Deciding on Where to Purchase that First Property

5 Replies

Hi BP community! I am a newbie from Brooklyn, New York. I'm currently in the beginning stages of learning as much as I can about REI while putting a plan together. I'm having a hard time deciding where to purchase a property considering that my husband and I work in Manhattan.

We were thinking of buying outside of our market since it's quite expensive, like upstate New York or New Jersey. But since I am not familiar with areas outside of the 5 boroughs, I feel as though my options are limited. Since we live within the city, there's no need to have a car. This is another limiting factor because it's difficult to go further out than where our transit system can reach. I don't mind going too far, but I need to keep a reasonable distance in mind for my husband because of his commute to work (we decided that I will be the one doing REI fulltime) and I will do some contract work on the side.

I’m planning on reading the book Long-Distance Real Estate Investing by David Greene, but as a new investor, I think that it might be too soon to consider the option to purchase a property outside of NY & NJ.

What steps have you taken to decide on where you want to purchase your first property? How did you go about narrowing down the options to one specific area? All ideas and thoughts are welcomed!

Originally posted by @Patrice Bocci :

Hi BP community! I am a newbie from Brooklyn, New York. I'm currently in the beginning stages of learning as much as I can about REI while putting a plan together. I'm having a hard time deciding where to purchase a property considering that my husband and I work in Manhattan.

We were thinking of buying outside of our market since it's quite expensive, like upstate New York or New Jersey. But since I am not familiar with areas outside of the 5 boroughs, I feel as though my options are limited. Since we live within the city, there's no need to have a car. This is another limiting factor because it's difficult to go further out than where our transit system can reach. I don't mind going too far, but I need to keep a reasonable distance in mind for my husband because of his commute to work (we decided that I will be the one doing REI fulltime) and I will do some contract work on the side.

I’m planning on reading the book Long-Distance Real Estate Investing by David Greene, but as a new investor, I think that it might be too soon to consider the option to purchase a property outside of NY & NJ.

What steps have you taken to decide on where you want to purchase your first property? How did you go about narrowing down the options to one specific area? All ideas and thoughts are welcomed!

 Welcome to the site Patrice. Many investors look at the turnkey markets when they invest out of state. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cleveland, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Birmingham, Alabama
  • Kansas City, Missouri
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

@Patrice Bocci Welcome aboard! There's SO much to learn and do in real estate, and it's a blast! There's nothing quite like doing it all yourself with your own hands, but as you mentioned, that isn't always a great option depending on where you're located, the knowledge and experience you have, and the CONNECTIONS you have. It's a ton of work, honestly. Quite a few of us here have been doing this for well over a decade, and there's a lot to be said for that much trial and error and networking!

@James Wise has given you really solid advice, so I won't repeat all of it and ramble like I normally would. :) Find some providers in areas you might be interested in, and talk to them. Ask questions. Do your due diligence so you're sure it's someone you can trust. Even the best rental property in the world can lose you money if you have terrible property management that is either unfamiliar with best practices or with the area... or if they are skewed more towards just taking your money rather than correctly managing your property for you. Property management is often underappreciated, but anyone here will tell you how important it is to get right!

The MidWest and SouthEast are great places to begin due to the low cost-of-living and stable, blue collar economies. STAY AWAY from anything less than a C class. Those will eat away at your returns with costly repairs and high turnovers, so don't be fooled by a shiny paper with a sweet-looking CAP.

Good luck! :)

@Patrice Bocci

Research as much as you can then pick 3 markets (or more it’s up to you) and visit the markets. If you don’t have a car it doesn’t matter it also doesn’t matter if it’s driving distance. You have 3 major airports plenty of markets to pick from. Once you research and pick and visited the markets make a decision and pick one and zone into a neighborhood and try to learn as much as you can. Start reaching out to Realtors and Property Managers once you pick a market. Some will ignore you remember time is money for them so don’t waste their time find ways to show them you are serious make sure your finance is in order.

Best of luck !!!

Thank you for the excellent advice! It looks like I have a ton of homework to do tonight. I'd never considered a turnkey, but that is something to look more into. I appreciate the lists, tips and the first action steps in getting started!

@Patrice Bocci Once you read the book Long Distance Investing you probably won’t be so timid about investing away from home. Education is key as well as building a network of reliable knowledgeable people. Lucky for you you’ve come to the right place, BiggerPockets!

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