Newbie From Seattle Looking For Out-of-State Markets

New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes

Hey everyone!

I've been lurking here for a few years now, but I've finally resolved to buy my first property this year! I'm a buy-and-hold investor looking to invest in single & multifamily properties out of state. Ideally, I'd like to target A/B class properties with a minimum rent of $900/month and a levered cashflow of $200/unit while maximizing CoC returns. Does anyone have any recommendations for markets where these types of deals can be easily attainable?

I'm currently considering St. Louis, Indianapolis, and Cleveland and would appreciate any referrals for property managers or agents.

Thanks,

Evan

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Michael HaasBusiness Member

Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes

@Evan Liu for rehabs we currently target CAP rates of 8% plus and have hit 10%+ a couple times. (That's assuming 3% vacancy, 8% CAP EX, no property management fees). Back in 2011-2012 15-20% CAP wasn't that hard, but those day's are past us for now.

The real value in a house hack isnt the CAP it's the cash-on-cash though, and that depends a lot on how much you put down, and using a low downpayment and/or down payment assistance programs makes huge cash on cash returns possible.

I’m pretty sure you qualify for assistance programs, you just may not be looking at the right ones. A purchase in a Low to Moderate Income Tract (LMI), such as Hillman City here in Seattle, would qualify for special programs with better features than regular mortgages with a 2% Down Payment Assistance with certain lenders. This is an in house product for them- No income restrictions- you can literally make a billion dollars a year and still get help with your downpayment.

Maybe you’re thinking of Washington State Housing Finance Commission Program? That program allows us to take out a loan with 3%-5% down, then get 4% down payment assistance so the cash required to close is super-minimal or even 0. This strategy works spectacularly well with house hacking, and can bring cash-on-cash returns through the roof but household income must be under the program limits (up to $145,000) to be eligible.

PM me if you’d like to grab a beer or coffee and discuss some options. I don’t think it’s any “either Seattle or Indy” questions, I think you can do both. And any investor not taking advantage of far more favorable owner occupant financing is leaving money on the table.

PS: properties with ADUs or DADUs cash flow better than multis in Seattle, and given the city's new legislation in 2019 these ADU investments are looking even better.

[email protected]408-439-7873

HouseHack Seattle | Michael Haas & Team572 Reviews

Website View Page

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Justin Polston
Property Manager · Shelbyville, IN · Member since 2014 · 303 posts · 161 votes
6y
@Evan Liu if you make it to Indy, definitely check out suburbs. Marion Co is getting pretty thick with competition. Almost every house we go after is going to highest and best. But in the suburbs, we're finding a lot of off market deals that our clients are benefiting from.
2 Reply
Armond Wright
Investor · Indianapolis, IN · Member since 2009 · 178 posts · 26 votes
6y
You can find some good deals in small cities near Indinapolis
1 Reply
Joey Chavez
Investor · CA · Member since 2019 · 56 posts · 25 votes
6y
There are plenty of good markets for land investing. You just have to look at the US census, current markets, data and county records that you can pull.
1 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
@Evan Liu Of those 3 markets, Indianapolis is the best by far. Indy has a growing population, growing jobs, diverse, modern industry and a local government that is willing to invest in their infrastructure. Cleveland and St Louis both have a declining population and little to no job growth. I briefly considered St Louis at one time but was turned off by their dis functional government and unwillingness to invest in redevelopment. I would recommend looking at both Indianapolis and Kansas City. Both markets offer strong cash flow and CoC returns but also have good economic and demographic trends. Feel free to reach out if you want insight on either.
1 Reply
Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
6y
@Evan Liu
Indianapolis and KC are the top 2 Midwest markets l. Both growing quickly
0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Mike D'Arrigo - Thanks for your insight! I included St. Louis in my search as it is the only city in the midwest I have ties to, having lived there for four years, but I'm concerned about the declining population and high crime rate. I've seen Indianapolis and Kansas City consistently top the rankings for best cities to invest in for several years now. Are there any higher class neighborhoods you would recommend checking out in those cities?
0 Reply
Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
6y
Kansas City is a better city in MO than St.Louis for investing ;)
0 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
Originally posted by @Evan Liu:
@Mike D'Arrigo - Thanks for your insight! I included St. Louis in my search as it is the only city in the midwest I have ties to, having lived there for four years, but I'm concerned about the declining population and high crime rate. I've seen Indianapolis and Kansas City consistently top the rankings for best cities to invest in for several years now. Are there any higher class neighborhoods you would recommend checking out in those cities?
If you're going to invest out of state, invest in the best market that you can. Having ties to a market shouldn't be a consideration unless that market fits your investment objective and offers the returns you're looking for. What do you consider higher class neighborhoods?

