New Investor in Learning Mode
Member since 2026 · 36 posts · 21 votes
New Investor in Learning Mode
Most Popular Reply
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
6moWelcome, Deborah. You're smart to educate yourself first. Understand property classes and know that owning a lot of cheap properties is usually not as profitable as fewer but better properties that are close to you. Cheap properties in the Midwest are cheap for a reason. Higher maintenance, evictions, poor tenant pool. Take your time.
53 Replies
- Member since 2026 · 36 posts · 21 votes6mo
@Jimmy Lieu Awesome, Jimmy! I really appreciate all the information and will soak up as much knowledge as I can.
- Member since 2026 · 36 posts · 21 votes6mo
@Andrew Coleman yes, very helpful. Thank you.
- Rental Property Investor · Cleveland, OH · Member since 2020 · 11 posts · 12 votes6mo
Hi Deborah — I can relate a lot to what you’re sharing.
I’m based in California and started investing out-of-state in Cleveland in 2023. I also spent a long time in “learning mode” before making my first move. There’s definitely value in building a foundation — but at some point, the learning really accelerates once you own something and have to operate it.
One thing I’d gently caution is assuming Midwest investing is simple just because prices look affordable. The numbers can work, but property management quality, tenant base, and neighborhood selection matter a lot more than most podcasts make it sound.
If you do explore turnkey or out-of-state, I’d recommend speaking with actual owners in that market (not just providers) and asking about their real experience 12–18 months after closing.
Happy to connect and share what my first couple of years have really looked like — both the wins and the lessons.
- 6moMike PaolucciBusiness MemberRealtor · Columbus Cleveland Dayton, OH · Member since 2022 · 493 posts · 550 votes
Quote from @Deborah Van:
Hi all — excited to be here!
I’m at the very beginning of my real estate journey and currently focused on learning the fundamentals before jumping into anything. I’m exploring real estate as a long-term wealth-building strategy and researching rental models (including turnkey and out-of-state investing) to see what aligns best.
I appreciate any insights for someone in the early research stage — happy to learn.
Hi @Deborah Van welcome to BP!
I'd recommend starting off with a turnkey/light value add property. Great way to get a solid foundation for future investing. Single family properties are the best way to get started. Less wear and tear, tenant stay tend to be longer and will always be more desireable if you ever decide to sell it.
Multi-family are great for scaling and hedging against vacancies but come with more wear and tear by tenants.
For out of state investing, getting your local teams in place will be key. Your property manager is also going to be key to making sure you're able to succeed. They have local contacts and relationships you can leverage to your success.
Got started off as an out of state investor myself back in 2021. Happy to jump on a call and share some of my experiences both in state and out of state.
Reafco - Mike Paolucci 512 Reviews - Member since 2026 · 36 posts · 21 votes6mo
@Mike Paolucci That's so funny that you mention turnkey/light value add, as I just replied to someone that that is exactly what I'm currently investigating/learning about.
Thank you so much for your offer to help. I had this belief that OOS investing was so hard, yet I hear on BP, just from the few conversations that I've had, that OOS is VERY common. I find that encouraging.
Did you start as a Realtor or investor first? I'm always curious.
- 6moMike PaolucciBusiness MemberRealtor · Columbus Cleveland Dayton, OH · Member since 2022 · 493 posts · 550 votes
Quote from @Deborah Van:
@Mike Paolucci That's so funny that you mention turnkey/light value add, as I just replied to someone that that is exactly what I'm currently investigating/learning about.
Thank you so much for your offer to help. I had this belief that OOS investing was so hard, yet I hear on BP, just from the few conversations that I've had, that OOS is VERY common. I find that encouraging.
Did you start as a Realtor or investor first? I'm always curious.
I started off as an out of state investor in 2021. Was born and raised in San Francisco. Did some property management when I moved here in 2022 and have been able to grow a portfolio to about 14 units so far and will be adding more here shortly.
OOS investing can definitely be intimidating because of the unknown but that's very common. Once you get 1-2 under your belt and familiar with the local boots on ground and maket, you'll be glad you took the leap of faith.
Happy to answer any additional questions or share some experiences! Just let me know if you'd like to connect off-line.
Reafco - Mike Paolucci 512 Reviews
- Member since 2026 · 36 posts · 21 votes6mo
@Sahil Jain Thank you, Sahil - that is sound advice. I'm always leery when everything sounds too easy. It's not just the prices that have to work. Like you say - tenant base, neighborhood, and good property management are key factors, as well.
I'm looking forward to the acceleration phase, but I'm cooling my jets and will definitely move forward as soon as I'm able.
I appreciate the offer to share what your journey has looked like. Give me a bit, and I'll reach out soon.
- Real Estate Agent · Member since 2026 · 6 posts · 4 votes6mo
Congrats on starting the journey! Real estate can be a great long-term wealth strategy, and taking time to learn the fundamentals before jumping in is honestly one of the best things you can do.
