I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
yes, 100% worth it to visit before buying something that costs hundreds of thousands of dollars. with that said - i always get nervous when a California investor's goal is "cash flow"... because there is no "cash flow" whatsoever in the short term on LTRs right now. none. not in any market. returns on non-value add LTRs have gone to zero in the short term. think about how long it would take just to cover closing costs if you're netting $32 a month above all expenses.
this is what tends to happen when folks chase cash flow in "cheap" OOS markets:
Turnkey Nightmare: Property Manager Ignored My Warning About a Missing A/C…
Nightmare with my property manager - advice needed!
Feedback Needed: $8.8k Turnover Quote for 2BR Duplex (Half)
Out-of-State Landlord Nightmare: 4 Months No Rent, Cleveland Escrow Battle
Failed BRR in Memphis TN
A Cautionary Tale About a Property Manager in Cinncinatti
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
i hope this is helpful
yes, 100% worth it to visit before buying something that costs hundreds of thousands of dollars. with that said - i always get nervous when a California investor's goal is "cash flow"... because there is no "cash flow" whatsoever in the short term on LTRs right now. none. not in any market. returns on non-value add LTRs have gone to zero in the short term. think about how long it would take just to cover closing costs if you're netting $32 a month above all expenses.
this is what tends to happen when folks chase cash flow in "cheap" OOS markets:
Turnkey Nightmare: Property Manager Ignored My Warning About a Missing A/C…
Nightmare with my property manager - advice needed!
Feedback Needed: $8.8k Turnover Quote for 2BR Duplex (Half)
Out-of-State Landlord Nightmare: 4 Months No Rent, Cleveland Escrow Battle
Failed BRR in Memphis TN
A Cautionary Tale About a Property Manager in Cinncinatti
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
i hope this is helpful
Yes, 100% worth it! You can research a lot online, but nothing replaces actually seeing the neighborhood for yourself. Driving around, talking to people, and meeting local agents and property managers can tell you things you'll never find in the numbers. Especially for your first property in a new market.
1. Did you visit before buying your first property? Yes
2. If so, was the trip worth it? YES!
3. Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision? I drove through a neighborhood that I thought would be my first choice and didn’t need to see the actual property to know it wasn’t what I was looking for. I was in town 3 days and left with ratified contract.
I also cringe when I hear people chasing cash flow because prices are high in their area. I am not convinced it is generally worth it especially when it means a class C or D property in the Midwest.
If you aren't familiar with the area, you need to go and visit it in person. You are about to spend a lot of money on a property, make sure it is in an area you are happy with and look at the place in person.
Anastasia, I do think visiting the market is worth it before buying your first out-of-state rental, especially if your main goal is cash flow and you don’t already have a trusted local team there.
A lot of the important details are hard to see online. Two neighborhoods can look similar on rent comps but feel very different once you see the street condition, tenant base, nearby commercial activity, traffic, property upkeep, and how quickly the area changes block to block. I’d also use the trip to meet a few agents, property managers, lenders, and contractors in person and see who actually knows the investor side of the market.
That said, I wouldn’t visit just to “get a feel” for the area. I’d go with a shortlist of neighborhoods and actual properties so you can compare what you researched online with what you see on the ground.
From the tax side, once you buy and place the rental in service, I'd also evaluate cost segregation. It may accelerate depreciation, but the real benefit depends on whether the resulting losses are actually usable under your passive-loss and material-participation situation. And I would not rush into creating multiple LLCs just because you are investing out of state. An LLC can help with liability and ownership structure, but it does not automatically create tax savings on a rental.
For a first out-of-state deal, the local team is probably just as important as the property itself.
Happy to connect!
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
Hey @Anastasia Walia. I ran into that same issue back in 2021 while being a Bay Area Native. Numbers and landlord laws just didn't make sense at all. Now I'm up to about 20 units across Columbus & Dayton.
