Which city should I start my first out-of-state BRRRR

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Which city should I start my first out-of-state BRRRR

Zeliang Zheng
Member since 2022 路 18 posts 路 21 votes

I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).

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Andrew PostellPro Member
Lender 路 Fort Worth, TX 路 Member since 2016 路 8k+ posts 路 6k+ votes
3y

@Zeliang Zheng hmmm, I might answer this in a little different way - the best place for you to invest in is the place where you know people.  What I mean here is that this city will be 1% better than that other city.  And another city will be 2% better than that one....but if there is one misstep on your property then all that difference can get erased.  And that's why it's important to invest somewhere that you know someone.  You may never even see your property.  That's an ENORMOUS amount of trust to put into a stranger.  How do you know that those people are any good?  That is, unless it's someone you know.  Or maybe someone you know can refer them to you.  I have been an out of state investor for 15 years.  I invest in Jacksonville, Florida.  I invest there because I have a trusted network of people who manage my properties.  Whatever the slight difference here and there is - go with some place that you have trustworthy people and that will be the better investment.  Hope all of that makes sense. 

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  • Jason WrayPro Member
    Banker 路 Nationwide 路 Member since 2020 路 2k+ posts 路 1k+ votes
    3y

    I have worked with @Beau Matlock in Indiana and they have had some pretty impressive SFR and mulitfmaily options in the last few months. It's still hard to beleive how great of a deal you can get on a cash flowing property in places like Indiana. I would reach out to him and his team and start looking at some of the deals they have in their MLS inventory.

    You can find him by searching here on BP.

    Hopefully this helps you view options you may have not considered.

    [email protected]727-637-4289
    1Reply
  • Jasmin Hernandez
    Rental Property Investor 路 California, AZ 路 Member since 2021 路 18 posts 路 14 votes
    3y

    I've found multiple properties in Phoenix, AZ. You can find good deals for properties that are distressed, but still have tenants residing there, below market. By rehabbing the properties you can get rents up to market . I have a duplex and triplex making a killing on rents now that the units have been remodeled. You just need to be sure you have enough cash to complete the rehabs. Don't be surprised if the rehab takes longer than expected. It almost always does due to circumstances outside your control. Rehabbing a unit is also costly, but once complete, the returns can definitely be worth it, especially after your cash out, refinance and get your money back. best of luck on your real estate journey!

    3Reply
  • Andrew PostellPro Member
    Lender 路 Fort Worth, TX 路 Member since 2016 路 8k+ posts 路 6k+ votes
    3y

    @Zeliang Zheng hmmm, I might answer this in a little different way - the best place for you to invest in is the place where you know people.  What I mean here is that this city will be 1% better than that other city.  And another city will be 2% better than that one....but if there is one misstep on your property then all that difference can get erased.  And that's why it's important to invest somewhere that you know someone.  You may never even see your property.  That's an ENORMOUS amount of trust to put into a stranger.  How do you know that those people are any good?  That is, unless it's someone you know.  Or maybe someone you know can refer them to you.  I have been an out of state investor for 15 years.  I invest in Jacksonville, Florida.  I invest there because I have a trusted network of people who manage my properties.  Whatever the slight difference here and there is - go with some place that you have trustworthy people and that will be the better investment.  Hope all of that makes sense. 

    3Reply
  • Ben Firstenberg
    Investor 路 Cleveland 路 Member since 2021 路 247 posts 路 240 votes
    3y

    I highly recommend Atlanta! We have great growth potential and prices are high, but not nearly as high as other markets. I think it's great, especially for BRRRRs where you're relying on the appraisal after the renovations. 

    0Reply
  • Brandon Elliott-Pandey
    Realtor 路 Erie 路 Member since 2022 路 194 posts 路 88 votes
    3y
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


    This is a deeply personal matter and really depends on your level of risk tolerance. I know of a few possible BRRRR's in CO for example but the market is a bit more expensive than the national average(s). What is your financial position at this point and where have you been looking so far?

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker 路 Member since 2016 路 4k+ posts 路 2k+ votes
    3y
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


     Stay away from the coasts.  Stay away from states that love tenants (Maryland).  Go for states and municipalities where you can make cash flow on a multi.  I suggest a place like Pittsburgh, most places in Ohio, Kansas City and some places in Florida.  

