First time out of state Investor
Member since 2025 · 8 posts · 15 votes
First time out of state Investor
Most Popular Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votesI'll be the first person to post that has nothing to sell. This is a bad idea. A HELOC is a great short term debt instrument to get in and out of a deal within 12-24 months via sale or refi. It's a really bad tool for a down payment. It's an even worse tool for a down payment on a stagnant rust/sun belt city that you do not know at all. You'll also be relying on the advice of locals with a profit motive.
Don't borrow against your house to do this. It's too risky on account of you being new and not knowing what you don't know. And index funds historically perform better than low appreciation real estate markets with none of the hassle factor.
I've done live-in flips, short term, mid term, and long term rentals. I'd be happy to help and (will say it again) have absolutely nothing to sell. Feel free to send me a direct message if you want to talk in more detail.
36 Replies
- Real Estate Broker · Cleveland, OH · Member since 2016 · 146 posts · 110 votes1y
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
Great to see you're exploring rental properties. Using a HELOC for your down payment and looking at purchase + rehab loans (like a conventional rehab loan or hard money to start, then refinance) can be a solid strategy if the numbers make sense.
I invest in Cleveland, and one thing I’d recommend since you’re not local is building a strong team on the ground (agent, contractor, property manager). That local insight really helps minimize risk when you don’t know the area well.
As far as deciding if a property is worth keeping long-term, I run the numbers carefully, cash flow after all expenses (including vacancy and maintenance reserves), neighborhood stability, and tenant demand are key. In markets like Cleveland neighborhoods can vary street by street, so due diligence on location is huge.
If you haven’t already, I’d suggest looking at crime maps, school ratings, and rental comps to get a feel for the area. And if you plan to self-manage from out of state, I’d caution against it, property management support is almost always worth it for long-distance investing. Start Smart (SS)! If you have additional questions I would love to hear and help if I can. Thank you.
- Member since 2025 · 8 posts · 15 votes1y
@R. Elle Berry Hi there, thank you very much for your reply. I agree with you, building a team is going to be needed. I was definitely looking into property management companies too, which is why I'm here too. I learned that this is a great place to learn and connect with people. Thank you.
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
Welcome! A few thoughts from experience --
Loan/Financing: If you're using your HELOC for the down payment, you'll likely want a rehab-friendly mortgage like an FHA 203(k), conventional loan that allows you to roll in renovation costs or possibly even a hard money loan. Some investors also use DSCR or turnkey-friendly financing for fully leased properties, which reduces the stress of tenant management.
Out-of-State Investing: Since you’re looking at Cleveland and Memphis, start by focusing on cash flow. Work with companies and/or property managers who know the neighborhoods, average rents, and tenant demand.
Property Criteria: For a first long-term rental, consider:
Price relative to rent: Can you cash flow after mortgage, taxes, insurance, and PM fees?
Condition: If it needs rehab, make sure the cost fits your budget and your comfort level with managing/overseeing the work.
Neighborhood: Look for steady rental demand and low turnover.
Mitigating Risk: Many new investors start with turnkey or pre-leased rentals in Midwest/Southeast markets -they often come with built-in cash flow, builder incentives, and property management systems. You avoid the guesswork of rehabbing and can focus on learning the business.
It’s all about balancing comfort level, cash flow, and ease of management - if you’re nervous about rehabs or being out of state, a turnkey might be the safest first step.Always happy to chat more about what's worked for other investors. Best of luck!
- Member since 2025 · 8 posts · 15 votes1y
@Melissa Justice thank you very much for your reply. I've been stuck on the financing part too. I'll look into the one you mentioned. I also heard of a Fannie Mae homestyle renovation loan. Is the one you mentioned kind of the same?
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
Quote from @Isidro Rodriguez Jr:
@Melissa Justice thank you very much for your reply. I've been stuck on the financing part too. I'll look into the one you mentioned. I also heard of a Fannie Mae homestyle renovation loan. Is the one you mentioned kind of the same?
FHA 203(k) - Primary residence only, lower credit requirements, 3.5% down, but you're stuck with FHA mortgage insurance for the life of the loan.
Homestyle Renovation - Can be used for primary or investment properties, more flexible on the type of rehab (cosmetic or structural), and PMI can be removed once you hit 20% equity.
So if you’re planning on house hacking or eventually moving out and keeping it as a rental, Homestyle usually gives you more long-term flexibility. FHA 203(k) is great if you’re starting with less money down and want to live in the property right away.
I’d recommend chatting with a lender that does both - they can run the numbers side by side and show you what works best for your goals.
