Living In Hawaii- Investing In Alabama
Member since 2025 · 16 posts · 10 votes
Living In Hawaii- Investing In Alabama
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votesQuote from @Lency Chiles:
I’m currently based out of Hawaii for 6 months and NM for the other 6. I’ve started building a team in Birmingham, AL to work with as it is fairly close to NM and has a better market for my long term goals. I’m looking to build a business not just a rental portfolio- I have 150k in capital to deploy and am thinking about a turnkey SFR to start that has value add I can dig into after stress testing PM, lender, agent and my own systems. Thoughts on how to make out of state investing profitable (I treat this like a business not a side hobby). I plan on quarterly visits to check on assets and team etc but would love to know others opinions on successful out of state investing and connect with others investing or working in the Birmingham market.
Copy & paste advice below:
-----------------------------------------------------------------------------
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9469 Reviews
9 Replies
- Realtor · OH · Member since 2026 · 122 posts · 77 votes6mo
To scale BHM from a distance, move beyond "Turnkey" and focus on building a proprietary lead funnel through local probate or tax-delinquent lists to secure the 20-30% equity spread that turnkey providers usually bake into their own margins. With $150k, you have enough liquidity to fund a BRRRR strategy, which allows you to recycle that capital infinitely rather than parking it in a single low-yield SFR. Since you're treating this as a business, implement a "Third-Party Audit" system where a local inspector or different agent vets the PM's maintenance claims quarterly—trust but verify is the only way to prevent "out-of-state leakage." Finally, ensure your Birmingham team is integrated into a CRM like Follow Up Boss so you have real-time visibility into your local operations from Hawaii. I hope that helps.
- 6moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
Quote from @Lency Chiles:
I’m currently based out of Hawaii for 6 months and NM for the other 6. I’ve started building a team in Birmingham, AL to work with as it is fairly close to NM and has a better market for my long term goals. I’m looking to build a business not just a rental portfolio- I have 150k in capital to deploy and am thinking about a turnkey SFR to start that has value add I can dig into after stress testing PM, lender, agent and my own systems. Thoughts on how to make out of state investing profitable (I treat this like a business not a side hobby). I plan on quarterly visits to check on assets and team etc but would love to know others opinions on successful out of state investing and connect with others investing or working in the Birmingham market.Copy & paste advice below:
-----------------------------------------------------------------------------
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
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 will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually 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.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9469 Reviews - 6moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 966 votes
Quote from @Lency Chiles:
I’m currently based out of Hawaii for 6 months and NM for the other 6. I’ve started building a team in Birmingham, AL to work with as it is fairly close to NM and has a better market for my long term goals. I’m looking to build a business not just a rental portfolio- I have 150k in capital to deploy and am thinking about a turnkey SFR to start that has value add I can dig into after stress testing PM, lender, agent and my own systems. Thoughts on how to make out of state investing profitable (I treat this like a business not a side hobby). I plan on quarterly visits to check on assets and team etc but would love to know others opinions on successful out of state investing and connect with others investing or working in the Birmingham market.
You’re approaching this the right way, treating it like a real business, not a hobby. Birmingham can work, but out-of-state investing becomes far more profitable when you pick a market with strong cash flow, stable rents, and a deep bench of investor-friendly PMs and contractors. That’s why a lot of remote investors pair the Southeast with Midwest markets, where $150K can stretch into multiple rentals or even a value-add small multifamily. Your plan to start with a light-value-add SFR is smart, but the real key is building a team you can trust and stress-testing them before you scale. Quarterly visits are great, but if you want true leverage, look for markets with boots-on-the-ground systems already dialed in so you don’t have to babysit every asset. Happy to compare notes if you want insight on how others are structuring their teams. - 6moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesHey Lency, sounds like you’re approaching this the right way by thinking in terms of systems and team instead of just buying a property, that’s honestly the biggest difference with out of state investing. The biggest thing I’ve seen work is treating your property manager like an operator you actively manage, not set and forget, so setting clear expectations upfront on communication, leasing timelines, maintenance approval thresholds, and reporting makes a huge difference, and then tracking simple KPIs like vacancy, turn time, and maintenance costs so you can catch issues early. On the acquisition side, staying conservative with your underwriting is key, especially with turnkey, since sometimes those deals look clean but are priced tight, so leaving margin for unexpected repairs or rent softness will protect you. Also, building redundancy into your team helps a lot, meaning having a backup contractor or second opinion for bigger repairs so you’re not fully dependent on one person’s pricing. Quarterly visits are great, but what really keeps things running smoothly is having consistent touchpoints like monthly calls and random spot checks on invoices or photos. A lot of people make out of state investing work really well when they focus on repeatable systems, clear communication, and accountability rather than trying to control everything remotely. If you dial that in early with your first deal, scaling becomes a lot more predictable.
Quote from @Lency Chiles:
I’m currently based out of Hawaii for 6 months and NM for the other 6. I’ve started building a team in Birmingham, AL to work with as it is fairly close to NM and has a better market for my long term goals. I’m looking to build a business not just a rental portfolio- I have 150k in capital to deploy and am thinking about a turnkey SFR to start that has value add I can dig into after stress testing PM, lender, agent and my own systems. Thoughts on how to make out of state investing profitable (I treat this like a business not a side hobby). I plan on quarterly visits to check on assets and team etc but would love to know others opinions on successful out of state investing and connect with others investing or working in the Birmingham market.
Jimmy Lieu, Red 1 Realty4.9122 Reviews - Member since 2022 · 57 posts · 24 votes6mo
A great team and systems in place, that is the only way to invest out of state. I live in Birmingham AL with properties here, but I also have a vacation rental property in northern Michigan. And honestly you don't necessarily have to use a PM, with the right contractors and software in place. (It does help that I'm a lender, real estate agent and experienced GC).
- Property Manager · Orlando, FL · Member since 2021 · 22 posts · 17 votes6mo
Quote from @Lency Chiles:
I’m currently based out of Hawaii for 6 months and NM for the other 6. I’ve started building a team in Birmingham, AL to work with as it is fairly close to NM and has a better market for my long term goals. I’m looking to build a business not just a rental portfolio- I have 150k in capital to deploy and am thinking about a turnkey SFR to start that has value add I can dig into after stress testing PM, lender, agent and my own systems. Thoughts on how to make out of state investing profitable (I treat this like a business not a side hobby). I plan on quarterly visits to check on assets and team etc but would love to know others opinions on successful out of state investing and connect with others investing or working in the Birmingham market.Hi @Lency Chiles, I'm currently based in Orlando but lived in Birmingham for over 10 years and can give you good insights into which zip codes or areas to target based on your long term goals for your portfolio. I'll be honest that I've had a tough time finding a great property manager in that specific market but I can provide some recommendations for great realtors that could point you in the right direction. Happy to be a resource if you have questions about the local market.
- 6moCurtis CloudenPro MemberInvestor · Ewa Beach, HI · Member since 2015 · 15 posts · 2 votes
Being out here in Hawaii, I see a lot of investors go out of state for better cash flow and scalability like you’re doing.
Sounds like you’re taking the right approach with building a team and testing property management early.
What made you choose Birmingham?
- Birmingham, AL · Member since 2025 · 20 posts · 2 votes6mo
I live in Birmingham. Grew up around investors, property management, and property maintenance. Spent 2.5 years learning about foundation and waterproofing after college then to property management and sales. What you'll get in bham is old style management. I haven't seen a single company actually care about their investors you're just number that pays them. Until I found this one company....
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