0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Mike D'Arrigo I would prefer to invest in A or B class neighborhoods with a monthly rental income of at least $1K. I’m willing to sacrifice potential returns in exchange for higher quality tenants. I’ve been looking at the outskirts of Indianapolis and Kansas City in the areas with lower crime stats and better school ratings, but I’ve never been to either city and would appreciate any insight into which areas or other factors to look into.
0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Caleb Brown It does look like Kansas City would better fit my investment objectives. Do you have any recommendations for neighborhoods or property managers in KC?
1 Reply
Ryan Fox
Investor · NV and CA · Member since 2016 · 374 posts · 227 votes
6y
@Evan Liu- I've been investing in Kansas City from out of state. Feel free to PM me for recommendations.
0 Reply
Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
6y
@Evan Liu Yes shoot me a PM
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
6y
Originally posted by @Evan Liu:
Hey everyone!
I've been lurking here for a few years now, but I've finally resolved to buy my first property this year! I'm a buy-and-hold investor looking to invest in single & multifamily properties out of state. Ideally, I'd like to target A/B class properties with a minimum rent of $900/month and a levered cashflow of $200/unit while maximizing CoC returns. Does anyone have any recommendations for markets where these types of deals can be easily attainable?
I'm currently considering St. Louis, Indianapolis, and Cleveland and would appreciate any referrals for property managers or agents.

Thanks,
Evan

Welcome aboard Evan.
0 Reply
Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
6y
Do you own your primary residence in Seattle @Evan Liu? A Seattle house hack with a low owner occupant down payment or down payment assistance program (like one from WSHFC) can compete with any of those markets for cash on cash return.
[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
Website View Page
3 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@James Wise Thank you! Glad to see you’re upholding your reputation of being “the most prolific welcomer”. Your guide has been very helpful in navigating the neighborhoods of Cleveland!
0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Michael Haas I do not own my primary residence and unfortunately I don’t qualify for any assistance programs. What kind of rates of returns have you been seeing and for which parts of Seattle? I would love to be able to house hack in a multi family, but it doesn’t look like the numbers work out around here and I’m not looking to get roommates.
0 Reply
Jeb Brilliant
Rental Property Investor · Long Beach, CA · Member since 2015 · 623 posts · 155 votes
6y
There is information that may be very helpful regarding the Indianapolis market. PM me.
0 Reply
James Nosack
Rental Property Investor · Seattle, WA · Member since 2018 · 25 posts · 7 votes
6y
@Evan Liu
Myself and my business partner have done a few multi family deals in King and Pierce county. We are now looking very seriously at Indy. Both of us live in Seattle, let’s connect.
0 Reply
Gloria N GearBusiness Member
Realtor · Indianapolis IN · Member since 2018 · 464 posts · 339 votes
6y
Hi Evan, I am a realtor in Indy that has worked almost exclusively with Investors for 3 years now. For what you are looking for, you need to be in the townships around the edge - Wayne, Pike, Perry, Franklin, and Lawrence are my favorites -- rents are between $1000-$1250 for 3/2 -- prices are between $100K-$150K but very competitive, so you have to jump fast and be connected so you get off market deals. Outside of Indy, look at Brownsburg, Avon, Plainfield, and Greenwood -- prices are higher, but so are the rents. Be glad to connect with you if you would like.
1 Reply
Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
6y
Hey @Evan Liu- take a look at Boise- it's a one hour, $80 flight from Seattle and is the fastest growing and highest appreciating market in the country. Lots of investors from Seattle buy here for a plethora of reasons.
1 Reply
Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
6y
@Evan Liu for rehabs we currently target CAP rates of 8% plus and have hit 10%+ a couple times. (That's assuming 3% vacancy, 8% CAP EX, no property management fees). Back in 2011-2012 15-20% CAP wasn't that hard, but those day's are past us for now.

