Out of state investors

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Out of state investors

Ishan Puri
San Francisco, CA · Member since 2018 · 13 posts · 5 votes

I am just getting started in out of state investing and wanted some advice from those in the game already. I am looking to build a cash flow portfolio and am vetting the following markets:

- Cleveland

- Cincinnati 

- Indianapolis 

1. How reliable is property management for an out of state investor?

2. Do I need a local lender? 

Any other tips would be appreciated for grading these markets (besides what is on BP) or finding a strategy. Right now, I am looking at multifamily in B neighborhoods in these cities. 

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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
7y

@Ishan Puri

1) Property management is a critical element, and some are much better than others.  Make sure you vet thoroughly and don't depend on any PM 100%.  You have to manage the managers.  Nobody will look after your property as well as you.

2) No, you can use any lender that lends in the state your investing in, but not necessarily a lender that is local.  Be sure to check for pricing including fees, points, as well as interest rates.  As well as the lender's experience with working with investors, and avoid Wells Fargo and some of the other big boys.

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  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    7y

    @Ishan Puri

    1) Property management is a critical element, and some are much better than others.  Make sure you vet thoroughly and don't depend on any PM 100%.  You have to manage the managers.  Nobody will look after your property as well as you.

    2) No, you can use any lender that lends in the state your investing in, but not necessarily a lender that is local.  Be sure to check for pricing including fees, points, as well as interest rates.  As well as the lender's experience with working with investors, and avoid Wells Fargo and some of the other big boys.

    3Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y

    @Ishan Puri All 3 of those markets are good cash flow markets, but when you look at the combination of cash flow and the economic and demographic trends, I think Indianapolis is the much stronger market. Indy has a growing population, growing jobs and a diverse, modern economy. Personally, I think it has much more going for it.  I would highly recommend adding Kansas City to your short list. It is very similar to Indianapolis.

    I think you'll find it difficult to find many MF's in B class neighborhoods. B class neighborhoods don't have a lot of MF which is part of why they are B class. That's going to be particularly true in the 3 markets that you are looking at. Most MF in those markets are in old, rough areas.

    I've been active in both markets for almost 10 years and would be happy to talk to you about them if you want. 

    How reliable the property management is depends entirely on who you work with. There are some very good ones and some bad ones. If you choose to go the turn key route, the property should be under management. The important thing is to research them well. 

    2Reply
  • Ronald Morris
    Camarillo, CA · Member since 2019 · 30 posts · 19 votes
    7y

    Hey @Ishan Puri

    I would recommend reading @David Greene's book on out of state investing. It offers a lot of clarity and has been a great resource for me. @Brandon Turner's book on real estate investing will help you build the foundation of your portfolio. This is a great start and they’re both on audible if you want to get a commuter's education.

    There is also the free "Ultimate Beginners Guide" that is a very abridge version of both those books. Next, I would recommend learning the vocabulary by lurking the forums and asking questions. Most people here are super nice and don’t mind answering questions.

    3Reply
  • Matt J.
    Rental Property Investor · Puget Sound, WA · Member since 2019 · 59 posts · 44 votes
    7y

    @Ishan Puri, I've seen Cincinnati and Cleveland appear in many 'best places to invest' lists. We're looking at both ourselves. Indianapolis is also interesting, if you can find the right neighborhood - but that's true almost anywhere.

    As for Kansas City, thanks for the tip, @Mike D'Arrigo! We'll add it to our list as well. 

    And I have to second the book recommendations by @Ronald Morris. Both of those guys know their stuff.

    1Reply
  • Robert Matelski
    Rental Property Investor · Austin, TX · Member since 2018 · 214 posts · 270 votes
    7y
    Originally posted by @Ishan Puri:

    I am just getting started in out of state investing and wanted some advice from those in the game already. I am looking to build a cash flow portfolio and am vetting the following markets:

    - Cleveland

    - Cincinnati 

    - Indianapolis 

    1. How reliable is property management for an out of state investor?

    2. Do I need a local lender? 

    Any other tips would be appreciated for grading these markets (besides what is on BP) or finding a strategy. Right now, I am looking at multifamily in B neighborhoods in these cities. 

