Starting an rental property search

[Nawab I.]

Hi BiggerPockets community

I live in Bay Area and don't own a house. Given my current accumulated down payment (meager) and high prices here, I am instead thinking of buying cheaper houses somewhere else and use the rental income to live in a rental property in my current location. Where do I start this search?

With my very basic research in last week, i see that Detroit, MI is a high Rent:Price market. I am also interested in Austin area, as this is a place where I might actually want to relocate in future due to its blooming tech scene. Also, both of above cities show a good chance of value appreciation.

Other than that, i don't know what steps should I do to remotely buy and operate a rental property. 

Anyone who has done similar and/or planning to do the same, would you mind sharing your research? 

Regards
Nawab

[Konrad Gessler]

Originally posted by @Stuart Fox:

I'd get on Zillow, find several homes that look like they have potential and start calling the Realtors associated with the listing. These are agents that work the zip code associated with that home. I'd also call property management companies asking about areas in Detroit that work for out of state investors that want to have rentals. Finally, connect with Detroit investors online here on BP, Connected Investors, Facebook and similar networking sites. You'll want to work with a turn-key company most likely. Talk to a lot of folks and get as much local data as possible. Remember that, for the most part, the cheaper the home and the higher the cap rate - the more likely you'll lose money on the deal. Be very careful of investing in C & D class real estate.

Stuart Fox

West Coast Cash Buyers

Hi Stuart. Can you please elaborate on this; "Remember that, for the most part, the cheaper the home and the higher the cap rate - the more likely you'll lose money on the deal." Why is this the case?