First Time Out of State Investor Looking for a Game Plan
Most Popular Reply
Tanner PileBusiness Member
Real Estate Broker · Colorado Springs, CO · Member since 2019 · 388 posts · 326 votesIn Colorado Springs you would want to get into the $400k range to get anything in a somewhat descent area. With a DSCR that would be Over $100k needed not to mention you may need to do repairs. LTRs rarely work here but you can probably break even.
Co-living is a good bet here since we have a large military presence of young guys living off base.
Finding something you fix up is also a possibility but for a first deal I would not recommend.
Tanner Pile4.931 Reviews
21 Replies
- Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
@Lau Cor welcome to BP!
You are looking down a path well traveled and your criteria will be easily achieved!Many out of state investors look to the Midwest/midsouth to capitalize on the opportunity in these markets.
Why a DSCR loan and not a conventional loan?
- Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
@Lau Cor welcome to BP!
You are looking down a path well traveled and your criteria will be easily achieved!Many out of state investors look to the Midwest/midsouth to capitalize on the opportunity in these markets.
Why a DSCR loan and not a conventional loan?
- Member since 2025 · 9 posts · 1 vote1y
I live in Tennessee and we definitely have prime real estate in Tennessee. The best place to start is to pin point the exact area/city where you would like to purchase a property. To pick, compare the real estate markets in the areas you are interested in. Once you find the area you are interested in, connect with an investor-friendly realtors in that area. Make sure they have legit experience in working with investors. Once you find a good, investor-friendly realtor, the process will become a lot easier. DSCR hard money loans can be great options for investors. There are a lot of hard money loan options that people may not even be aware of. I would love to connect!
- Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
There are options to work with the title company after purchase (60 days) to buy it with conventional financing and then shift the property into an LLC with a quitclaim deed to get the same effect as purchasing with your LLC but you get the advantage of better rates with the conventional loan. Sent you some info on that, check your inbox!
- 1yCarissa AtendidoPro MemberMember since 2025 · 53 posts · 37 votes
@Jared Smith hi! I'm new to BP and have been "dying" to get into the real estate game, just paralyzed with fear. I'm a passive investor on 3 syndicated deals but they have been a flop and haven't been receiving any income on any of the deals due to the "economy" which is so disappointing. This experience adds to me fear. I have lots of cash tied to those deals too which I regret.
im interested to learn more about your comment on buying an investment property as an individual using a conventional loan and then transferring the deed into an LLC. I invested in the 3 syndicated deals using my LLC that I have with my fiancée but don't really have any business credit to probably qualify for a loan to buy a property. So I was told I can buy it as an individual and then transferring the deed into my LLC could be a good solution. But I read that there's downsides in doing that just don't know exactly what- capital gains tax, etc.
also I was told to open up a new LLC and use my current LLC as the manager. Having a new LLC reduces my liability and separates risks on my syndication deals . Thoughts on this?
I would love your thoughts and advice! Thank you in advance!!
- 1yEvan HoppleBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
@Lau Cor
Columbus, OH has solid 1% Rule deals with strong appreciation metrics. Wherever you invest you'll want to focus on building your Core4 team of an investor-friendly real estate agent, lender, contractor, and property manager.
Reafco Real Estate- 1yLau CorMember since 2024 · 9 posts · 10 votesOP
@Evan Hopple thanks! We're actually now checking out Columbus. I appreciate the recommendation. Is Columbus a growing area? I've steered away from Ohio initially because it was smack dab in the middle of the rust belt. Can you help me to understand why Columbus might be a location to consider other than multiple solid 1% deals?
- Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes1y
@Lau Cor you are probably not going to find many on market deals in Colorado Springs that you can get for 80K down (<$400,000 purchase price) that will break even with a DSCR loan. You might make it work if you can find a way to increase cash flow aside from the basic long term rental strategy.
Also as an FYI - Colorado Springs is it's own MSA and is not considered part of the "Denver Area". It is part of the Colorado front range. Boulder is in the Denver MSA but Colorado Springs, Pueblo and Fort Collins are considered separate from Denver
Hope this is helpful.
