Looking to invest out of state - cash flowing markets

18 Replies

After months of reading and researching throughout BP, I've re-evaluated what I'm looking to do with my RE investment goals and am aiming to purchase my first property this year.

Basically, I am looking at out of state markets with cash flowing properties to eventually replace my W-2 income. I have around 80k to work with and looking at multi-family/unit properties however if the numbers work SFH as well. Ideally, want to 'rinse and repeat' to build my portfolio using that 80k whether it be cash out refi or through creative financing.

Some of the markets I'm interested in are Columbus, OH, Indy, Pittsburgh, and KC.  Open to hearing any other suggestions on good cash flowing markets as well as what everyone looks for in evaluating and finding these type of markets.  I've tried looking in my area and around northern NJ but the numbers are very tight especially with property taxes over 10k and I think going out of state makes the most sense for me in regards to my RE goals.

I understand the risks in out of state investing but also the importance in establishing a good team in regards to brokers, agents, contractors, PM's so would love to connect with anyone in these markets who would have good recommendations in getting started working with out of state investors.

If you ask me, Now It's time for Detroit to do wonder

Why Detroit? There is no other market in the United States that brings investors with a better cash flow returns and capital appreciation in Detroit investment properties. No wonder why investors like Warren Buffet are saying that “now is the time to invest in Detroit”.

This is the year for Detroit to invest on property in Detroit Metro area!

Detroit is the only place in this country were 10-15% of the graduating class is heavy R&D and STEM the only other place in the country is Silicon Valley. Also, Michigan is #2 on the list for autonomous car tech we have the largest test facility here. You can spell detROIt without ROI lol. anyone interested in the Detroit market let me know. You must get a realtor with boots on the ground who makes a living researching the market and can educate you and give advice backed by reputation. Most people make the mistake investing in out of state places like Detroit because they go with some random person with no credentials to prove who they are or if they are any good. They fail through the whole process, buying in the wrong area for the wrong price and have no network of construction or management lined up. You will make money hand over fist in Detroit If you have the right guy on the ground who also has a proven track record with builders/rehabbers and management in place. That goes for all out of state investments not just Detroit

@Joe G.

You said it best yourself:

"the importance in establishing a good team in regards to brokers, agents, contractors, PM's"

Establishing a great team AND system are crucial. Also, I highly recommend attending REI meetings in NJ and NY. You need to speak to others who have successfully invested out of state. Learn the ropes a bit more so that you can establish a proper foundation first. This is a technique I personally used when I started out and it worked well for me.

Hi Joe,

I'm an agent in Pittsburgh, I'd be glad to talk and answer some more of your questions about our market. I also have a contact near Columbus, OH who can help you out in that market. PM me!

@Joe G. Hi Joe Pittsburgh PA is a great market for Investors for several reasons. It ranks as a top hub of innovation that has attracted Investors and large companies like Google, Uber, Amazon, Autodesk and others. They see our city as the next great start-up hub, especially with regard to advanced robotics, thanks in huge part to Carnegie Mellon University. We are also one of the top 20 finalist cities that Amazon is considering for it's HQ2. When large companies start moving in, you also see the need for housing increase.

Likewise, workers are coming here for Pittsburgh's livability, economic mobility and safety. Investors are seeing Pittsburgh as a market that offers a great return on investment for more manageable buy-in costs. Yes it can be daunting to be an out of town Investor, but with the right people in place locally, you can protect your interest. Sending you a Private message. Thanks, Gary

Thanks everyone for the info so far.  

What are some people's thoughts about the Columbus, OH area in regards to cash flowing properties? I feel like I've seen a lot of posts about Columbus so not sure if more and more people are flocking to that area.

@Joe G. so I have 16 units in Columbus across 4 different MF properties and you absolutely can cash flow.   The big question is more around your risk tolerance and objectives.   I focus on C areas which cash flow better but do require significantly more oversight based on tenet pool and age of buildings.   Even with a good PM and team in place for an OOS investor there is a lot of time required to keep these units producing.   However, in the B class I have seen a number of properties that will cash flow (a be it quite a bit less per door) but with a good PM can be much more passive.   Like everywhere deals to be had at all levels but just requires a bit more work to uncover the gem and match with you objectives.