    Hello, fellow Bay Area resident! I can only speak about the Cleveland market, as that is where I have been focusing on investing. I have 6 SFRs and 1 duplex there currently. I have found a reliable property manager, but there have been a few frustrations and hiccups from time to time. I would rate them a solid B... and that is probably about as good as you will get in that market. As far as lenders, local will likely be easiest, but if you work directly with a large national bank (e.g. Chase) they should be able to provide you with loan products that can meet your needs. If you are careful and make good decisions, you can get some decent cash flow properties out of the Cleveland market. I don't expect huge long term appreciation there... but I do expect the values to fully return to their pre-crash levels soon (they were not overly inflated to begin with, and they are still lagging a bit below the ~2006 watermark in most areas). You can find some multi-family properties in decent areas if you look at some of the inner-ring suburbs, such as Shaker Heights, Cleveland Heights, and Lakewood. If you have questions about specific neighborhoods once you start poking around a bit feel free to drop me a note!

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    7y

    @Ishan Puri

    OH have a lot of older stuff and so does Indy.

    1. How reliable is property management for an out of state investor? Not very also I would try get a third party PM.

    2. Do I need a local lender? No everyone uses the same few national lenders. 

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Ishan Puri:

    I am just getting started in out of state investing and wanted some advice from those in the game already. I am looking to build a cash flow portfolio and am vetting the following markets:

    - Cleveland

    - Cincinnati 

    - Indianapolis 

    1. How reliable is property management for an out of state investor?

    2. Do I need a local lender? 

    Any other tips would be appreciated for grading these markets (besides what is on BP) or finding a strategy. Right now, I am looking at multifamily in B neighborhoods in these cities. 

     Welcome to the site Ishan. If you're looking into Cleveland 1st thing you should check out is The Ultimate Guide to Grading Cleveland Neighborhoods. As for lenders no, they don't need to be local. Many of my clients use national lenders when they buy property as we are typically looking at a west coast buyer purchasing a Midwestern property with a lender in a 3rd state. 

    1Reply
  • Melissa Nash
    Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
    7y

    @Ishan Puri

    Yes Ohio cashflow. More bang for your buck

    Indy- less cashflow, more growth. Spend more $ here to get into better areas.

    Yes, I have good pm’s in each. Hit me up.

    2Reply
  • Ishan Puri
    OP
    San Francisco, CA · Member since 2018 · 13 posts · 5 votes
    7y

    Thanks everyone for your insightful comments and willingness to help! I will reach out to you with more queries!

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y
    Originally posted by @Matt J.:

    @Ishan Puri, I've seen Cincinnati and Cleveland appear in many 'best places to invest' lists. We're looking at both ourselves. Indianapolis is also interesting, if you can find the right neighborhood - but that's true almost anywhere.

    As for Kansas City, thanks for the tip, @Mike D'Arrigo! We'll add it to our list as well. 

    And I have to second the book recommendations by @Ronald Morris. Both of those guys know their stuff.

     Matt, let me know if I can help.

    1Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    @Ishan Puri  Get pre-approved with a lender first.....I'm in the Bay Area but I used Shawn Huss at Chemical Bank to get pre-approved for what I bought in Cleveland.....you can google him . ou can also look up @chrismason    He's here in the Bay Area ....Generally speaking, nobody will take you serious until they know you are pre-approved. 

