New investor looking into Out of State LTR strategy + tips

Orlando, Florida
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New investor looking into Out of State LTR strategy + tips

Uzziel Cortez
Member since 2024 · 4 posts · 8 votes

Hello everyone,

I am 31 years old and finally ready to dive into the deep end here.

Looking over the strategies I think I want to start with Out Of State MTR / LTR strategy.

My though is travel nurses or university students will be a good market / consumer base to tap into.

I live in Orlando FL but looking at lower cost markets such as Texas or Indiana.

Looking forward to hearing any tips yall might have for me.

Thanks

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Nadeem Alamgir
Real Estate Agent · Member since 2023 · 831 posts · 577 votes
2y

Hey Uzziel, I recommend adding Ohio to the list. 

Low cost of entry like you're looking for, investor-friendly, and tons of MTR/LTR opportunities for out-of-state investors. 

https://ark7.com/blog/learn/cities/best-places-to-invest-in-...

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  • Logan LaperriereBusiness Member
    Real Estate Agent · Grand Rapids, MI · Member since 2023 · 333 posts · 124 votes
    2y

    Hi Uzziel,

    Welcome to the BP Forum!

    The midwest is a great place to invest in long term rentals. I personally invest in Michigan. The areas where I invest have both cash flow and appreciation. When investing out of state make sure that you have a strong team in place. Your "Core 4" are your Real Estate Agent, Property Manager, Lender, and Contractor. If you would ever like to talk about different markets in Michigan feel free to reach out. I am always happy to chat with fellow investors.

    -Logan

    0Reply
  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    2y

    @Uzziel Cortez Welcome and congrats on getting started.  I would caution you on doing your first deal OOS. Especially if you don't know the nuances of the particular area. You may be lured in by a cheap price or a pushy agent trying to sell you on a deal. 

    Putting together a team out of state is hard enough as it is, but learning REI and building a team from a distance at the same time could be a recipe for disaster. I personally live in Orlando too and invest in Ohio, but I grew up in the town I invest in and have trusted people there.

    I'm not talking you out of it, but perhaps try to find something around here, maybe in a area that still has homes that are reasonable like deep in Polk County or Volusia like Deltona, Haines City areas. 

    Let me know if I can help, best of luck!

    1Reply
  • Nadeem Alamgir
    Real Estate Agent · Member since 2023 · 831 posts · 577 votes
    2y

    Hey Uzziel, I recommend adding Ohio to the list. 

    Low cost of entry like you're looking for, investor-friendly, and tons of MTR/LTR opportunities for out-of-state investors. 

    https://ark7.com/blog/learn/cities/best-places-to-invest-in-...

    2Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    @Uzziel Cortez
    If you are looking at markets in the Midwest like Indiana, I would recommend checking out Columbus and Cleveland OH. Both the Columbus and Cleveland markets are great for investing in from out of state since they are landlord-friendly, and have a low barrier of entry and cash flow.

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    2Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Uzziel Cortez not understanding why you think TX is cheaper than FL?

    Look in both states and you'll find cheap rural areas, but most urban/suburban areas around hospitals and universities will be around the same price.

    Check out the Midwest, which has been overlooked by many.

    As @Shawn McCormick points out, you need to be careful of getting taken advantage of with OOS investing. 

    Biggest scam?

    Getting sold a Class B or C property and being led to believe you'll get Class A results!

    Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

    So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

    Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

    Class A Properties:
    Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% the more recent norm.
    Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

    Class B Properties:
    Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
    Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

    Class C Properties:
    Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
    Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
    Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

    Class D Properties:
    Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
    Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
    Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

    Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

    What else can we assist you with?

    Logical Property Management4.9455 Reviews
    WebsiteView Page
    1Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2y
    Quote from @Uzziel Cortez:

    Hello everyone,

    I am 31 years old and finally ready to dive into the deep end here.

    Looking over the strategies I think I want to start with Out Of State MTR / LTR strategy.

    My though is travel nurses or university students will be a good market / consumer base to tap into.

    I live in Orlando FL but looking at lower cost markets such as Texas or Indiana.

    Looking forward to hearing any tips yall might have for me.

    Thanks

    Hi Uzziel, I'd recommend that you also look into Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
    WebsiteView Page
    1Reply
  • Uzziel Cortez
    OP
    Member since 2024 · 4 posts · 8 votes
    2y
    Quote from @Michael Smythe:

    @Uzziel Cortez not understanding why you think TX is cheaper than FL?

    Look in both states and you'll find cheap rural areas, but most urban/suburban areas around hospitals and universities will be around the same price.

    Check out the Midwest, which has been overlooked by many.

    As @Shawn McCormick points out, you need to be careful of getting taken advantage of with OOS investing. 

    Biggest scam?

    Getting sold a Class B or C property and being led to believe you'll get Class A results!

    Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

    So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

    Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

    Class A Properties:
    Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% the more recent norm.
    Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

    Class B Properties:
    Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
    Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

    Class C Properties:
    Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
    Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
    Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

    Class D Properties:
    Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
    Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
    Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

    Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

    What else can we assist you with?

    Seems like this makes sense in terms of risk mitigation, estimating values/deals, etc.
    How do you go about finding the data to make such a classification especially as a new investor?

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    2y
    Quote from @Uzziel Cortez:

    Hello everyone,

    I am 31 years old and finally ready to dive into the deep end here.

    Looking over the strategies I think I want to start with Out Of State MTR / LTR strategy.

    My though is travel nurses or university students will be a good market / consumer base to tap into.

    I live in Orlando FL but looking at lower cost markets such as Texas or Indiana.

    Looking forward to hearing any tips yall might have for me.

    Thanks


     Welcome aboard.

    0Reply
  • Alex Hunt
    Lender · Member since 2022 · 441 posts · 134 votes
    2y

    Great to see you diving into real estate! Starting with an Out Of State MTR / LTR strategy is smart, especially targeting travel nurses or university students.

    Focus on areas in Texas or Indiana with strong job markets and growing populations for better rental demand and investment potential. Also keep an eye out for areas with upcoming infrastructure projects or planned developments

    Need more advice? Just call or DM me. Happy to help on your real estate journey! 
    '

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    2y
    Quote from @Uzziel Cortez:

    Hello everyone,

    I am 31 years old and finally ready to dive into the deep end here.

    Looking over the strategies I think I want to start with Out Of State MTR / LTR strategy.

    My though is travel nurses or university students will be a good market / consumer base to tap into.

    I live in Orlando FL but looking at lower cost markets such as Texas or Indiana.

    Looking forward to hearing any tips yall might have for me.

    Thanks


    BiggerPockets has a great community! Welcome! This place has helped me grow my real estate portfolio in Ohio.
    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    2y
    Quote from @Uzziel Cortez:

    Hello everyone,

    I am 31 years old and finally ready to dive into the deep end here.

    Looking over the strategies I think I want to start with Out Of State MTR / LTR strategy.

    My though is travel nurses or university students will be a good market / consumer base to tap into.

    I live in Orlando FL but looking at lower cost markets such as Texas or Indiana.

    Looking forward to hearing any tips yall might have for me.

    Thanks


     I would also add Ohio to the mix. Columbus and Dayton are great investment markets!

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
    WebsiteView Page
    2Reply
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