Cheers,

Art

@Joe G. Taking KC out of it, your other three target markets are basically on a long single stretch.  Heck, you could dip south and take in Cincinnati.  Just fly out to Indy and have that be the start of a 4-6 days trip.  You can "take in" indy -> Cincinnati -> Columbus -> Pittsburgh all at the same time.  I doubt it's a scenic drive but it's more than doable (maybe wait a month until the start of spring!).  

My experience has been that if you're flying in from out-of-state local realtors will figure out a way to show you properties that you'd have interest in.  See 5+ in each location and you'll end up with a pretty darn good idea of what you're getting for you money.  It won't tell you everything about the markets, submarkets, etc. but I'm willing to guess that you'll end up with some sort of "gut reaction" to each of the markets.

I'd wager a box of donuts that if you visit those 4 markets you won't end up viewing them all in the same light.  You'll like 1-2 more than the others and toss out a couple of the markets entirely.  I just don't know a better way to get to know an area than driving around it.

Odds are you won't find the exact property you want to buy on the trip but when you get home you'll at least have a Top Market to focus on.  Plus you'll have had a face-to-face meeting with a realtor that can (hopefully) preview properties for you so that your next trip down you come with more of an intention t buy.  Or, who knows, you might stumble across the right deal.  

@Sean Carroll @Sebastian Scott we should meetup and grab a coffee to exchange notes as it appears we are all in Bay Area.  I have a number of properties in Columbus and would be interested to see how your experience in Cincinnati compares as am looking to expand to some other markets.

Cheers,

Art

with 80k as seed money and you want to retire.. the ONLY way you do that in SFR's is the BRRRR strategy..

no other way to do it.. unless your going to add 20 a quarter to your cash.

if you do this you need to get to 10 units ASAP... I am a big fan in not having 1 house in 5 markets i like to concentrate.

highest cash flow 99% of the time means least appreciation. and most appreciation means lowest cash flow.

money is made in appreciation if you cannot reasonably get to 50 to 100 doors..

Originally posted by @Rachel H. :

@Joe G. Definitely get in touch with @Ali Boone. She's done this and written on the topic of out-of-state real estate investing on the BP blog. Good luck! 

Thanks Rachel! :)

Joe, happy to help anytime if you ever want to reach out!

I think Indy is a great market, but has grown quite competitive for investor properties as the demand is high and inventory low.  KC is somewhat better for getting started at this point, and a lot of similarities to Indy market.  I can't really speak to Columbus or Pittsburgh, but do watch out for the higher taxes in Ohio.

Originally posted by @Joe G. :

After months of reading and researching throughout BP, I've re-evaluated what I'm looking to do with my RE investment goals and am aiming to purchase my first property this year.

Basically, I am looking at out of state markets with cash flowing properties to eventually replace my W-2 income. I have around 80k to work with and looking at multi-family/unit properties however if the numbers work SFH as well. Ideally, want to 'rinse and repeat' to build my portfolio using that 80k whether it be cash out refi or through creative financing.

Some of the markets I'm interested in are Columbus, OH, Indy, Pittsburgh, and KC.  Open to hearing any other suggestions on good cash flowing markets as well as what everyone looks for in evaluating and finding these type of markets.  I've tried looking in my area and around northern NJ but the numbers are very tight especially with property taxes over 10k and I think going out of state makes the most sense for me in regards to my RE goals.

I understand the risks in out of state investing but also the importance in establishing a good team in regards to brokers, agents, contractors, PM's so would love to connect with anyone in these markets who would have good recommendations in getting started working with out of state investors.

 Hi Joe, Columbus Ohio is a great market to invest in.  With OSU graduating 6000+ students a year, the tax incentives offered to bring more big business to Columbus and as the state capitol, there is always a need for multifamily rentals. 

I think Larry Fried makes a good point.  I'm in Indy and I can tell it is a tighter market, but I do see properties every day that are good deals and they work.  They are out there.  I bought a great flip last week.  Involved with a number of new rentals this week.  There is good inventory out there.  You have to develop relationships.  I think sometimes we get more hung up on the properties or locations and forget that having relationships and making connections is a vital part of the game. 

I know I get some good opportunities because of who I know.  Sometimes it's about positioning and access. 

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