Out-of-State Investor - Need Feedback and Advice

Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes

1y

Google WI CCAP---that's access to circuit court records which is another way to verify information. Premier Point Realty and Homestead Realty have a host of experienced investor/real estate agents as well.

If it were me and I was out of state, I would definitely go with a bigger name vs an individual person...especially when it comes to property management.

Captain Save-A-Home LLC

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

1y

@Mohammed Youssef

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%

Source: Fair Isaac Company

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.

We can also share numerous examples of properties & portfolios we’ve assisted investors with!

DM us if you’d like to discuss this logical approach in greater detail!

[email protected]248-209-6824

Logical Property Management4.9459 Reviews

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Troy DeLong

Real Estate Agent · Lansing, MI · Member since 2020 · 171 posts · 91 votes

1y

@Mohammed Youssef I'm an agent / investor out of the Lansing, MI area and would love to chat with you about our market. Reach out anytime.

- Troy

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Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

1y

Which market you pick does not matter that much as who you work with (you are already on top of that) and how much YOU know about the market, which links back to physical access, in your case a direct flight and the ability to spend some time to learn about trends and neighborhoods, physically see some properties.

The single best metric to qualify agents is production: 6 deals per year are average and indicates very little knowledge, over 15 is better. Proficency starts over 20, top agents can double that. If you want to learn more about Milwaukee, go on YouTube and look up Milwaukee market update.

1 Reply

Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

1y

Quote from @Mohammed Youssef:

Hey BP community,

I’m a California-based investor looking to build a long-term out-of-state portfolio in the Midwest. I’ve narrowed down my focus to three markets for now:

Milwaukee (WI), Columbus (OH), and parts of Michigan (open to cities like Grand Rapids, Lansing, or suburbs of Detroit).

I’m at the stage of interviewing investor-friendly realtors and would love to hear how you screen and vet agents in these markets. My goal is to buy 1–2 buy-and-hold properties this year, then scale gradually.

Here’s what I’m asking realtors so far:

• Do you work with out-of-state investors regularly?

• Are you an investor yourself or familiar with analyzing deals?

• Can you help me with rent comps, cap rates, and neighborhood breakdowns (A-D class)?

• Do you have a network of reliable property managers, lenders, inspectors, or contractors?

• What areas do you recommend (or avoid) for long-term rentals in your market?

• How responsive are you, and what’s your communication style?

• Can you send me sample deals or recent investor purchases you’ve worked on?

What am I missing? What other questions or red flags should I watch out for?

My Current Approach (Open to Feedback):

• Focused on Milwaukee, Columbus, and Michigan for affordability and rent-to-price ratios

• Interviewing 3–5 realtors in each market

• Gathering referrals from BP, Facebook groups, and local investor meetups

• Asking for CMAs, past deals, and insight on ideal zip codes for cash flow

• Tracking all interactions in a spreadsheet to rate professionalism, experience, and communication

Would love feedback on how I can improve my process—especially as a long-distance investor trying to build strong relationships with boots-on-the-ground partners.

If you’ve invested in any of these markets, I’d also appreciate your take on:

• Best neighborhoods to invest in (or avoid)

• Local challenges or surprises

• Team-building tips specific to your experience

Thanks in advance! Appreciate any advice, referrals, or feedback you’re willing to share. I’m here to learn and make smart, intentional moves.

Hi Mohammed, definitely agree with your opinion on looking into investing in Columbus Ohio! It's a super affordable real estate market where you can still find deals that hit the 1% rule anywhere from $120-180k purchase price. It's one of the hottest markets in the US right now with so much population growth, job growth, and companies moving/developing here (26B Intel headquarters being built here, 68K+ enrollment in Ohio State University, Amazon, FB, Google, Honda, Microsoft, LG, Nationwide, Anduril, etc.). You can still find positive cash flow (aka the 1% rule) and amazing appreciation potential. Recently I read an article stating Franklin County properties have appreciated anywhere from 7-10% over the past 12 months. Happy to connect and answer any questions you have.

[email protected]614-300-7535

Jimmy Lieu, Red 1 Realty4.9120 Reviews

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Joe HammelBusiness Member

Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes

1y

Your list of questions looks very good for getting a feel if a realtor is really “investor friendly”. You could ask them how many closings they’ve had in the last year, or couple years?

Red flags would be someone too desperate. It’s a delicate balance between has enough business to be competent but yet also communicative; vs super communicative because they have no business or experience. So keep that in mind with expectations of how fast someone is responding. Realtors juggle a lot to have a consistent flow of business and keeping everyone happy.

Similar to if you want the best doctor or attorney...good chance they might be a little busy at times. However, no excuse for hours and/or days without responses.

Anyways, here is some info we put together on the suburbs of Detroit that seems to help when OOS investors are trying to decide on which market to invest in:

Metro Detroit has what 99% of Real Estate Investors want, whether they're local or OOS. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from 21 properties here. All of which, I’ve purchased within the last 4 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those. Being an OOS investor yourself, this is step number one to mitigating risk.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

[email protected]248-422-1685

FIRE Realty Team - Keller Williams5379 Reviews

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Jeffrey Hastedt
Member since 2025 · 1 post · 0 votes
1y
@Joe Hammel this is a great response. Answers every question about being a landlord around here.
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Gregory Chadwell

Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes

1y

Are you a cash buyer or finance?

Also do you use a formula for writing offers?
What are your expectations when working with an out of state real estate agent?
thanks Greg

Quote from @Mohammed Youssef:

Hey BP community,

I’m a California-based investor looking to build a long-term out-of-state portfolio in the Midwest. I’ve narrowed down my focus to three markets for now:

Milwaukee (WI), Columbus (OH), and parts of Michigan (open to cities like Grand Rapids, Lansing, or suburbs of Detroit).

I’m at the stage of interviewing investor-friendly realtors and would love to hear how you screen and vet agents in these markets. My goal is to buy 1–2 buy-and-hold properties this year, then scale gradually.

Here’s what I’m asking realtors so far:

• Do you work with out-of-state investors regularly?

• Are you an investor yourself or familiar with analyzing deals?

• Can you help me with rent comps, cap rates, and neighborhood breakdowns (A-D class)?

• Do you have a network of reliable property managers, lenders, inspectors, or contractors?

• What areas do you recommend (or avoid) for long-term rentals in your market?

• How responsive are you, and what’s your communication style?

• Can you send me sample deals or recent investor purchases you’ve worked on?

What am I missing? What other questions or red flags should I watch out for?

My Current Approach (Open to Feedback):

• Focused on Milwaukee, Columbus, and Michigan for affordability and rent-to-price ratios

• Interviewing 3–5 realtors in each market

• Gathering referrals from BP, Facebook groups, and local investor meetups

• Asking for CMAs, past deals, and insight on ideal zip codes for cash flow

• Tracking all interactions in a spreadsheet to rate professionalism, experience, and communication

Would love feedback on how I can improve my process—especially as a long-distance investor trying to build strong relationships with boots-on-the-ground partners.

If you’ve invested in any of these markets, I’d also appreciate your take on:

• Best neighborhoods to invest in (or avoid)

• Local challenges or surprises

• Team-building tips specific to your experience

Thanks in advance! Appreciate any advice, referrals, or feedback you’re willing to share. I’m here to learn and make smart, intentional moves.

0 Reply

Out-of-State Investor - Need Feedback and Advice

Out-of-State Investor - Need Feedback and Advice

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