Out of state Rentals for Positive Cash Flow

43 Replies

Hi Guys,

I have about 100k cash available to invest out of california. Looking for some cash flow rentals in Houston Texas, Cleveland Ohio, Cincinnati or Detroit. I am thinking of using that for a 20% down to generate some positive cash flow. 

Any tips or Suggestions ?

Ashish

I think what you are trying to do is a smart idea. More bang for your buck so to speak.  I live in Portland Oregon and the rentals available are way to over priced for my wallet.  I purchased a rental in Dayton  Ohio and plan to do so again soon.  I put 20% down and have no regrets.  I will be interested to see what others have to say but I say smart move.

Originally posted by @Ashish Brar :

Hi Guys,

I have about 100k cash available to invest out of california. Looking for some cash flow rentals in Houston Texas, Cleveland Ohio, Cincinnati or Detroit. I am thinking of using that for a 20% down to generate some positive cash flow. 

Any tips or Suggestions ?

Ashish

 We're seeing a lot of our investors look toward Cincinnati as a place to invest.  The returns, on the whole, are better in Cincinnati than Columbus but Columbus has the security of population and job growth. Having a balance of both types of property would be a good way to go.  - All the best!  

I'm a contractor in the Cincinnati area there are quite a few neighborhoods that have huge potential. I stay pretty busy without having to travel too far from home. I'm usually within 3-4 miles of my house

@Cade Roden Would you recommend Cincy over Northern KY? I am currently looking for small apartment complexes.

@Ashish Brar I am in the same situation. I have found little in CA that cash flow like the Midwest. You have to be very careful which area of Detroit you go into. For $100k in the Midwest you could buy a 1-4 unit outright or close to it that cash flows or use it for a down payment on a slightly bigger place.

@Courtney Jones I’d like to talk about what area of Dayton you looked at/decided to stay away from. I’ve recently been looking around for properties there.

Originally posted by @Michele G. :

Cade Roden Would you recommend Cincy over Northern KY? I am currently looking for small apartment complexes.

Ashish Brar I am in the same situation. I have found little in CA that cash flow like the Midwest. You have to be very careful which area of Detroit you go into. For $100k in the Midwest you could buy a 1-4 unit outright or close to it that cash flows or use it for a down payment on a slightly bigger place.

Courtney Jones I’d like to talk about what area of Dayton you looked at/decided to stay away from. I’ve recently been looking around for properties there.

@michele g.  I've seen some good deals in Northern KY, we rehabbed a few of them, the problem in NKY I've seen is investors trying to force numbers and a lack of skilled trade workers. Nky is a combination of many municipalities that each have their own little personality. It's a good place to look but you have to watch yourself, there are plenty of people in the area pitching "good" deals. The numbers look right at first but it won't work. Make sure you've got somebody who will check the numbers for you and that will be a able to step foot inside.

@Michele G.

While I recommend NKY properties to my clients there is a lot of activity there and deals are harder to come by due to the smaller footprint compared to just north of the border in Cincinnati.  It is hit or miss at times and requires some patience in searching on both sides.  

I work with a couple of folks out of CA doing that exact thing up here near Cleveland. I think finding a good set of boots on the ground is key. Find someone that will go walk prospective properties and send you videos. A good management company can also make or break you after purchase. As far as Cleveland goes, you really have to know the specific areas that are good and bad. I am in Lake County which is about 30 mins to the east of downtown and this is the area that I stick too. Low prices can be alluring, but you get what you pay for. Good luck in your ventures!

I have  been investing in the Euclid, Lake County, and Akron area most recently.  The key is your boots on the ground.  I have 8 apartment complexes and 4 single family, for a total of 122 front doors and rising.  I have a RE Attorney, RE CPA, PM, preferred Residential RE agent, preferred Commercial Agent and a local Cleveland commercial lender too.  My PM only likes Euclid and Lake County.  So, I only invest presently in Euclid and Lake County.  My one 24 unit in Akron has a different PM.  The rest of my team is the same for that Akron 24 unit.   

Right now we have $160,000 and rising cash flow, not to mention we are exponentially increasing the value of these apartment complexes the Multifamily Millions way by David Lindahl.  I am following pages 47 to 130 in that hard cover book.

Swanny

@Ashish Brar

1. Listen to @Michael Swan   s Podcast #238.

2. Read the book he is reading.

3.Follow what he says

4. Look at the info that @jameswise has put out here on BP.

5. Follow what he says also.

6. Repeat

It was AFTER listening to his podcast last year that I started buying in Cleveland....I only have a couple of duplexes and an SFR out there......but I'm growing.

Thank you @Brian Garlington , have we talked before in person.  I love this stuff.  Anybody else out there that I  have talked to in the past? I seem to talk to quite a few people each week.  Ever since Mindy Jensen asked me to be on that podcast I have really enjoyed helping our BP nation members out.  

BiggerPockets Rules!!!!

Swanny

Hey @Michael Swan great job man. Im a small investor from the Boston area. Trying to sell my properties and get into some better cash flow markets...would love to chat with you.