- 1yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Welcome to the Bp community. Being that you are looking to make your first investment OOS, I would recommend finding a turnkey solution in a good growing market.
To get the most out of your investment you should find a market that is growing in population and Jobs. This will let you get in the way of appreciation.
Next find a situation where you can talk and learn from someone who has done it before. When you build a good relationship with a good turn key provider, they can help you find the best deal and best vendors to work on that deal. The investors that I work with like the fact that this has been something that has been accomplished before.
With OOS investing the team that you work with can make of break a deal. take the time tom find the right team.
Best of luck.
- 1yTanner PileBusiness MemberReal Estate Broker · Colorado Springs, CO · Member since 2019 · 388 posts · 326 votes
In Colorado Springs you would want to get into the $400k range to get anything in a somewhat descent area. With a DSCR that would be Over $100k needed not to mention you may need to do repairs. LTRs rarely work here but you can probably break even.
Co-living is a good bet here since we have a large military presence of young guys living off base.
Finding something you fix up is also a possibility but for a first deal I would not recommend.
Tanner Pile4.931 Reviews - 1yEric DeNardoPro MemberReal Estate Agent · Denver · Member since 2020 · 364 posts · 151 votes
@Lau Cor - Welcome to BP! You have come to the right place to learn and meet some great people. I'm an investor/realtor here in Denver and with the cash you have, it would be hard to buy an investment property in Colorado Springs.
However, you could assume a VA loan and get secondary financing and only put down 10% of the purchase price and get a low interest rate. That will significantly help you achieve cash flow here in the front range. There are many VA loans in Colorado springs as well.
There are obviously some challenges to assuming a loan, but if you're interested, I'd be happy to talk with you further about it.
- 1yLau CorMember since 2024 · 9 posts · 10 votesOPHi Jared, I received your message and think it would be prudent to connect. The reason why I was thinking of a DSCR loan was because I was informed that it was a good option if I wanted to purchase with an LLC.
Quote from @Jared Smith:
@Lau Cor welcome to BP!
You are looking down a path well traveled and your criteria will be easily achieved!Many out of state investors look to the Midwest/midsouth to capitalize on the opportunity in these markets.
Why a DSCR loan and not a conventional loan?
- 1yLau CorMember since 2024 · 9 posts · 10 votesOPThank you Evan I appreciate the advice.
Quote from @Evan Hopple:
@Lau Cor
Columbus, OH has solid 1% Rule deals with strong appreciation metrics. Wherever you invest you'll want to focus on building your Core4 team of an investor-friendly real estate agent, lender, contractor, and property manager. - 1yLau CorMember since 2024 · 9 posts · 10 votesOP
Quote from @Bill S.:
@Lau Cor you are probably not going to find many on market deals in Colorado Springs that you can get for 80K down (<$400,000 purchase price) that will break even with a DSCR loan. You might make it work if you can find a way to increase cash flow aside from the basic long term rental strategy.
Also as an FYI - Colorado Springs is it's own MSA and is not considered part of the "Denver Area". It is part of the Colorado front range. Boulder is in the Denver MSA but Colorado Springs, Pueblo and Fort Collins are considered separate from Denver
Hope this is helpful.
Thank you Bill. Any recommendations for the Colorado area that may fit my budget?
- Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
Quote from @Lau Cor:
Hi Jared, I received your message and think it would be prudent to connect. The reason why I was thinking of a DSCR loan was because I was informed that it was a good option if I wanted to purchase with an LLC.Quote from @Jared Smith:
@Lau Cor welcome to BP!
You are looking down a path well traveled and your criteria will be easily achieved!Many out of state investors look to the Midwest/midsouth to capitalize on the opportunity in these markets.
Why a DSCR loan and not a conventional loan?
Indeed, but you can always get a conventional loan and then swap into an LLC with certain lenders. Let's connect!
