Out of state buy and hold

Investor · Herriman, UT · Member since 2015 · 52 posts · 9 votes

Where do you think would be a better place to buy and hold property as an out of state investor. St. Louis, Kansas City, Dallas or Memphis?

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Mike D'ArrigoPro Member

Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes

10y

@Brian Ewell I always recommend starting by evaluating markets at a macro level. The 3 most important things would be population growth, income growth and job growth. I am constantly evaluating potential markets. Below is a comparison matrix of some of the most popular markets, including most of the ones that you mention. I'll let you draw your own conclusions.

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Travis Scribner
Property Manager · Saint Charles, MO · Member since 2016 · 17 posts · 3 votes
10y
As a rehabber and property manager in St. Louis, this market can be very profitable. Just have to find the right deal. What numbers are you trying to get?
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
Memphis!
Investor's Guide to Memphis Real Estate
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Christos Dimopoulos
St. Thomas, VI · Member since 2015 · 24 posts · 29 votes
10y
Dallas is a great market even though prices seem to just keep going up here due to the shortage of housing. The job growth over the long term is driving the increase, in my opinion, and it is sustainable growth. Texas, in general, has proven to be a good state for real estate investment over the long term.
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Brian Ewell
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Investor · Herriman, UT · Member since 2015 · 52 posts · 9 votes
10y
Originally posted by @Douglas Skipworth:

Memphis!
I'm leaning toward Memphis because of the lower price point. However, the taxes seem to be higher and the vacancy rates are higher. I thought about using a turn key company, but it seems that you loose most of your profits when you do this. Do you think it is better to find your own team of individuals or use a turn key company?
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
10y
Memphis, we hit game winning shots from half court when we don't even need to shoot it that far.
901-848-9028
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Brian Ewell
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Investor · Herriman, UT · Member since 2015 · 52 posts · 9 votes
10y
Originally posted by @Christos Dimopoulos:

Dallas is a great market even though prices seem to just keep going up here due to the shortage of housing. The job growth over the long term is driving the increase, in my opinion, and it is sustainable growth. Texas, in general, has proven to be a good state for real estate investment over the long term.
Dallas is a great market, but the prices make it more difficult to get a good ROI.
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
10y
In all seriousness and obviously bias, but Memphis. I met someone in SD last week buying a KC $80,000 home that rents for $850. That home would sell about 3 to 4% cheaper in Memphis. I have seen #'s in Dallas and they are not as good as in KC. I don't know a lot about St. Louis, but I do not hear of many people buying there. We just finished speaking at a large REI event in San Diego last weekend, about 125 people attended and not 1 was buying in St. Louis. The markets I heard most about was Memphis and Little Rock (obviously b/c I was invited to present and those are the markets I represent), Columbus, Ohio, Chicago, IL and Indianapolis, Indiana and some guy doing land contracts in Grand Rapids, MI that I could not figure out.
901-848-9028
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Roland Thomas
Real Estate Investor · Houston, TX · Member since 2015 · 269 posts · 31 votes
10y
Houston, the market is shifting to a buyers market. Buy low sell high ;)
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
Originally posted by @Brian Ewell:
Originally posted by @Douglas Skipworth:

Memphis!
I'm leaning toward Memphis because of the lower price point. However, the taxes seem to be higher and the vacancy rates are higher. I thought about using a turn key company, but it seems that you loose most of your profits when you do this. Do you think it is better to find your own team of individuals or use a turn key company?
Hi, Brian.
Personally, I think using BiggerPockets to build a team of honest and competent professionals in an out-of-town market is much better than going the turnkey route. However, some investors want a more hands off approach. For them, turnkey is a great choice.
If you want some good turnkey referrals in Memphis, I'm happy to give them to you. There are several on BP (one of whom has comment above).
If you want a turnkey alternative, there are good options for that, too. Just make sure that you use BP to vet whoever you choose.
Best of luck to you!
Investor's Guide to Memphis Real Estate
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Brian Ewell
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Investor · Herriman, UT · Member since 2015 · 52 posts · 9 votes
10y
Originally posted by @Travis Scribner:

As a rehabber and property manager in St. Louis, this market can be very profitable. Just have to find the right deal. What numbers are you trying to get?
I haven't researched St. Louis much. What kind of numbers are out there?
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Brian Ewell
OP
Investor · Herriman, UT · Member since 2015 · 52 posts · 9 votes
10y
Originally posted by @Douglas Skipworth:

Originally posted by @Brian Ewell:

Originally posted by @Douglas Skipworth:
Memphis!
I'm leaning toward Memphis because of the lower price point. However, the taxes seem to be higher and the vacancy rates are higher. I thought about using a turn key company, but it seems that you loose most of your profits when you do this. Do you think it is better to find your own team of individuals or use a turn key company?
Hi, Brian.
Personally, I think using BiggerPockets to build a team of honest and competent professionals in an out-of-town market is much better than going the turnkey route. However, some investors want a more hands off approach. For them, turnkey is a great choice.
If you want some good turnkey referrals in Memphis, I'm happy to give them to you. There are several on BP (one of whom has comment above).
If you want a turnkey alternative, there are good options for that, too. Just make sure that you use BP to vet whoever you choose.
Best of luck to you!
I would rather not use a turn key company. I think this leaves too much money on the table and not in the investors pocket. I am more hands on, but not a lot of time. Could you give me some referrals that I could look into in Memphis?
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
@Brian Ewell,
My friend @Stephen Akindona is a licensed agent who is a good deal finder. James Martin is good property manager.
There are a ton of wholesalers on the site who would love to send properties your way.
Send me a private message and I can tell you about what we do.
Investor's Guide to Memphis Real Estate
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Charles Worth
Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes
10y
@Brian Ewell
I don't know anything about St. Louis but as for the other markets I would encourage you to look at the overall picture. Which place has better numbers in terms of jobs, demographics, etc. Yes its hard to get a cash flow ROI in Dallas because its a better market and that shows in the appreciation, vacancy, quality of tenant, etc. In short I would argue its a safer play and maybe (key word maybe because no one has a crystal ball) a market that will appreciate faster.
As for KC, again the numbers are worse on a cash flow basis but its def not as good as Dallas but I think its overall macro numbers are better hence the worst numbers.
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
Originally posted by @Charles Worth:

@Brian Ewell
Yes its hard to get a cash flow ROI in Dallas because its a better market and that shows in the appreciation, vacancy, quality of tenant, etc. In short I would argue its a safer play and maybe (key word maybe because no one has a crystal ball) a market that will appreciate faster.
I disagree that it's hard to get cash flow ROI in Dallas because it's a better market with more appreciation. It's hard to get cash flow in Dallas because TX has some of the highest property taxes and insurance rates in the nation which are cash flow killers. Combine that with low rent to price ratios to start with and your cash on cash returns are in the 7% range. Also, although Dallas is seeing high appreciation currently, it is generally not a high appreciation market. There's too much room to build. Like Dallas, Indianapolis and Kansas City are also seeing above normal appreciation but both are good cash flow markets.
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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
In all honestly the top 9 markets you hear about are pretty much the same. Some offer better CF and some a little better appreciation. It's more important who you buy from that they have integrity and stand behind their product.
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Christian Sifuentes
Flipper/Rehabber · Fair Lawn NJ · Member since 2016 · 382 posts · 87 votes
10y
What NOI?
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
@Brian Ewell I always recommend starting by evaluating markets at a macro level. The 3 most important things would be population growth, income growth and job growth. I am constantly evaluating potential markets. Below is a comparison matrix of some of the most popular markets, including most of the ones that you mention. I'll let you draw your own conclusions.
3 Reply
Jeff M.
Contractor · Kansas City, KS · Member since 2016 · 6 posts · 3 votes
10y
Brian,
Here's a little inside baseball... My great uncle was a steel tycoon back in the day. And, he was in on the original planning commissions back in the 50's when the interstates were being built. The plan has always been to develop the I-35 corridor (which runs from 50 miles inside Mexico to Canada). This plan is still ongoing. Currently, Mexico owns the traffic revenues generated on I-35 (they get 50 years per construction contracts). Moving forward, considering the current economic and political climate, Texas is a prudent choice.
As referenced earlier, Dallas may not seem attractive on the surface, but both Houston and Dallas are places that I've lived & both are currently very active. I have a colleague that works the Dallas and Kansas City markets. From your list, in my humble opinion, if you can work any part of the Dallas market, I say go for it! It never hurts to hedge your bets!
I hope this helps!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Brian Ewell pretty much all the replys are from those that sell in their particular markets which of course is just fine. that's how you find people.
from my experience in those markets and I work in them all.
Memphis... just be careful of double taxation.. if your in the city your tax's are almost double,, than if you buy in the country.
Dallas.. TAx's are killer and foundation issues are not maybe they are when.. at least in everything I have done there.
St. Luis just make sure your not in a war zone.
KC just make sure you stay out of war zone's
other than those two issues with tax's and foundations the mid west is interchangeable and its about buying from a great team and buying at the right asset class.. make sure you buy quality they will perform better than those that are paper tigers.
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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
Below is my humble opinion. For those geeks and engineers out there as long as your in "Quadrant I" you are ok. For example Seattle/California/Hawaii is in Quadrant II - negative cashflow and positive appreciation. Detroit, yea that's in Quadrant III.
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Account Closed
Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes
10y
Brian Ewell as Jay mention take note that some of these opinions are coming from marketers or providers that will try to steer you towards their market. You can study statistics and online information all day long and will find both pros and cons for each market but I agree with Lane that generally speaking a lot of the cash flow markets are very similar and can all make you money with the right people. Finding the right people is more important than finding the right market in my opinion. You need both to be successful. Finding the right people can be tricky as well. Investors get referral commissions from providers that make there opinions biased as well. Finding an unbiased opinion around here is tough sometimes. In the end you will eventually pick your market and your team. Through trial and error you will eventually find the right combination that works for you and over time will establish a long term trusting relationship. Once these relationships are established investing gets easier and the cash flow gets better. Hope this helps. Good luck.
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Jason Hawk
Real Estate Services · Olathe, KS · Member since 2015 · 329 posts · 57 votes
10y
I'm in Kansas City and we are seeing excellent returns.
Jason
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Eddie T.
Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes
10y
Christos Dimopoulos what is the median price point investors that intend to buy and hold are looking for in Dallas?
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
@Jay Hinrichs is spot on. I would only add one thing about Dallas. Not only are the taxes killer, so are the insurance rates--twice the national average.
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Christos Dimopoulos
St. Thomas, VI · Member since 2015 · 24 posts · 29 votes
10y
@Eddie T. They continue to rise (15%+ this year!). It of course all depends on the type/size/location of the house you are wanting to buy. Everyone has their own preferences on the area they like depending on their own situation. I would say the median has now gotten to $175k - $200k.
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