The only Midwest investing that makes financial sense for most CA investors is true MF (properties with large number of units).  The cash flow without appreciation markets (i.e. the Midwest markets) have a hard time scaling with inflation, is too small cash flow to make a significant impact to CA investors, can be a pain in the butt (building trusted team, potentially poor tenants, potential hidden cap expenses, potential Mother nature issues, etc.).

What is good cash flow after all expenses in the Midwest after accounting for all costs including cap expenses?  Lets go optimistic and say $400/unit.  At 10 units you have $4K/month.  at 20 units you have $8K/month.   Tough to get wealthy using this approach.

Think about your goals.  Think about the risk.  Think about the effort.  Think if the Midwest RE investing is the best option.

Think about what you know about the CA RE market (especially Coastal So Cal and San Fran area).  Think about property appreciation and rent appreciation.  Think about what is good cash flow per unit 5 years after purchase, 10 years after purchase, 20 years after purchase, etc.  We have single units that cash flow about what would equal about 10 good cash flow Midwest units due to rent appreciation of the coastal So Cal market.

You can investigate the ROI of coastal So Cal and San Fran area RE versus Midwest RE. I can save you the effort ... Coastal So Cal and San Fran area on average produces a better ROI for any long term hold over the best Midwest market.

Good luck

Personally, I wouldn't invest in an area I wasn't familiar with. I might consider a new area if I could go spend a month or more there before buying. What I did was wait 3 years until I could relocate to a better cash flow area.

I moved from California to Dayton 13 years ago for a 3 year tour. I stayed here by choice, precisely because of the opportunity I saw in this market compared to CA. (negative/low cash flow, MASSIVE down payments)

If you are not local, you MUST have excellent property management. Unfortunately, there are some poor local PMs. And there are some good ones. They are the primary difference between profit and loss for YOU.

The PM is just as important as the deal you find, may be more important.

@Michael Swan

Yes...we talked on the phone last year...you gave me some great tips on how to find a PM and an agent as well as some great advice on how things are in the Winter Months compared to the rest of the country....you covered a few other things as well and I took copiuos notes during our 15-20 minute conversation.  Thanks a lot man,,,

It's interesting that there are so many people that would rather bet on appreciation....rather than go for cashflow. I did that with my first two properties that I bought out here in the Bay Area.....as did others....I'm also glad I stepped out of my comfort zone and took a couple of trips to Ohio last year and looked at some areas and found a good agent, PM and lender....been enjoying GREAT cashflow ever since.

I invest in Redding, CA 

I'm doing similar.  I can't afford the Boston area, so I've invested in property in Maine.  The main reason I chose to do so is I have connections there for good property management.  Plus, I used to live there, so I am very familiar with the area.  But, that's not the case for everyone, so it makes sense to find a place that works best for you given all your individual factors.  As someone who wanted to get into landlording and knew he'd never do it where he lived, out of state investing was the way to go.  Running the numbers, it's clear to see I'm getting more for my money by doing so and I didn't have to go broke to do it like I would here.

In state and out of state will both have good deals.  It's about knowing your market.

Originally posted by @Ashish Brar :

Hi Guys,

I have about 100k cash available to invest out of california. Looking for some cash flow rentals in Houston Texas, Cleveland Ohio, Cincinnati or Detroit. I am thinking of using that for a 20% down to generate some positive cash flow. 

Any tips or Suggestions ?

Ashish

 Cleveland is a solid market if you stick to the suburbs! You can get a few properties with that kind of investment! I would go with something that doesn't need a lot of work so you can earn cash flow.

Beware of turnkey properties that are overpriced and in mediocre areas.  They work well for the first two or three years until the tenant leaves.  Choice of location is important for successful real estate investing.   Cleveland and Detroit are cities that are scarred by de-industrialization.  Parts of Detroit are coming back around the downtown area.  Educate yourself...

Originally posted by @Ashish Brar :

Hi Guys,

I have about 100k cash available to invest out of california. Looking for some cash flow rentals in Houston Texas, Cleveland Ohio, Cincinnati or Detroit. I am thinking of using that for a 20% down to generate some positive cash flow. 

Any tips or Suggestions ?

Ashish

Ashish,

Cleveland, Cincy, and Detroit are demographically remaining static or declining. Houston, on the other hand is one of the fastest growing big cities in the country. Drastically different than the other markets you mentioned.

For me personally I would not invest in a market that wasn't experiencing at least moderate population growth. Maybe Cleveland or Cincy is? 

@Lana Sha I'm originally from Redding, and have family there, in fact my daughter is a very active Broker in Redding. If you have any questions about the area, etc. message me. I KNOW that market very well, having built all types of projects from SFR, MFR, subdivisions, office parks, medical/dental, retail/office condos, etc. I plan on doing more things there too. I also have a big house on 20 acres, close to Bethel Church and Bethel School of Supernatural Ministry, that is currently rented to a womens' sober living home, but I may sell it.

Anyway, good luck on Redding! There's a great market  there right now. 

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