- Member since 2023 · 6 posts · 0 votes1y
Quote from @Lau Cor:
Hey guys! Newbie here on BP. I have a goal to buy my first real estate investment in 2025. I live in CA. My goal is for investing to grow my wealth and maybe replace my W2 in the future. For my first investment, I'm looking for a safer investment with a goal to at least break even in 12 months and possibly focus on learning long term cash flow and appreciation. I plan on purchasing the home with an LLC and want to use a DSCR loan. Currently, the areas that have interested me are Memphis/Nashville/Knoxville, TN, the Colorado Springs area in Denver, as well as North Carolina. I feel like I've missed the boat with Austin, Tx for the 1% rule. My budget for my first property would be somewhere from 50-80k as a down payment. Can some please help me with a game plan of where to start? I'd deeply appreciate it.
Hey Lau,
Plenty of options like that in the Oklahoma City & Tulsa markets. Let me know if you'd like to know more! Can definitely help you build a team & fill in the areas you are missing!
- Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes1y
@Lau Cor so for areas with larger populations Pueblo would be lower cost as would Grand Junction then you drop down in population to areas like Alamosa, Lamar, Gunnison, Montrose, Rifle, Meeker and the four corners. Personally, I would not do Pueblo. I wrote about that several years ago here on the forums. I am not suggesting any of those areas would be good to invest in (each have a few pluses and a few minuses), just that they are lower costs area. You can also look in some of the smaller communities on the Western Slope once you move beyond the economic influence of the resorts. Keep in mind that once you drop down in population there are issues with finding quality property management and as well as securing quality tenants.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.
If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Logical Property Management4.9458 Reviews - 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Lau Cor:
Hey guys! Newbie here on BP. I have a goal to buy my first real estate investment in 2025. I live in CA. My goal is for investing to grow my wealth and maybe replace my W2 in the future. For my first investment, I'm looking for a safer investment with a goal to at least break even in 12 months and possibly focus on learning long term cash flow and appreciation. I plan on purchasing the home with an LLC and want to use a DSCR loan. Currently, the areas that have interested me are Memphis/Nashville/Knoxville, TN, the Colorado Springs area in Denver, as well as North Carolina. I feel like I've missed the boat with Austin, Tx for the 1% rule. My budget for my first property would be somewhere from 50-80k as a down payment. Can some please help me with a game plan of where to start? I'd deeply appreciate it.
Hi Lau, first step is working with a great investor agent who specializes in working with out of state clients! Your realtor should be the backbone of your business and be able to help with sending you personalized deal flow, building the rest of your real estate team (PMs, GCs, lenders, etc), showing you the good/bad neighborhoods, developing scope of work and estimating renovations, and so much more! Additionally, they should have access to on-market, off-market, and pocket listing investment deals just for you! After you find a great realtor, I do recommend getting pre-approved asap so you can be qualified for financing and know exactly how much you can afford for a property. Then the last step is finding the right investment property that meets your buying criteria! With that being said, I would recommend taking a look at Columbus Ohio - you can still find the 1% rule and amazing appreciation here! There's so much population, job growth, and companies moving and developing here (Intel, FB, Google, Microsoft, Honda, LG, Anduril, etc). Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 1yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
You're on the right track by focusing on long-term cash flow and appreciation while aiming for a break-even investment within the first year. With a $50K-$80K down payment and a DSCR loan, targeting markets like Memphis, Nashville, Knoxville, Colorado Springs, and North Carolina makes sense, as they offer strong rental demand and potential appreciation. Your next steps should include refining your criteria (property type, expected cash flow, appreciation potential), analyzing deals using DSCR lender requirements, and networking with local investors and agents.
Good luck!
NETWORTH BUILDERS5236 Reviews - 1yPat LulewiczBusiness MemberRealtor · Raleigh NC and Greensboro, NC · Member since 2019 · 391 posts · 392 votes
As you consider a DSCR loan and mention breaking even, the whole underlying principle of the Debt Service Coverage Ratio loan is that the ratio needs to meet the lenders requirements, most of them requiring a 1.10+ DSCR which means Rent is 1.1x the mortgage payment. If you're "breaking even", then your DSCR is 1.0 which would fail the requirements of the lender and they would decline originating the loan. This doesnt' even get into reserves, vacancy, maint, PM services, etc. The solution for this would be to bring more downpayment to the table, but you're definitely pricing yourself out of the markets you mentioned. I'd recommend looking at more secondary or tertiary markets for your goals.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.