First time out of state Investor

Member since 2025 · 8 posts · 15 votes

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?

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Travis TimmonsPro Member

Rental 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.

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Joseph TadresPro Member
Real Estate Agent · Columbus, OH · Member since 2025 · 184 posts · 179 votes
1y
Hey Isidro! Being an out-of-state investor, deciding on the market in which to invest in can be difficult. I think it helps to connect with locals so that you can get the honest opinion. Cleveland is pretty affordable; you just need to know what class area you are looking at. I could send you a neighborhood map that could help!
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Alfath AhmedBusiness Member
Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
1y
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?

You will need to use a hard money loan then refinance with DSCR unless your HELOC can cover the whole purchase + rehab.
I can share some lender contacts and a neighborhood map that my team and I put together.
[email protected]614-802-5698
ReafCo | Ahmed Group 533 Reviews
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Zachary DealPro Member
Lender · Member since 2023 · 465 posts · 425 votes
1y
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?

Purchasing a rehab project as an out of state investor with no experience (unless it is very light rehab like ~$5K for example) is not typically recommended and can be more difficult when it comes to loan approval. Generally you should be within a commutable distance (~2 hour drive or so) to be able to regularly check in on the rehab and ensure contractors and subs are completing their work to your standards. If you're set on purchasing out of state I would recommend more turn key properties, unless you have a family or friend you can stay with for a few months. If DTI is a concern you can use a DSCR loan for purchase of a turn key (or post rehab) and hard money for projects needing rehab (typically $15K+ min rehab)

[email protected]
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