- 1yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
I would connect with a local Realtor and see what they think about the different areas
- Member since 2025 · 9 posts · 4 votes1y
Have you considered the Alabama market at all?? Market is really taking off and I have a full team I can connect you with
- Member since 2025 · 8 posts · 15 votes1y
I hadn't considered Alabama at all but I'm not against it. Let me look at some properties and I'll get back to you. Thank you for offering to connect me with your team. @Kyle Gagnon
That's a solid starting point, Isidro! Using a HELOC for the down payment and looking at loans that roll in purchase + rehab (like certain renovation or investor loans) can definitely make sense if the numbers line up. A lot of folks struggle with the "not knowing the area" part and it's common. What usually helps is breaking it down to the basics: projected rent vs. all in costs (mortgage, taxes, insurance, repairs, reserves, management). If the deal still meets your return goals after stress testing the numbers, that's a good sign.
I also like to walk through the “would I keep this long term if appreciation didn’t happen?” question since it keeps you grounded in cash flow and tenant demand. How are you thinking about evaluating neighborhoods from afar? more on numbers, or are you leaning on local insights? Happy to keep the conversation going!- Member since 2025 · 8 posts · 15 votes1y
@Min Zhang Hi, I've been looking at crime maps and google maps to see how the neighborhood looks. Also looking at what's around the neighborhood. I've considered section 8 a lot too.
- Lender · Los Angeles, CA · Member since 2020 · 65 posts · 15 votes1y
Solid strategy, I offer fix and flip/hold program 100% financing just bring closing costs! Let me know happy to connect!
- 1yBernice RetzloffPro MemberMemphis, TN · Member since 2024 · 234 posts · 100 votes
Hey @Isidro Rodriguez Jr, welcome!
Sounds like you're in a really strong position! Having a HELOC gives you flexibility to get into your first deal. Using it for down payments or even paired with a loan that wraps in rehab costs (like a conventional renovation loan or hard money to start, then refinance) can definitely make sense.
When it comes to deciding if a property is “good enough” to keep long term, most investors break it down into a few key points:
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Numbers first - Does it cash flow after all expenses (mortgage, taxes, insurance, PM, vacancy, maintenance)?
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Condition - Rehab is fine, but you want to be sure big-ticket items (roof, HVAC, foundation) won’t wipe out your returns.
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Location - Look for neighborhoods with stable demand, low vacancy, and landlord-friendly laws.
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Exit strategy - If things change, could you sell or refinance and still be in a good spot?
Since you mentioned Memphis, that’s actually my home market. I’m a real estate agent here, and I work with a lot of out-of-state investors who do exactly what you’re describing: buy rentals, add value through rehab, and hold for long-term cash flow. If you ever want to explore this market more seriously, I’d be glad to answer questions and help you understand which areas line up with your goals.
You’re asking the right questions! The biggest step is getting clarity on your buy box and building the right team on the ground.
- Member since 2025 · 8 posts · 15 votes1y
@Bernice Retzloff Hi thank you for your reply. Yes I'm not tied down to an area. I'm interested in Memphis but I keep hearing and reading that it is a high crime area. Do you have connections with property management companies that have experience with section 8? It doesn't have to be S8 but it's an option I'm willing to look into.
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- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
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Logical Property Management4.9469 Reviews - 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
Welcome to BP, Isidro! When deciding if a property is good enough to keep long term, I’d focus on two main things: does it cash flow after all expenses, and are the market fundamentals strong enough to support appreciation and tenant demand down the road. Rehab loans like a conventional renovation loan or hard money into a refi can work if you’re rolling purchase and rehab together, just make sure your numbers leave you with equity and positive cash flow when it’s all said and done. Since you mentioned out-of-state, I’d definitely suggest checking out Columbus, Ohio—it’s one of the few markets where you can still find affordable homes in the $120–180K range that hit the 1% rule, cash flow from day one, and have massive growth drivers like Intel, Amazon, Google, Facebook, Honda, Microsoft, and LG moving in or expanding here. The city’s population and job growth are both strong, and it’s very landlord-friendly, which makes it easier to manage from afar. A lot of out-of-state investors are having success here by building the right local team (agent, contractor, property manager) to handle the things they can’t. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9122 Reviews - 1yJordan RayBusiness MemberReal Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 337 votes
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
Welcome to BiggerPockets @Isidro Rodriguez Jr — you're in a great spot having equity available through a HELOC, that gives you flexibility a lot of new investors don't have! Cleveland and Memphis both come up often, but the big question you asked — “how do I know if a property is good enough to keep long-term?” — usually comes down to two things: the numbers and the team on the ground.
In Memphis, you can still find properties that hit the 1% rule, which is a great starting filter for cash flow deals. On top of that, lenders here are very investor-friendly — many offer financing that combines 100% of the purchase and 100% of the rehab, with investors usually only about $10K out of pocket per deal. That makes it easier to leverage your HELOC for the the closing costs only and still scale quickly.
