the income you earn and the market you invest. Milwaukee is a little better than Chicago, but it does not make sense for a Chicago investor to go remote in Milwaukee. The delta is not big enough. If you both make 500k W2 in silicon valley, you can invest in either Chicago or Milwaukee - that's enough of an economic delta to justify the above.

    4Reply
  • Mike PaolucciBusiness Member
    Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 501 posts · 553 votes
    1y
    Quote from @Account Closed:

    Hi everyone, 

    I live in California and have been meeting a lot of investors who prefer to invest out of state due to California being so expensive as well as the aggressive tenant protection laws we have here. I have heard both the good and the bad sides of investing out of state and so I am curious to know what other's experience has been?  I have mostly heard about LTRs specifically in Indiana, Alabama, Texas, Michigan, and Ohio but I am open to hearing anyone's experience anywhere. Would really like to hear your thoughts!

    Hey Alyssa. I started off as an OOS investor back in 2021 while living in the Bay Area. Found my deal on Zillow, ran the numbers, pulled the trigger and flew into town to do some of the work myself with the help of some family with experience fixing houses. After we completed the repairs (all cosmetic stuff) we handed it off to my property manager. 

    Your PM will be able to help you manage everything from leasing, regular maintenance to bigger ticket items like replacing your roof and managing tenants. With the right PM (I always recommend connecting with multiple who specialize in the types of properties you're buying), they should be able to help you stabilize the property and hopefully keep the tenants for multiple years. 

    Whatever way you slice it, you're going to learn a lot from your first rental. Not only what it's like owning rental property & all the responsibilities that come with it, but you'll also figure out if owning property is the right kind of investment for you. 

    Happy to answer any additional questions. 
    [email protected]614-892-9184
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  • Michael CalveyPro Member
    Head of Sales at BiggerPockets · Denver, CO · Member since 2023 · 134 posts · 154 votes
    1y
    Quote from @Account Closed:

    @John Mason I've been hearing this a lot! how do you find your teams?


     The best way to find your boots on the ground is to use vetted Agents from BiggerPockets with our Featured Agent Program, or Lenders with our Featured Lender Program, or Property Managers with our Featured PM Program, or a Tax Pro with the Featured Tax Professional Program - all from BiggerPockets to help everyone find trusted investor friendly professionals. 

    [email protected]
    BiggerPockets
    3Reply
  • Randy CharboneauBusiness Member
    Residential Real Estate Broker · Grandville, MI · Member since 2016 · 109 posts · 78 votes
    1y
    Quote from @Greg Parker:

    @Account Closed

    You can look up investor-friendly agents and PM's on BP in the area you choose.  Talk to all of them and see which ones you like, fly to town and meet them, look at some examples and numbers on current deals.  They also need to have a reliable contractor that knows how to price and work on rentals.  


    I agree with this.   It's important to get to know your team and trust them before moving forward.  A great team can save you so much time and hassle.   I've personally helped many OOS investors here and they've been very happy with returns.  I've talked with some other investors who had bad experiences with other agents and reading some of the stories here makes it even clearer the right team is paramount.

    If you decide to look at West Michigan feel free to reach out and I'll give you any data you need.  I also have a list of contractors and PM's I can recommend  for this area as well.

    [email protected]616-262-0001
    INDEPENDENCE REALTY512 Reviews
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  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 717 votes
    1y

    @Account Closed

    There are many good markets where you can build wealth. The best place is what fits with your lifestyle, time, and energy.  Many people still make money in CA even with the restrictive laws and many people lose money in "landlord friendly" state with cheap properties. Search markets that work for your goals then eliminate from your list the ones that will not fit with your lifestyle.  

    2Reply
  • Jabs Carter
    Rental Property Investor · Dallas Fort Worth, TX · Member since 2024 · 1 post · 2 votes
    1y

    Yes, I am a Texas resident but I invest out of state. I buy in GA, Fl, Oh, Nc, Tn, Ok and I would say. having boots on ground is crucial as well as a property management company. 

    2Reply
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