New Rental Property Purchase - Out of State

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

@Shayan Sameer if you are using equity from your primary home as a down payment, then you are borrowing 100% of the purchase price. I am not sure if that is the case, but that's how it read and why @Nicholas L. said that.

I feel like a broken record on here, but cash flow with 20-25% down on a long term rental is kind of a myth. You can find plenty that look good on a spreadsheet, but the maintenance on an older home along with the pool of tenants that you are renting to will evaporate the "cash flow" very quickly. Those "cash flowing" assets are likely to appreciate below the rate of inflation as well. Index funds beat those returns by a long shot and don't have furnaces to replace or tenants to deal with.

As I see it, the only way to actually cash flow in the current market is to do a higher effort strategy (STR, MTR, rent by the room, etc.) or have low to no leverage.

Ryan Harrell

Memphis, TN · Member since 2023 · 100 posts · 24 votes

Hi Shayan, with a budget of around $200k, you may be able to find something in/around Greensboro, but it'll be a lot tougher in Charlotte and Raleigh.

Memphis, Little Rock, Oklahoma City, and Tulsa are solid markets that many of our investors in your price range tap into.

Good luck!

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Shayan Sameer

OK - seemed like you were, can you provide more info? I assumed you'd use HELOC for down payment + another loan for the rest. that is 100% financed. HELOC money is borrowed money.

OP

Member since 2024 · 63 posts · 39 votes

Sorry guys, it looks like I confused everyone here.... My apologies.

I can put 20% down; the rest could be HELOC or a conventional loan. Whatever makes more sense.

Evan HoppleBusiness Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 285 posts · 420 votes

[email protected]614-924-8151

Quote from @Shayan Sameer:

Hello,real estate investors,

I have a question for those with experience pulling home equity to fund new investments. I'm considering tapping into the equity from either my primary residence or rental property to purchase another rental home that generates solid monthly cash flow.

I'm open to investing out of state and have heard that areas like Ohio, Tennessee, Georgia, and North Carolina offer potential opportunities. However, I'm unsure of the specific areas within these states to target. For example, if I were to invest in Columbus, Ohio, could anyone share their insights on which neighborhoods or parts of the city offer good returns?

My goal is to ensure that I hit the 1% rental return per month. My budget for the property is up to $200K. Is that enough? I reside in FL, so I would like to purchase in neighboring states if possible, but I heard Ohio is a great market.

I'm open to all suggestions and ideas! Looking forward to your recommendations.

$200k for a duplex is certainly doable in Columbus. If you can stretch the budget to $250-275k, you can get a significantly nicer property / in a better area and still achieve the 1% rule

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Shawn AckermanPro Member

Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes

@Shayan Sameer If you can service all debt and property expenses and have money left over then I'd say it's worth it. But coming close to break even, especially when using Interest only debt(HELOC), I'd say probably not a good idea.

Head over to bank rate or and take a look at the mortgage calculators, plug in the numbers and get an idea of what the property needs to generate to satisfy the intended debt.

You still have to underwrite the deal for the non-finance expenses as well(typically 40-50% of the gross rents). I wish I could give you a quick and easy answer but that is just not how my brain works lol!!!!

Looking for 1% deals will be cutting things close. I'd say, at minimum look for 1.5%.

Example. $200K property needs to rent at 1.5% for a minimum of $3K per month. half of that will go back into property expenses. putting 20% down on $200K will be a $160K (first position)note. Let's say at 6% over 30Yrs will be about $960 per month(Principle/Interest) with the remaining interest only portion $40K costing roughly $200 per month.

$1500- $960 + $200 IS $340

Cash in your pocket after everything roughly $1500-$1160-$340 which is not bad for a 100% financed deal(INFINITE RETURNS)

Now, If you ran this analysis on a 1% deal as @Nicholas L. mentioned you will undoubtably end up in the red each month.

All the best!!!

Patrick Galphin

Realtor · Memphis, TN · Member since 2023 · 29 posts · 38 votes

@Shayan Sameer,

Welcome to BiggerPockets! The Memphis market here in Tennessee continues to be strong. Properties are routinely hitting right at the 1% mark and generating good returns for investors. Our team works exclusively with out-of-town investors and have the support program in place to help build a strong portfolio. I would love to connect and share more about the Memphis market.

Let's connect soon!