The other piece is local knowledge. Out-of-state investors protect themselves by leaning on an investor-friendly agent who also owns rentals and partners with property managers and contractors. That gives you the most eyes on the ground so you know which properties really make sense long-term versus the ones that look good on paper but won’t perform.
If you’d like, I can walk you through how other California investors are structuring deals here in Memphis and show you the criteria we use locally to decide what’s worth holding? Let me know if you are open to a conversation! Talk soon!
Jordan Ray - eXp Realty5109 Reviews - 1yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
I'll be the first person to post that has nothing to sell. This is a bad idea. A HELOC is a great short term debt instrument to get in and out of a deal within 12-24 months via sale or refi. It's a really bad tool for a down payment. It's an even worse tool for a down payment on a stagnant rust/sun belt city that you do not know at all. You'll also be relying on the advice of locals with a profit motive.
Don't borrow against your house to do this. It's too risky on account of you being new and not knowing what you don't know. And index funds historically perform better than low appreciation real estate markets with none of the hassle factor.
I've done live-in flips, short term, mid term, and long term rentals. I'd be happy to help and (will say it again) have absolutely nothing to sell. Feel free to send me a direct message if you want to talk in more detail.
- Member since 2025 · 8 posts · 15 votes1y
@Travis Timmons Hi nice to meet you. I'm interested in hearing from you since you're the only one telling me using my heloc is a bad idea to use for a down payment.
- 1yArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 969 votes
Isidro, welcome to the forum! Using your HELOC as leverage is a solid strategy many investors use to get started. For out-of-state markets like Cleveland, the key is knowing your neighborhoods well — some zip codes cash flow great but come with higher management headaches, while others are steadier B-class rentals. A few things that help: lean on a local team (agent + PM + contractor), run conservative rehab estimates, and always stress-test your numbers (vacancy, CapEx, etc.). For financing, look into DSCR or rehab loan products that bundle purchase + renovation. Once you've got boots on the ground and reliable comps, it's much easier to decide if a deal is BRRRR-worthy and worth holding long-term.
- 1yJoseph TadresPro MemberReal Estate Agent · Columbus, OH · Member since 2025 · 184 posts · 179 votes
Since you are looking at different markets, I would consider the appreciation versus cash flow. The other really important things are having a neighborhood grade map to help you understand the area. The next thing is having a local investor, general contractor, lender, and property manager.
- 1yJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 893 votes
Welcome to BP @Isidro Rodriguez Jr,
If you’re a first time investor, the properties you should be focusing on are the ones in good areas that attract quality residents, people who will treat your house like it is their own. Picking the right neighborhood makes a huge difference in keeping your investment safe and generating steady rental income.
The city of Memphis has a lot of great opportunities for this. With strong rental demand and affordable properties, it is a market that is worth exploring if you are just getting started in real estate investing.
Feel free to connect if you would like to learn more about finding the right properties in Memphis.
- Investor · BAY AREA · Member since 2017 · 81 posts · 21 votes1y
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
gonna have to take a trip out that way and get familiar brother lets connect
Congrats on your new venture!!
Using a HELOC for your down payment and looking at rehab properties can work well. For loans, a rehab/renovation loan (like a 203k or Fannie/Freddie HomeStyle) can combine purchase + rehab costs.
To decide if a property works long-term, I look at cash flow, rental demand, rehab costs, and appreciation potential.
Feel free to reach out, check out my profile, and connect with me through the links—I’m happy to help you run the numbers for properties you’re looking at!
- Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes1y
Quote from @Isidro Rodriguez Jr:
Hello, I'm new here. I'm at a point in my life where I think I want to get into rental properties. I own a home in Southern California and have a HELOC. I've been looking at properties in Cleveland, Ohio and Memphis, TN. At the prices I'm looking at, I know the property will need some rehab. I'm thinking about the type of loan that will put the purchase and rehab together. My down payment will come from my heloc. Also the fact that I don't know the area is making it difficult. How do you guys decide when a property is good enough to invest in and keep as a long term rental?
Hi Isidro, since you’re investing out of state and it’s your first time, rehab projects can be tough without boots on the ground. From my experience with other out-of-state clients, I’d recommend building a solid team (agent, contractor, property manager, etc). A good agent can help connect you with the right people, and having that team in place makes the whole process so much easier!