To answer your questions directly:
1. Did you visit before buying your first property? - No I did not. I used my local realtor/inspector to walk the property for me and provide pictures / videos. I flew out after I had closed on it and did some light costmetic work to get it rent ready. (you can also hire a contractor for this)
2. Worth the trip - Yes, it can definately be worth the trip to see what you're buying and the location around it.
3. Change my decision - No, I had an idea of the area before I flew out based on my research. I also used google maps to do some initial reconossance before I flew out as well.
Happy to answer any questions you might have.
For anyone who checked out a place and ended up changing their mind, what did you notice in person that you didn't catch in your research?
Everybody's said go, and they're right, so let me answer the more useful question: what to do with the three days once you're there.
Most first visits get spent driving neighborhoods. That's the least valuable part. You can get 80 percent of that from Street View and an hour with a local investor. Here's what you can only get by being there.
Walk two or three active rehabs. Ask agents and PMs to point you at contractors with jobs going, and ask if you can stand in one. You'll learn more about that market's real construction costs and labor quality in ninety minutes on a job site than in a month of spreadsheets. You'll also see what "renovated" actually means locally, which varies enormously and is the number one thing out-of-state buyers get wrong.
Go see the finished product of whoever wants to sell you a house. If a turnkey operator or agent has a rehab they just completed, walk it, and then walk one they did two years ago that's now got a tenant in it. The second one tells you everything the first one hides.
Look at an occupied rental in the price band you're targeting, not just vacant ones. Vacant and staged tells you nothing about who lives in that submarket.
Meet the contractor, not just the agent and the PM. Everybody on this thread says build a team, and then the trip agenda is always agents and PMs. Your rehab and maintenance costs will do more damage to your returns over five years than your PM's fee will, and that relationship is the hardest one to build from 2,000 miles away. Sit down with one or two, ask them what a turn costs in that market and what surprises them most in the housing stock. If they can answer that specifically, you've found somebody.
And to answer @Garth Huxtable's question about what people catch in person: it's almost never the property. It's the block. Two houses that comp identically will be on streets with completely different amounts of deferred maintenance on the neighbors, and that shows up in your tenant pool and your resale. The other one is the drive. When you actually drive from the airport to the house, you find out whether it's ten minutes from the job centers or forty, and rent follows that more closely than square footage does.
One honest caution on the cash-flow goal, seconding Nicholas. In cheap markets the number that eats the cash flow isn't the mortgage, it's capex on old housing stock. Pre-1965 houses in most of these markets come with original drain lines, panels that need upgrading, and roofs and HVAC on borrowed time. Those don't get cheaper because the house was cheap. Underwrite those before you underwrite the rent, and use the trip to find out what they cost locally.
Disclosure, I run a construction company and own rentals in my own market, so I'm the contractor seat on somebody else's team, which is why I think that seat gets skipped.
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
I’d definitely visit before buying your first out-of-state property, especially if cash flow is the goal. You can learn a lot online, but driving neighborhoods, seeing the housing stock, and meeting your agent, PM, and contractors in person gives you a feel that spreadsheets can’t. As an agent who works with a lot of out-of-state investors, only a small number actually visit before buying. The majority trust the system they’ve built. The key is finding an agent who can truly be your boots on the ground and give you honest feedback on the property, neighborhood, and numbers. The Midwest market is worth a look too, and a quick trip can help you get comfortable before making that first purchase.
Is it worth visiting? Only if you care about your money. 🤔
I’ve listened to the BP podcasts several time on out of state investing (OOS), it was something I was considering doing in the Midwest/SE USA. So I visited a few markets in the south that BP investors + podcasts had labeled as good cashflow markets, and holy cow… I’m SO GLAD I didn’t buy remotely in those markets! They were WAY rougher then I could’ve imagined. I guess we don’t really have neighborhoods like that in the PNW very often… what I had in my head and what I was considering investing in were very different.. Now I know why they were 75-100k.
Visit first, if you’re too busy to do that, at least read the horror stories on these forums of those who didn’t.
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
My main job is working with OOS investors that buy real estate in Ohio. I'm an investor as well and own 30 units so I have seen the "good, bad, and ugly" from both prespectives.