    3Reply
  • Wai Chan
    Rental Property Investor · San Diego, CA · Member since 2014 · 80 posts · 44 votes
    7y

    @Mike D'Arrigo

    Thank you for sharing your opinion. I have sent you a PM too. Thanks again

    0Reply
  • Rick Louallen
    Real Estate Agent · Cincinnati, OH · Member since 2014 · 29 posts · 22 votes
    7y

    Cincinnati:

    Various info. and articles:

    https://youtu.be/8SHPzcx596A
    Welcome to Cincinnati! (2017)youtu.beThere's a lot Cincinnati can do. Excellent meeting facilities, a great attendee experience and a hospitality community that can deliver. To learn more about ...
    Recent article about Cincinnati:


    https://urldefense.proofpoint.com/v2/url?u=http-3A__c.bizjournals.com_ct_e_265546871_ODUyMDI4NzE6OjA&d=DwMBaQ&c=fie8CffxQEyLNW7eyn-hJg&r=IlJlcrGTkYct4O0noio_45mTQ18L7QtF-_QtkIkDrPA&m=RaHdHOIxcIe3W_6-Fq__fI19VmcGlhmHkkR19ysp2x8&s=RID-PlWfkiKH2fdcsvdmNX80HUmrlvHCENdmNoqkUBs&e=

    Another recent article: Cincinnati is the fastest-growing major city in Midwest


    Check out this story on cincinnati.com: https://urldefense.proofpoint.com/v2/url?u=http-3A__cin.ci_2ADgx3s&d=DwICaQ&c=fie8CffxQEyLNW7eyn-hJg&r=IlJlcrGTkYct4O0noio_45mTQ18L7QtF-_QtkIkDrPA&m=M_XgjFLPSBA0KKCWQ2dvti_EvnEFp5z9qQvjupUQHws&s=-bt__seberdB73tjqVrYhVFnKY4-4ewICMK9CIUbem8&e=

    Cincinnati Apartment Rent Growth Accelerates - MPF Research

    https://www.realpage.com/mpf-research/cincinnati-apartment-rent-growth-accelerates/#.WYFM8Q1gwEQ.gmail

    Here's a few resources for getting information on particular communities within Cincinnati.

    Breaks down into smaller communities: http://www.apartments.com/local/cincinnati-oh

    This one also has a Community Profiles tab in the upper right corner : http://www.sunraydirect.com/Cincinnati3/CBWSKFredendall/


    Search crime rates of individual areas, or by zip code: http://www.neighborhoodscout.com/oh/cincinnati/crime/


    2Reply
  • Heshel Mangel
    Member since 2018 · 208 posts · 90 votes
    7y
    Originally posted by @Ishan Puri:

    I am just getting started in out of state investing and wanted some advice from those in the game already. I am looking to build a cash flow portfolio and am vetting the following markets:

    - Cleveland

    - Cincinnati 

    - Indianapolis 

    1. How reliable is property management for an out of state investor?

    2. Do I need a local lender? 

    Any other tips would be appreciated for grading these markets (besides what is on BP) or finding a strategy. Right now, I am looking at multifamily in B neighborhoods in these cities. 

    As an OOS investor, the PM is the most important piece if the puzzle. Make sure you vet them well and listen to recommendations. Don't just go for the cheapest company. 

    You don't need a local lender, but local lenders tend to be more willing to work with you on an individual basis, especially if you don't confirm to the typical Fannie Mae guidelines. 

    I have been looking for MFs in Cincinnati for some time. If you hear of any in B areas please do let me know. I am finding that MF in B areas are rare. 

    1Reply
  • Nic Cooper
    Rental Property Investor · SAN DIEGO · Member since 2019 · 69 posts · 38 votes
    7y

    I'm looking at Ohio as well.  Just spent 3 days in Cincinatti and now I'm in Columbus.  Cleveland next week.  I do recommend coming out to visit to help build up your team.  Yes the cash flow is important, the people are just as if not more important.

    0Reply
  • Heshel Mangel
    Member since 2018 · 208 posts · 90 votes
    7y

    @Nic Cooper How was your trip to Cincinnati? Did you spend the time meeting team members or just learning the neighborhoods and properties? 