- 1yDean HarrisBusiness MemberReal Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
BRRRR is my favorite strategy here in Memphis. TN. I have personally completed it over 40 times and my clients have completed it hundreds of times. The key is your construction team and where you buy in Memphis. Im happy to answer your questions and connect you with our vendor partners
I also host a podcast where we talk all about the BRRRR and how to invest in Memphis. You can search Investors Guide to Memphis Real Estate wherever you listen to podcasts and you can watch us on Youtube.
Good Luck!
CrestCore Realty4.713 Reviews - 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I'm with @Travis Timmons on this.
Same point: if you borrow 100% of the purchase price and purchase in an area you're not familiar with, you will just lose money. Everyone else involved (agent, title company, PM, contractor, bank, etc.) will make money; you will not.
A HELOC feels like free money and definitely is not.
And, rehabbing out of state using 100% borrowed funds is hard mode. I'm working on a rehab 30 minutes from me, and it's a challenge.
If you posted and said, "I'm interested in Pittsburgh solely because of the price points and don't have any intention of visiting or setting up a team," I'd say, that's nice! Don't buy something here, then. Keep saving up. House hack in California instead.
Hope this helps. We're happy to answer any additional questions you have, and as you can tell, we're trying to talk you out of it, and not into it.- Member since 2025 · 8 posts · 15 votes1y
@Nicholas L. I appreciate you. I'm focusing on the people that I feel are telling me the truth. I was thinking of only using the heloc for the down payment. The rehab and the purchase I was hoping to use a loan that wraps both of them together. I know I technically wouldn't cash flow until the heloc is paid off but that's ok. If im wrong for thinking this it's ok, I got tough skin. If you tell me this is the wrong strategy then I'll find something else. Thank you for your response.
I'm going to offer two perspectives.
Both are true.
1. Out of state investing is much harder than advertised. For every person that does it well, there are probably literally 25+ who fail. You being from California and being a beginner is going to be like a blinking light - "this guy doesn't know what he's doing, we can charge him more, we can cut corners, he'll never know".
I live in St. Louis. Everything a local investor would NEVER touch, is sold to somebody from California, etc.
And it comes back up for sale a year or two later after they have learned the hard way.
2. It can be done = David Greene.
- Specialist · Member since 2025 · 483 posts · 270 votes1y
You're on the right track—use the HELOC for down and pair it with a purchase-rehab loan (conventional w/ repair escrow, or hard money/DSCR bridge) if the deal works by your numbers and team. To decide "good enough" from afar: set a tight buy box (C–B areas, target rent range, max all-in vs ARV), verify rents with a PM not just online, and inspect the big five (roof, HVAC, electrical, plumbing, foundation). Budget rehab as needs vs wants to get rent-ready fast, and keep offers contingent so rehab costs adjust your price. In markets like Cleveland or Memphis, I'd start with a light value-add SFR or small multi and build your core four (agent, PM, lender, GC) locally to pressure-test comps, scope, and exit.
- 1yLinda LabbePro MemberInvestor · North Bay, Ontario · Member since 2015 · 709 posts · 263 votes
we work in the Detroit Toledo area and have for the last 10 years we have great teams on the ground and that is the first thing anyone needs more then willing to share what we have learnt with anyone who wants to chat
- Memphis, TN · Member since 2024 · 180 posts · 223 votes1y
Welcome to Bigger Pockets! I'm an investor agent in Memphis, TN and all that we do is source great properties for our out of state investor clients. If you're looking for a loan to combine purchase price and rehab costs, I can get you connected with some great local lenders. And you're 100% right- you will need some good boots on the ground to vet these properties for you. I just sent you a DM- happy to connect and give you some guidance on how to get started in this market.
- Real Estate Broker · Antioch, Ca. 94509 · Member since 2025 · 149 posts · 21 votes1y
Great question, Isidro. Since you are looking at out-of-state rentals, the first step is to focus on building a local team you can trust. A good property manager or agent who knows the neighborhoods can help you spot which areas have steady rental demand and which ones to avoid. Using a loan that covers both purchase and rehab, like a hard money or renovation loan, can make sense, especially if you are rolling in your HELOC for the down payment. The key is to make sure the numbers still work after rehab, meaning the rent more than covers your loan, taxes, insurance, and upkeep. If you can find that balance, it gives you steady income and sets you up for long-term growth, even if you are not there to see the property every day.
- 1yKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
Welcome to the journey, Isidro! In markets like Cleveland, the key is knowing your neighborhood grade and tenant base first, then running the numbers conservatively with realistic rent and rehab estimates. For financing, many investors use a DSCR loan or a local portfolio lender that offers purchase + rehab options, especially if you're planning to BRRRR. I'd recommend building relationships with local property managers and agents who know investor neighborhoods, since that "on-the-ground" knowledge is what makes or breaks a long-term rental deal.
Kerlous Tadres | Reafco Real Estate542 Reviews
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