All the best,

Patrick

2 Reply

Benjamin Carver

Real Estate Agent · Raleigh, NC · Member since 2019 · 316 posts · 290 votes

Hey there, I'm in Raleigh-Durham in North Carolina. Cashflow isn't easy here but appreciation is super strong. If you're interested in that and open to a little creativity and work. Feel free to reach out always happy to jump on a call

Mya Toohey

Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes

I am also in Florida, the Tampa area. I can see why you want to invest out of state if that is your budget. Its hard to reach the 1% rule here now. If y0ou have a home at 300,000 you have to make 3k a month and finding a home at 300,000 and make that much rent is almost impossible. You can still make money on flips here though. What are your thoughts on doing a flip or a BRRRR that seams to be the best way to capitalize on your investment. I am not sure about the other markets but I would suggest looking up a Realtor from here and utilizing their knowledge to help you. you always need a good one no matter where you at if you are OOS investing. Best of Luck to you!!!

Allie McAlister

Memphis, TN · Member since 2024 · 180 posts · 223 votes

@Shayan Sameer

There's many opportunities in the Memphis market if you're looking in that $200k or less price range and trying to hit the 1% rule.

There's a ton of blue collar and healthcare jobs that are providing a tenant demand for houses in that rent range, and more to come with Blue Oval City expecting to be operable in late 2027.

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Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

[email protected]614-662-1652

Columbus, Ohio is a great market to consider if you're looking for appreciation markets that still have cashflowing deals under $200k. I moved here from Florida after seeing the expansive growth in the Columbus market.

I would focus on areas up north like Linden and areas on the west side of Columbus, like Franklinton and Hilltop.

Linden is seeing a large amount of investment activity within residential 1-4 unit properties and newly developed facilities, which were ignited by the ONE Linden Plan. With new construction and renovations going on, on almost every block.

In Franklinton there are plenty of large projects going on that will bring massive growth to the west side of Columbus, such as the Peninsula Development, which is a multiphase project that will erect a 24 story apartment complex featuring a grocery store, a multi use office space building, and a new hotel featuring a two-story venue.

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Pat LulewiczBusiness Member

Realtor · Raleigh NC and Greensboro, NC · Member since 2019 · 397 posts · 393 votes

In NC, you wont find a property that works at that price in the primary markets of Raleigh or Durham, Charlotte, etc. Secondary markets like Greensboro, Winston, and Fayetteville will likely still be under the 1% rule, but our property taxes are lower than most northern states so the CoC (which is what you should be as/more concerned about) return will be favorable. Tiertiary markets can get you to 1% rules on paper but then it'll all be based on demand and tenant class. Look at Goldsboro, Greenville, Burlington/Mebane/Graham, High Point, and some of the neighboring towns of Charlotte.

OP

Member since 2024 · 63 posts · 39 votes

Quote from @Samuel Diouf:

Columbus, Ohio is a great market to consider if you're looking for appreciation markets that still have cashflowing deals under $200k. I moved here from Florida after seeing the expansive growth in the Columbus market.

I would focus on areas up north like Linden and areas on the west side of Columbus, like Franklinton and Hilltop.

Linden is seeing a large amount of investment activity within residential 1-4 unit properties and newly developed facilities, which were ignited by the ONE Linden Plan. With new construction and renovations going on, on almost every block.

In Franklinton there are plenty of large projects going on that will bring massive growth to the west side of Columbus, such as the Peninsula Development, which is a multiphase project that will erect a 24 story apartment complex featuring a grocery store, a multi use office space building, and a new hotel featuring a two-story venue.

@Samuel Diouf will you be able to help me?

Taz Zettergren

Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes

@Shayan Sameer I don't have any experience in Ohio but I've had a ton of my clients be successful here in the southern/middle part of the country. Places like Memphis, Little Rock or OK are great spots to look and 200k will be plenty.

I would be cautious chasing the 1% rule, a lot of the time it puts you into less desirable neighborhoods or into properties that haven't been completely renovated. Personally I prefer homes around that median price because that's where the most demand will be not only for owner occupants but renters as well. That typically puts your rent to sales price around .75-.8 ish give or take but these areas tend to appreciate more consistently from what I've seen and the rental clientele is more consistent.

Best of luck on the search!

Min ZhangBusiness Member

Real Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes

[email protected]614-412-2912

Hi Shayan, you should also look into Cleveland if you're interested in cash flow deals. You can find duplexes under $200k in C class neighborhoods and meet the 1% Rule. I recommend checking out these west side neighborhoods for cash flow: Jefferson, Cudell, Brooklyn Centre, and West Boulevard

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Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

[email protected]614-300-7535

Quote from @Shayan Sameer:

Hello,real estate investors,

I have a question for those with experience pulling home equity to fund new investments. I'm considering tapping into the equity from either my primary residence or rental property to purchase another rental home that generates solid monthly cash flow.

