Looking for out of state investing
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Bernice RetzloffPro Member
Memphis, TN · Member since 2024 · 234 posts · 100 votesHey @Chaim Mal!
Totally feel you on the Brooklyn prices! It’s tough to cash flow there, especially starting out. That’s why a lot of investors in your shoes are looking at out-of-state markets like Memphis, where entry prices are way lower and the rent-to-price ratio actually works. One of the best ways to gauge a market remotely is to partner with a team that knows the area street by street. In Memphis, for example, we focus on B-class neighborhoods near major employers like FedEx and St. Jude. Areas where homes rent fast and tenants stay long-term. We look at how quickly properties lease after renovation and how long tenants stay (ours average 3.5 years), which helps reduce vacancy and maintenance issues.
If you're just starting, look for a turnkey provider that handles everything in-house. Acquisitions, renovations, property management. So you're not trying to piece together a team from afar. That kind of setup helps you invest confidently without needing to fly in every week. If you’re curious about how this looks in practice, I’d be happy to walk you through the Memphis model and what to watch out for in other markets. You’re asking the right questions already! It just takes one solid first deal to get the ball rolling!
35 Replies
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
@Chaim Mal are you able to pick a few markets within driving distance, and go to them in person? you can find real estate meetups and attend them, meet other investors, walk properties, get a feel for things.
there is no better method than this - i don't recommend trying to math your way to a market
good luck
- 1yLindsay DavisBusiness MemberReal Estate Broker · Birmingham, AL · Member since 2019 · 327 posts · 203 votes
Local brokers or property managers who have deep expertise in the markets they operate in can add some color to the situation on the ground.
Before asking around for information, I’d recommend thinking about your buying criteria. For example, what’s your budget per unit (or per property)? Are you after appreciation or cash flow? What’s your investment strategy?
If you come prepared with a list of specifics about what you’re after, you’ll be able to get more granular and actionable information that you can use to narrow down the markets, submarkets, and zip codes to buy in.
Spartan Invest4.8133 Reviews - Investor · Irvine, CA · Member since 2009 · 261 posts · 183 votes1y
Okay, so about three months ago, I purchased a property in the Phoenix area for $360k. The market value seemed to be around $450k, so right off the bat, I had about $90k in equity – a pretty good deal, right? The appraisal for the mortgage even came in higher at $470k, so no complaints there!
Right now, the rent basically covers all the expenses, so for the next couple of years, I'm pretty much breaking even each month.
Now, here's my thing about cash flow. I definitely like it – it feels like a safety net when you're investing. But let's be real, sometimes the monthly cash flow is peanuts compared to how much the property can go up in value, the equity you build as the rent pays down the mortgage, and the tax breaks and depreciation. If you only focus on cash flow, you could miss out on some bigger gains.
Back to my Phoenix place. I'm figuring that over time, the rent is gonna creep up. I'm hoping to get to maybe $100, then $200 in positive cash flow, and even more in a few years. Plus, I'm keeping an eye on interest rates and hoping to refinance in the next one to three years and maybe drop my rate by a percent (hopefully more). That would totally change the cash flow picture down the road.
For me, it's about seeing the whole picture and having a plan, not just fixating on the cash flow right now without thinking about the future.
Quote from @Dani Beit-Or:
Okay, so about three months ago, I purchased a property in the Phoenix area for $360k. The market value seemed to be around $450k, so right off the bat, I had about $90k in equity – a pretty good deal, right? The appraisal for the mortgage even came in higher at $470k, so no complaints there!
Right now, the rent basically covers all the expenses, so for the next couple of years, I'm pretty much breaking even each month.
Now, here's my thing about cash flow. I definitely like it – it feels like a safety net when you're investing. But let's be real, sometimes the monthly cash flow is peanuts compared to how much the property can go up in value, the equity you build as the rent pays down the mortgage, and the tax breaks and depreciation. If you only focus on cash flow, you could miss out on some bigger gains.
Back to my Phoenix place. I'm figuring that over time, the rent is gonna creep up. I'm hoping to get to maybe $100, then $200 in positive cash flow, and even more in a few years. Plus, I'm keeping an eye on interest rates and hoping to refinance in the next one to three years and maybe drop my rate by a percent (hopefully more). That would totally change the cash flow picture down the road.
For me, it's about seeing the whole picture and having a plan, not just fixating on the cash flow right now without thinking about the future.
I see what your saying, however if not cash flow then what should one look for in owning property. Because if there is negative cash flow then it would be Appreciation but what happens if there is a problem or repair needs to be done ?
- Investor · Irvine, CA · Member since 2009 · 261 posts · 183 votes1y
As investors, we sometimes get super focused on just one thing when we're trying to decide if a property is a good deal. Like, maybe we get really hung up on the price. But the truth is, buying an investment property is like balancing a whole bunch of different things, maybe even 8 to 20 big things!
Think of it like this: when we look at a place, we're checking out a bunch of "pillars" that hold up our decision. Things like the price, how old the house is, how big it is, where it's located, how much rent we can get, how many bedrooms and bathrooms it has, the garage size, the lot size, how good the place looks overall, the cash flow (how much money we'll make), the schools nearby, if it's in a good community or near public transport, and maybe a few other things.
Some of these pillars are easy to get, like knowing how many bedrooms there are. Some we can guess pretty well, like insurance and property taxes. And some we really have to dig into, like figuring out the rent and the cash flow.
Now, let's say you did your homework, looked at all these pillars, and decided a certain property was the one. But then, 3 months later, you own it, and you are actually renting it out for $300 less than you thought, and your cash flow takes a hit. Did you make a terrible mistake? Was it a bad investment?
I don't think so, not if all those other pillars are still strong. Think of your decision to buy as a platform sitting on those 20 pillars (all those different things you considered). If maybe three of those pillars didn't turn out exactly as you expected, is the whole platform going to collapse? Probably not, because it's still standing on 17 other solid pillars that you checked out and that are still holding things up.
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