    0Reply
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 738 votes
    7y

    Big banks like Chase or Wells Fargo don't really do anything at all with real estate investors. If you're looking for a lender that closely resembles a bank then you need to look at COGO Capital, Groundfloor, Visio etc. They use the broker model which is good for you because often a broker can find a better deal for you if they're have contacts with multiple lenders.

    It takes time and work to develop relationships with individual hard money lenders. If you want to raise capital from investors you also need to be compliant with the SEC and state blue sky laws. A lot of people can help you if you choose that route. 

    1Reply
  • Nic Cooper
    Rental Property Investor · SAN DIEGO · Member since 2019 · 69 posts · 38 votes
    7y

    Both. Spend time walking/driving the areas.  Meet up with fellow investors and local specialists.  Also lenders.  I saw a fair amount of properties.  Narrow down what areas you want to invest in then come out.  Network before you arrive.

    1Reply
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 738 votes
    7y

    Keep in mind some of the more institutional lenders in Private Money will shy away from Cuyahoga County, OH: Cook County Il and Detroit. A lot of foreclosures. If you find a lender for properties in those counties you will likely pay more because of the higher risk. 

    0Reply
  • Allyssa McCleery
    Rental Property Investor · West Palm Beach, FL · Member since 2017 · 262 posts · 136 votes
    7y

    When choosing a property management company it would be a good idea to keep an eye on the properties that go up for rent in your target neighborhoods and pay attention to how much effort they put into the advertisement, how long the rental has been listed and even call as a prospective tenant and see how you are treated. You can also fly out to the city and meet with different property managers and ask them for a list of the properties they manage in your target neighborhood and then drive out and see the condition of these properties. Although these suggestions won't tell you everything it will be helpful in narrowing down your selection. Also, remember to use other professionals you connect with to get referrals (title agents, property management, contractors, agents, wholesalers, etc.) If they work in any part of the real estate industry they will likely know other professionals they can recommend. 

    0Reply
  • Kiera Underwood
    Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
    7y

    Hey Ishan! I actually talked to an investor today that talked about deals becoming more scarce in Indiana today. Have you seen that at all? 

    You don't have to have a local lender! I've worked with hundreds of investors in the last year and I DEFINITELY have a preferred national lender. You can get connected with him and then regardless of what market you decide on you'll be good to go! Feel free to PM me and I'll provide more info! 

    0Reply
  • Kiera Underwood
    Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
    7y

    I will say though that in my experience, local lenders have such great communication/flexibility/hit timelines.. generally, rates might be a little bit less competitive, but because you're just starting out, the value and education they provide might not be something to discount. 

    0Reply
  • Priya ThomasPro Member
    Investor · Cincinnati, OH · Member since 2017 · 135 posts · 61 votes
    7y
    Originally posted by @Nic Cooper:

    Both. Spend time walking/driving the areas.  Meet up with fellow investors and local specialists.  Also lenders.  I saw a fair amount of properties.  Narrow down what areas you want to invest in then come out.  Network before you arrive.

    I am glad that we could meet and hang around. I agree that for out of state investor it can be intimidating, I always recommend to go and see before you buy. Know the local market, network with local investors and agents.

    1Reply
  • Nic Cooper
    Rental Property Investor · SAN DIEGO · Member since 2019 · 69 posts · 38 votes
    7y

    @Priya Thomas always.  You are right.  I don't think I could invest unless I spent some time out here.

    1Reply
  • Ishan Puri
    OP
    San Francisco, CA · Member since 2018 · 13 posts · 5 votes
    7y

    Yes @Kiera Underwood I have heard that a lot of the return has been sucked out of Cleveland area unless you go in to flip. I am looking north of Indy for stable cash flows, or right near downtown for a MF. What do you think of Bates-Hendricks?

    https://www.google.com/maps/d/u/1/viewer?mid=1ZJ6z2HR9cwVpc88QIQhmiRrwMg7-dW0H&ll=39.748659009013934%2C-86.12839942987637&z=15

    0Reply
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