    3Reply
  • Mark Jones
    Property Manager 路 Indianapolis, IN 路 Member since 2022 路 150 posts 路 59 votes
    3y

    I have done a lot of BRRRRs in the Indianapolis area.  The buy and hold has been great for me over the years.  Happy to answer any questions for you if you are interested in this market!  

    1Reply
  • Sam McCormackBusiness Member
    Real Estate Agent 路 Cincinnati, OH/NKY 路 Member since 2021 路 1k+ posts 路 835 votes
    3y

    @Zeliang Zheng

    Maybe Cincinnati would interest you! Known for it's cash flow, it has many areas that are more appreciation friendly, let me know if you are interested!

    [email protected]859-443-4952
    Sam McCormack Realtor
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    1Reply
  • Gary Swank
    Real Estate Agent 路 Pittsburgh, PA 路 Member since 2014 路 822 posts 路 255 votes
    3y

    Hi Zeliang, Pittsburgh, PA offers investors great opportunities for what you are looking for. For one our buy-in is more conducive than other more saturated markets. Investors have seen strong appreciation with good returns, but you've got to know the area very well. Neighborhoods and properties within those neighborhoods change street by street and sometimes on the same street. So getting with someone that knows the area very well is crucial and beneficial in making the most informed decision. I've lived here my whole life and know the area and market very well. Feel free to reach out to me. Thanks, Gary

    0Reply
  • John Burtle
    Real Estate Broker 路 IL 路 Member since 2016 路 284 posts 路 178 votes
    3y
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


     Illinois is a good state to brrrr. I tend to find good properties that will perform well.

    0Reply
  • Caleb Brown
    Real Estate Agent 路 Kansas City 路 Member since 2018 路 5k+ posts 路 3k+ votes
    3y

    Happy to chat on KC. Good mix of appreciation and cashflow 

    0Reply
  • Charles Granja
    Rental Property Investor 路 Kansas City/Chicago 路 Member since 2021 路 126 posts 路 113 votes
    3y
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


     Kansas City, MO is one of the more reasonable markets. But, I'm not sure the yield will be worth the risk when you can get a no-risk return for 4-5%. Investing out-of-state presents problems you may not be expecting. If you are a new investor, I would caution against this, because you likely don't have systems to protect your interests.

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor 路 Chicago, IL 路 Member since 2016 路 4k+ posts 路 2k+ votes
    3y

    Hey @Zeliang Zheng - I'd recommend Chicago, but I am of course biased.  

    There are houses at all price points and tons of multi-family properties that need to be rehabbed, which makes them perfect for BRRRRs.

    [email protected]
    Quality Builders4.970 Reviews
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    3Reply
  • Linda LabbePro Member
    Investor 路 North Bay, Ontario 路 Member since 2015 路 709 posts 路 263 votes
    3y

    go where you have a great team on the ground  lots of cites work non will work without the right team narrow it down to  a few cities  and then pick the one where you have the strongest team

    0Reply
  • Eudith Vacio
    Real Estate Agent 路 Chicago & NWI 路 Member since 2015 路 860 posts 路 521 votes
    3y

    Chicago / Northwest Indiana :)

    1Reply
  • Darrell Essex
    Chicago, IL 路 Member since 2016 路 27 posts 路 11 votes
    3y

    I would start relatively close. Just because if you need to get over there you don鈥檛 want to be going from Maine to Hawaii (extreme example I know). Like I鈥檓 in Chicago, I have Indiana, Wisconsin, and Michigan pretty close and Iowa and Missouri not that bad either. I just started expanding my search to Indiana and Missouri. 

    0Reply
  • Darrell Essex
    Chicago, IL 路 Member since 2016 路 27 posts 路 11 votes
    3y
    Quote from @Jonathan Klemm:

    Hey @Zeliang Zheng - I'd recommend Chicago, but I am of course biased.  

    There are houses at all price points and tons of multi-family properties that need to be rehabbed, which makes them perfect for BRRRRs.

    Eeee I dunno the rents don鈥檛 mesh with the prices that well and suburbs taxes are ridiculous. Seems like the agents have the prices right spot on to where you break even if you rehab it and if you break even why would you brrrr it when you could鈥檝e left less in by buying a ready to go property outright. (70% cash out equity vs 20% down conventional)
    2Reply
  • Marcus Auerbach
    Investor 路 Milwaukee - Mequon, WI 路 Member since 2010 路 5k+ posts 路 7k+ votes
    3y
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


    As close as possible to where you live. BRRRR is tough enough, going remote is next level difficult. Keep in mind, you will compete with investors who live right there and it's not easy for them, even being local.