I'm open to investing out of state and have heard that areas like Ohio, Tennessee, Georgia, and North Carolina offer potential opportunities. However, I'm unsure of the specific areas within these states to target. For example, if I were to invest in Columbus, Ohio, could anyone share their insights on which neighborhoods or parts of the city offer good returns?

My goal is to ensure that I hit the 1% rental return per month. My budget for the property is up to $200K. Is that enough? I reside in FL, so I would like to purchase in neighboring states if possible, but I heard Ohio is a great market.

I'm open to all suggestions and ideas! Looking forward to your recommendations.

Hi Shayan, if you're pulling home equity or a HELOC, you will want to find a value add property that you can refinance and pay off the HELOC asap. You will either want to focus on BRRRRing or flipping! I wouldn't recommend a standard buy and hold rental because you'll have to pay both your HELOC and mortgage on the house. But to answer your question, yes you can definitely find positive cash flow and the 1% rule here in Columbus Ohio. The typical price point is 120-180k for a single family house. If you're looking at duplexes, you will typically be $200-250k. The macroeconomics for Columbus Ohio are on fire especially with population growth, job growth, and companies moving/developing here so there's amazing appreciation as well. Happy to connect and answer any questions you have.

Jimmy Lieu, Red 1 Realty4.9124 Reviews

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Shayan Sameer

if you are putting down 20% cash but borrowing 80% from a HELOC, i still think you won't cash flow.

i also get nervous when people throw out entire states. yes, you can be successful in any of them, but only if you have a team / network. if you buy a random property in a neighborhood you've never been to and turn it over to people you don't know you'll just lose money.

not trying to be negative, trying to protect you and your hard earned cash.

Samuel DioufBusiness Member

Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes

[email protected]614-662-1652

Quote from @Shayan Sameer:

Quote from @Samuel Diouf:

Columbus, Ohio is a great market to consider if you're looking for appreciation markets that still have cashflowing deals under $200k. I moved here from Florida after seeing the expansive growth in the Columbus market.

I would focus on areas up north like Linden and areas on the west side of Columbus, like Franklinton and Hilltop.

Linden is seeing a large amount of investment activity within residential 1-4 unit properties and newly developed facilities, which were ignited by the ONE Linden Plan. With new construction and renovations going on, on almost every block.

In Franklinton there are plenty of large projects going on that will bring massive growth to the west side of Columbus, such as the Peninsula Development, which is a multiphase project that will erect a 24 story apartment complex featuring a grocery store, a multi use office space building, and a new hotel featuring a two-story venue.

@Samuel Diouf will you be able to help me?

Of course! Just shot you a PM 👍

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OP

Member since 2024 · 63 posts · 39 votes

Quote from @Alissa Anderson:

Hi Shayan,
I have properties that fit your goals in Memphis TN. We do a lot of construction in 38127 and 38128. These two zip codes are really up and coming and the builder that handles the construction is one of the driving forces for gentrification of the area.
I would love to share our inventory with you! All our product hits the 1% rule and our investors love the cashflow.

Send me the info pls..

OP

Member since 2024 · 63 posts · 39 votes

Quote from @Shayan Sameer:

Quote from @Alissa Anderson:

Hi Shayan,
I have properties that fit your goals in Memphis TN. We do a lot of construction in 38127 and 38128. These two zip codes are really up and coming and the builder that handles the construction is one of the driving forces for gentrification of the area.
I would love to share our inventory with you! All our product hits the 1% rule and our investors love the cashflow.

Send me the info pls..

@Alissa Anderson sure.. please DM me.

Lillian Pintaro

Real Estate Agent · Member since 2024 · 46 posts · 13 votes

Hi I'm from the Birmingham AL area. If you are interested here id love to give you some insight into where the best neighborhoods are. My family has invested here my whole life and its been very good to us.

Jorge VazquezBusiness Member

Real Estate Broker · Tampa, FL · Member since 2017 · 1k+ posts · 700 votes

Hi, my friend! Let me tell you about Florida—it has been tricky to hit the 1% rule here for the past 2 years, but things are looking up. Out of my 32 properties, I’ve seen insurance rates drop by up to 40% on renewals, and property tax increases are finally slowing down compared to the crazy jumps we saw over the last five years. Rents are projected to keep climbing next year, and there are still panicked sellers out there, which means opportunities are popping up. If you’re open to looking across the state—from Jacksonville to Sarasota—you can definitely find some solid deals, but you’ve got to be strategic and focus on markets that fit your goals. Coastal cities might give you long-term appreciation, while places like Lakeland or Ocala can deliver better cash flow right away. Florida’s got options; it’s all about digging in and making the right move!

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