Yes - visit the city and drive around the areas you plan to buy your rental property. Once you do that, you can get a good visual. Do you have to visit every property you buy? No, but it is good to make trips 1-2x per year to get to know everyone on a personal level and set the tone with your team of boots on the ground.
Get a neighborhood graded map from your realtor, meet different PM's, and contractors. Build new relationships and join groups so you know others who is using who.
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
I can't even comprehend spending hundreds of thousands of dollars on something I have no motivation even go see. Makes zero sense to me. If I couldn't find the time to at least do that, I'd just invest in a CD or high yield account.
@Anastasia Walia do you have a particular market in mind? I ask because a lot of people who invest out of state choose to invest into a market that hey have a connection with. Maybe they used to live there or they have friends or family there and it is a place where they have connections to or that they would like to have connections to.
Then, once you have made narrowed your decision down to maybe two or three markets, then start connecting with investors in those markets. you can do that through BiggerPockets. Then, at that point, you can start to build a team of people that can help you build a portfolio.
I would tell you to not invest out of state unless you're willing to go all in and get to know how to be a successful investor in that state and more specifically in one area of that state. and I would say that it's not worth the trouble unless you're willing to build a portfolio of at least 5 to 10 houses in that specific area. The reason being is because having one house doesn't give you a realistic understanding of investing in that specific area. Once you have five or more houses in an area you understand more about what it's like to invest in that area and you start having economies of scale, meaning that because you have more properties, a handyman might prioritize you over investors with smaller portfolios because the handyman may realize that they'll get more work by helping you with your properties. Additionally, you may have a property manager that prioritizes you over other owners because they realize that if they don't take a good care of you that you may move your entire portfolio to another property manager. You may even build a portfolio large enough to not need a property manager, but rather have an assistant in an area that can function very much like a property manager, except they only focus on your specific properties.
So I'd say they're going all in means that you're willing to go and visit the area that you wanna invest in. And if you have family or friends there then you can always make a trip to go and see your family and friends and check out your properties.
@Anastasia Walia do you have a particular market in mind? I ask because a lot of people who invest out of state choose to invest into a market that hey have a connection with. Maybe they used to live there or they have friends or family there and it is a place where they have connections to or that they would like to have connections to.
Then, once you have made narrowed your decision down to maybe two or three markets, then start connecting with investors in those markets. you can do that through BiggerPockets. Then, at that point, you can start to build a team of people that can help you build a portfolio.
I would tell you to not invest out of state unless you're willing to go all in and get to know how to be a successful investor in that state and more specifically in one area of that state. and I would say that it's not worth the trouble unless you're willing to build a portfolio of at least 5 to 10 houses in that specific area. The reason being is because having one house doesn't give you a realistic understanding of investing in that specific area. Once you have five or more houses in an area you understand more about what it's like to invest in that area and you start having economies of scale, meaning that because you have more properties, a handyman might prioritize you over investors with smaller portfolios because the handyman may realize that they'll get more work by helping you with your properties. Additionally, you may have a property manager that prioritizes you over other owners because they realize that if they don't take a good care of you that you may move your entire portfolio to another property manager. You may even build a portfolio large enough to not need a property manager, but rather have an assistant in an area that can function very much like a property manager, except they only focus on your specific properties.
So I'd say they're going all in means that you're willing to go and visit the area that you wanna invest in. And if you have family or friends there then you can always make a trip to go and see your family and friends and check out your properties.
I am currently considering 3 markets: Philadelphia PA, Jacksonville FL, and Toledo OH
Complete waste of time!
You can research everything online: rents, listings, crime. And believe it or not, it is 100% accurate! Also neighborhoods don't transition, it just changes from one side of the street to the other, right where the line is on the online map. And you can always trust strangers from the internet: they will be so much more careful with your money than they are with their own! And speaking of money: real estate is pretty cheap and if it did not fit, you can just return it on Amazon or something ;-)
Complete waste of time!