The real value in a house hack isnt the CAP it's the cash-on-cash though, and that depends a lot on how much you put down, and using a low downpayment and/or down payment assistance programs makes huge cash on cash returns possible.

I’m pretty sure you qualify for assistance programs, you just may not be looking at the right ones. A purchase in a Low to Moderate Income Tract (LMI), such as Hillman City here in Seattle, would qualify for special programs with better features than regular mortgages with a 2% Down Payment Assistance with certain lenders. This is an in house product for them- No income restrictions- you can literally make a billion dollars a year and still get help with your downpayment.

Maybe you’re thinking of Washington State Housing Finance Commission Program? That program allows us to take out a loan with 3%-5% down, then get 4% down payment assistance so the cash required to close is super-minimal or even 0. This strategy works spectacularly well with house hacking, and can bring cash-on-cash returns through the roof but household income must be under the program limits (up to $145,000) to be eligible.

PM me if you’d like to grab a beer or coffee and discuss some options. I don’t think it’s any “either Seattle or Indy” questions, I think you can do both. And any investor not taking advantage of far more favorable owner occupant financing is leaving money on the table.

PS: properties with ADUs or DADUs cash flow better than multis in Seattle, and given the city's new legislation in 2019 these ADU investments are looking even better.
[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
Website View Page
4 Reply
Zeke Liston
Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
6y
Hi @Evan Liu, I would check out Columbus, OH!
0 Reply
Jeb Brilliant
Rental Property Investor · Long Beach, CA · Member since 2015 · 623 posts · 155 votes
6y
@Evan Liu I meant to say (I was preoccupied on a call when I left my other post), there's a ton of information about Indy to be had. I invest full time in Indy from California and what you really need is an in-depth knowledge of the area you're going to invest in. Whatever city you choose I'd highly recommend flying out there and meeting with city officials. I always try to meet the housing people, the police chief (or station caption) and in smaller towns I meet the mayor as well. I also walk around the neighborhoods, yes on foot and talk with neighbors. Granted I do this for apartment buildings not SF homes but to be honest it would be great to do it at least for your first SF. I also suggest visiting potential properties with your PM and agent so you have a baseline of houses to compare against over the phone with them.
0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Corby Goade - That's interesting--I didn't know Boise was a strong market to invest in real estate! What kinds of return are you seeing and in which areas of the city? Also, may I ask what made you choose Boise? The proximity to Seattle definitely sounds appealing, but if I have to hop on a plane to visit anyways it might not be such a huge benefit over investing in the Midwest.
0 Reply
Evan Liu
OP
New to Real Estate · Seattle, WA · Member since 2017 · 11 posts · 3 votes
6y
@Michael Haas - Ah yes, I was thinking of the WSHFC. I assume those assistance programs require owner occupancy, and I'm not looking to relocate at this time. I currently live on the Eastside where even the cheapest SFHs sell for over $700K and many condos have HOA fees of $400-600/mo. If there's anyway to achieve positive cashflow with a reasonable rate of return in the Bellevue/Kirkland/Redmond area without housemates, I'm all ears!
0 Reply

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