From a dispositions perspective (working on the selling side of investment deals), one thing I see a lot is that new investors benefit from really getting clear on their buy box early — things like target price range, property type, preferred markets, and exit strategy (buy & hold, BRRRR, flip, etc.). Having that clarity makes it much easier to evaluate deals and avoid analysis paralysis.
Since you mentioned turnkey and out-of-state investing, a few things worth paying close attention to while researching:
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Property management quality – this is huge when you’re investing remotely. A great manager can make an average property work well, and a bad one can ruin a good deal.
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Market fundamentals – job growth, population trends, landlord laws, taxes, and rent-to-price ratios all matter more than just the purchase price.
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True numbers – make sure you're underwriting with realistic expenses (maintenance, vacancy, capex, management). A lot of beginner investors underestimate these.
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Exit flexibility – even if you plan to hold long term, ask yourself: Would this still be attractive to another investor if I needed to sell?
Another helpful step early on is simply analyzing lots of deals. Even if you don’t buy anything yet, it trains your eye for what a good opportunity actually looks like.
You’re approaching it the right way by learning first and asking questions. Real estate has a big learning curve at the start, but once the fundamentals click, it becomes much easier to spot opportunities.
Curious — are you leaning more toward cash-flow-focused rentals or appreciation markets right now?
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- 6moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
@Jimmy Lieu keeps doing it. Please stop, man.
- 6moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
@Deborah Van looks like you heard from 2 actual investors with no agenda and a bunch of agents that ended their post with "feel free to reach out if you need anything."
Out of state investing is tough and cash flow is kind of a myth. It does not exist if you are honest about your expenses. For example, you're probably going to pay $4-5k in closing costs. Realistically, it's probably going to take a few years for you to recoup those costs if nothing breaks (and something always breaks). There are just so many "death by a thousand cuts" expenses that get you. Tenant turnovers from out of state usually cost over $1000 to get the place back to marketable condition; there will be vacancy gaps; there is always maintenance and repairs. You are also going to pay the "Rich person from California" upcharge from local vendors unless you put in face time and build some trust and connection with them.
Leverage + appreciation of price and rents is what gives you outsized returns in real estate (and makes it worth the hassle). It is a grind but worth it when things work out. I have absolutely nothing to sell and no agenda...feel free to shoot me a message if you think that I could be a resource. My background is in live-in flips, long term, mid term, and short term rentals.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes6mo
Quote from @Travis Timmons:
@Deborah Van looks like you heard from 2 actual investors with no agenda and a bunch of agents that ended their post with "feel free to reach out if you need anything."
Out of state investing is tough and cash flow is kind of a myth. It does not exist if you are honest about your expenses. For example, you're probably going to pay $4-5k in closing costs. Realistically, it's probably going to take a few years for you to recoup those costs if nothing breaks (and something always breaks). There are just so many "death by a thousand cuts" expenses that get you. Tenant turnovers from out of state usually cost over $1000 to get the place back to marketable condition; there will be vacancy gaps; there is always maintenance and repairs. You are also going to pay the "Rich person from California" upcharge from local vendors unless you put in face time and build some trust and connection with them.
Leverage + appreciation of price and rents is what gives you outsized returns in real estate (and makes it worth the hassle). It is a grind but worth it when things work out. I have absolutely nothing to sell and no agenda...feel free to shoot me a message if you think that I could be a resource. My background is in live-in flips, long term, mid term, and short term rentals.
100% agree. I may have missed it in the comments but I didn't see if the OP said she was from California or other HCOL location.
I've poured in over $90k (downpayments totaled $60k and all the repair costs) on "move-in ready" single family homes in the Midwest (Indianapolis). This "cash flow on paper" has turned into money pits and I actually sold one of the homes to stop the bleed. When I put the numbers in a rental property calculator on the remaining house projected out to 20 years my IRR (Internal Rate of Return) is 2%, less than a high yield savings account. The appreciation on the Class C properties is very slow.
To the OP, please be cautious of who is messaging you, especially if they have something to sell. I'd recommend attending local meet ups to talk to investors who buy locally and out of state.
- 6moCandice CoatesPro MemberNew to Real Estate · DMV · Member since 2022 · 53 posts · 45 votes
@Travis Timmons, I will reach out to Jimmy and make him aware that he is not able to add his location in his forum posts. Thank you for flagging it.
- 6moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
@Candice Coates he's copied and pasted that same reply hundreds of times. It's not about the location...he has spammed the mess out of the forums for as long as I can remember.
- 6moCandice CoatesPro MemberNew to Real Estate · DMV · Member since 2022 · 53 posts · 45 votes
I understand, @Travis Timmons. I have sent him the forum rules and just made him aware (even if he has done this multiple times). He is one of our featured lenders, so that is the only reason why I stepped in. Once again, thank you for making us aware.
- 6moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
Quote from @Candice Coates:
I understand, @Travis Timmons. I have sent him the forum rules and just made him aware (even if he has done this multiple times). He is one of our featured lenders, so that is the only reason why I stepped in. Once again, thank you for making us aware.