    1Reply
  • John Warren
    Real Estate Broker 路 3412 S. Harlem Avenue Riverside, IL 60546 路 Member since 2015 路 6k+ posts 路 5k+ votes
    3y

    @Darrell Essex I think you are going to find out that the agents in the other states where you are looking also know how to price properties, and that no one is looking to sell properties at a 30-40% discount in this market. Doing a BRRRR in your area is already very risky, and then doing one out of state is adding an insane amount of risk to most people.

    I do these types of deals as an investor, and I am at the buildings almost every day checking in on the construction. We also manage the buildings at the other end, so I am pretty hands on. I literally cannot imagine doing this out of state. 

    1Reply
  • Darrell Essex
    Chicago, IL 路 Member since 2016 路 27 posts 路 11 votes
    3y
    Quote from @John Warren:

    @Darrell Essex I think you are going to find out that the agents in the other states where you are looking also know how to price properties, and that no one is looking to sell properties at a 30-40% discount in this market. Doing a BRRRR in your area is already very risky, and then doing one out of state is adding an insane amount of risk to most people.

    I do these types of deals as an investor, and I am at the buildings almost every day checking in on the construction. We also manage the buildings at the other end, so I am pretty hands on. I literally cannot imagine doing this out of state. 

    I already found that out which is why I said what I said. When I say Indiana that鈥檚 an hour from my house and same with Wisconsin. Missouri my daughter is there. 
    0Reply
  • Drew SygitBusiness Member
    Property Manager 路 Royal Oak, MI 路 Member since 2012 路 13k+ posts 路 9k+ votes
    3y

    @Zeliang Zheng we're partial to Metro Detroit!

    You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:

    https://www.biggerpockets.com/member-blogs/3094/99854-deep-dive-into-metro-detroit-cities-ecorse

    (BP search feature can be problematic, so we鈥檝e also added links @ our website under View Cities & Neighborhoods We Service)

    Doubt you'll find this much info for any other market in the country. So, why would you invest remotely anywhere else?

    Please send us any feedback via email, as we do not use the DM feature here.
    Also, if you like our response, please don鈥檛 be shy about giving us a vote馃槉

    [email protected]248-209-6824
    Logical Property Management4.9465 Reviews
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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor 路 Kansas City, MO 路 Member since 2014 路 10k+ posts 路 5k+ votes
    3y

    All things being equal, it's best to invest where you live. But stable cities (not declining in population or with really high crime rates) and higher cash flow markets (usually midwest or southeast) tend to be better out-of-state buy and hold markets.

    Podcast Guest on Show #121
    0Reply
  • Patrick DruryBusiness Member
    Real Estate Agent 路 Columbus, OH & Cleveland OH 路 Member since 2021 路 1k+ posts 路 2k+ votes
    3y

    @Zeliang Zheng
    I would recommend checking out Columbus OH. It's a great hybrid of cashflow and appreciation.  

    [email protected]614-412-4565
    Reafco-557 Reviews
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  • John Warren
    Real Estate Broker 路 3412 S. Harlem Avenue Riverside, IL 60546 路 Member since 2015 路 6k+ posts 路 5k+ votes
    3y

    @Darrell Essex if you end up looking in Indiana or Wisconsin, you can definitely find success there. I know investors and agents in both southern Wisconsin and NW Indiana. It always seems to me that the extra business friendly element of dealing with those states gets (mostly) washed out in the numbers and offset by the lack of inventory compared to Chicago. 

    With that said, you can make money anywhere if you are intentional and network in the area. 

    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent 路 Columbus, OH 路 Member since 2019 路 3k+ posts 路 2k+ votes
    3y
    Quote from @Stephanie P.:
    Quote from @Zeliang Zheng:

    I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).


     Stay away from the coasts.  Stay away from states that love tenants (Maryland).  Go for states and municipalities where you can make cash flow on a multi.  I suggest a place like Pittsburgh, most places in Ohio, Kansas City and some places in Florida.  

    I like Columbus Ohio, tons of appreciation and cash flow still and deals that meet the 1% rule. I helped a client close on a rental that is giving them 26% cash on cash return two weeks ago so I can positively say deal flow here is alive and well! Plus there's tons of population and job growth catalysts here, such as the Honda and Intel gigafactories getting built here! I am a local investor and agent here so if you have any questions, please feel free to reach out!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9124 Reviews
    WebsiteView Page
    0Reply
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