You can research everything online: rents, listings, crime. And believe it or not, it is 100% accurate! Also neighborhoods don't transition, it just changes from one side of the street to the other, right where the line is on the online map. And you can always trust strangers from the internet: they will be so much more careful with your money than they are with their own! And speaking of money: real estate is pretty cheap and if it did not fit, you can just return it on Amazon or something ;-)
You had me for a minute lol
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
I am in Milwaukee, WI and have been in the real estate market for over a decade. I would say the common thread for successful out of state investors that last in this business and build something great, is definitely visiting the state before you buy and setting up your teams yourself. Do not buy into the scheme 'I have the entire team built for you'---that is the quickest way to lose money.
I'm looking at buying a rental home out of state since the bay area has a higher entry price. My main goal is cash flow.
I can research rents, taxes, crime, landlord laws, and listings online, but I wonder how much I’d miss by not actually spending a few days driving around the area. I've had success in San Francisco buying in areas that had planned development, I feel like this is something you only experience when you are there and talking to people.
For those investing out of state:
Did you visit before buying your first property?
If so, was the trip worth it?
Did seeing the neighborhoods in person, or meeting agents/property managers, change your decision?
The ONLY time you could invest remotely w/o visiting and succeed is if you already had a LOT of experience, so you knew how to screen service providers to avoid being scammed or dealing with incompetent ones.
Otherwise, you are gambling that whomever you are dealing with will be competent and not trying to take advantage of you.
100% agree with visiting the market before you buy. I did this for the first few rentals I purchased out of state. I also live in California. That way, you get to meet the PM, see the neighborhoods, and understand what's going on there. Don't buy unsight unseen. I think too many people do this, and then they end up never investing again.
If you're after cash flow and your first out of state property, you should consider new construction. I know a few builders that offer rates in the 3.75% range, and that helps cash flow quite a bit. Plus, you push back large maintenance items for a number a years. Or you can go with the $160K mid west property and probably get the same cash flow but with ongoing maintenance. Depends on how much down you have.
Not only worth it, but I would say necessary.
I did this every time I was interested in a new market. Look at listings, drive areas of interest, meet a realtor or 2, schedule around a local meetup, etc. These visits are invaluable. Ideally you would meet local partners in person before you make this kind of investment, and in cases where renovations are necessary, see completed work firsthand.
In new markets, we typically visited 2-3 times before making a first purchase. And sometimes the initial visit changed our mind on the market.
Anastasia, I think visiting is absolutely worth it before buying in a new out-of-state market, especially for the first property.
Most of the numbers can be researched from home. What’s harder to understand remotely is how quickly neighborhoods can change from one street to the next, where development is actually happening versus just being talked about, and what the surrounding area really feels like.
I’d also use the trip less as a property-shopping trip and more as a team-building trip. Meet a few agents, property managers, contractors, and even other local investors. A good property manager in particular can tell you things about tenant demand, problem streets, realistic rents, and maintenance issues that you’re unlikely to get from listings or online data.
You may still end up buying exactly where your research originally pointed you, but you’ll have much more context behind the decision. And once you know the market and have people you trust on the ground, I think future purchases can be much easier to make remotely.
For the cost of a flight and a couple of days, I’d consider it pretty inexpensive due diligence compared with the cost of buying on the wrong block.
@Anastasia WaliaI would say that it is mostly a function of who you have working for you on the ground. I used to help remote investors acquire properties in Philadelphia. I can say with confidence that they would not have been able to add any insights or find anything that I had not already uncovered and presented. But it may have impacted their decision and not necessarily in the right way. One time, an investor had committed to what was a great investment but decided to come for settlement and found an issue that concerned him in the neighborhood - I knew it was not a reason to miss out on the opportunity -but the investor was missing the context of a town he knew nothing about. Today, the property has almost tripled in value while having a long term renter. But if you do not have truly reliable boots on the ground - get over there.
@Anastasia Walia Yes, you should. Online research is valuable but I would definitely visit an out of state market before making my first purchase there. Driving the neighborhoods and meeting local agents, property managers and contractors can provide insights you simply won’t get from the numbers alone.