I get it...I've just spoken with actual investors that have purchased actual bad deals where they lost $10-30k after all transaction costs due to the shameless self promotion and consistent messaging of how easy it is to invest out of state. I connected on the phone with a new investor last year from CA under contract on a place in Cleveland. He was unsure, nervous, and wanted some advice. It was a terrible deal and he was in way over his head. He backed out of it before it was too late.
The saddest part of that story is that I looked up the tax records on that Cleveland property, found an out of state owner that bought it the year before and was selling it at a loss. Guess what? That guy was a BiggerPockets user that posted in the forums the year before and was hit with the usual agent outreach nonsense, bought a bad deal, and the only chance to unload it was to find a greater fool.
The forums have a bad habit of preying on people that don't know any better and then blaming them for listening in the first place. - Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes6mo
Quote from @Candice Coates:
I understand, @Travis Timmons. I have sent him the forum rules and just made him aware (even if he has done this multiple times). He is one of our featured lenders, so that is the only reason why I stepped in. Once again, thank you for making us aware.
Several BP posters have pointed this out for over a year. Jimmy's spam comments are still there and scrolling across the other posts, there are numerous copy and paste comments.
Candice, genuine question, what is the purpose of forum rules if some people are allowed to break them after warnings by moderators at BP and other people have their posts/comments removed?
I don't mean to derail the OP's post but this is a persistent problem on BP.
- Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 463 posts · 253 votes6mo
Hi Deborah-
Congratulations on starting your real estate investing journey. You are focused on learning the fundamentals including out-of-state investing.
You are not alone in considering out-of-state investing as many markets have become difficult to find cash flowing properties.
When considering your market out-of-state, you want to look at the fundamentals. Is the population growing? Is the economy diversified with job opportunities? Is it affordable and offer a high quality of life? Are the laws and government landlord friendly? Is the climate reasonable and will insurers cover properties in the state.
Michigan checks these boxes and we partner with local property managers to help our clients experience greater ROI and have time to look for the next deal. We also can recommend the rest of the team that you would be looking for from an investor friendly local lender, detailed property inspector, insurance, and asset protection attorneys.
To Your Success!
- Member since 2026 · 36 posts · 21 votes6mo
@Travis Timmons
So funny—great observation. I appreciate the honesty. I did get a bit alerted when someone mentioned average cash flow of only $200–300 a month on a $160K property. That seems pretty low and well below the 1% rule, even for turnkey. But I’m still researching and learning. Trying to stay confident and cautious at the same time. I may reach out down the road once I’m a bit further along. Thank you! - 6moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Deborah Van:
Hi all — excited to be here!
I’m at the very beginning of my real estate journey and currently focused on learning the fundamentals before jumping into anything. I’m exploring real estate as a long-term wealth-building strategy and researching rental models (including turnkey and out-of-state investing) to see what aligns best.
I appreciate any insights for someone in the early research stage — happy to learn.
Here's some copy & paste info that might be helpful:
----------------------------------------------------------------------------------------------You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
https://www.biggerpockets.com/forums/963/topics/1195280-experience-of-oos-investing-in-cleveland-after-15-years
Logical Property Management4.9458 Reviews - Brooklyn, NY · Member since 2026 · 28 posts · 14 votes6mo
That’s actually a good approach. A lot of people rush into their first deal without really understanding how the numbers work and end up learning expensive lessons.
If you’re still in research mode, I’d spend a lot of time getting comfortable analyzing deals. Understanding purchase price, realistic rent, operating costs and reserves is what really determines whether a rental performs well or becomes a headache.
Turnkey and out of state investing can work, but they also require a lot of due diligence since you’re relying on other people to manage things. It’s worth really digging into the local market data before committing.
The good thing is once you understand how to evaluate deals, you can apply that skill in almost any market.
- Member since 2026 · 36 posts · 21 votes6mo
@Drew Sygit - Wow, Drew, thank you so much for the advice. That is a very thorough post and I will take it to heart when doing my research. Much appreciated!
- Member since 2026 · 36 posts · 21 votes6mo
@Claudia Shelton I apologize for not seeing your message sooner. Thank you for posting, and I appreciate the advice. I've been forewarned about the Midwest/Rust Belt and will definitely keep my eyes open when investigating.
Re: analyzing deals — I have a couple of spreadsheets I've created to help me evaluate opportunities, and with the information shared by others, I believe I'll be well-equipped to make the best decisions I can. Only time and experience will tell.
And to answer your question — no leaning right now. Just sticking with the basics.
- Member since 2026 · 36 posts · 21 votes6mo
@Jeff Roth Thank you for your message. I didn't see it sooner, my apologies.
I've never considered Michigan, but I thank you for the information. With all the outreach from agents in Ohio, plus several warnings from others on BP, I don't think Ohio is for me. I'm not ruling it out entirely yet, but I definitely am much more educated than I was a week ago. :)Thanks for the note. I'll keep Michigan in mind.
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