New Out-of-State Investor, What Markets Should I Research?

Harold, notice what's happened in this thread in 24 hours. You asked which market to research and you got Kansas City twice, Ohio, Oklahoma City, Memphis, and South Florida tax deeds. Every one of those answers came from somebody who earns a living in that market. None of them are lying to you. It's just that the question "which market" mostly gets answered by people who are already in one.

I'm a contractor rather than an agent, so I don't have a market to sell you. I'd rather give you the thing that actually decided the outcome for most of the out-of-state owners I've met.

It usually isn't the market. It's the house.

I've walked houses two blocks apart, same city, same rent, bought within a few thousand dollars of each other, where one owner is fine and the other is deep underwater on repairs that were sitting there at closing. Same market, same team, different result. The variable was the age and condition of the structure and the mechanicals, and neither buyer had priced it before they were committed.

So here's what I'd add rather than replace.

Learn to read a house before you learn to read a market. Year built tells you more about your first three years of ownership than the zip code does. Pre-1965 usually means cast iron drain lines and galvanized supply near the end of their life plus an undersized panel. Late 1970s means checking for aluminum branch wiring. 1980s means polybutylene supply. 1990s and newer means the structure is fine and the systems are the story, so HVAC, water heater, and a roof on its second life. None of that is a reason to avoid anything, it's a reason to know what you're buying.

Size your capital against the work, not the purchase price. New investors budget to the down payment and keep almost nothing back. The ones who get hurt usually didn't buy in a bad market, they had no reserve when the sewer line failed in month four.

And two checks before you close anywhere, in any market: a sewer scope on anything pre-1970, and somebody pulling the cover off the electrical panel. A few hundred dollars, and it's where the five-figure surprises live. Most general home inspectors do neither.

Full disclosure so you can weigh it: I run a construction company and own rentals myself, so I see this from the repair side and that colors my view. But you're going to be handed a lot of market opinions over the next few months and almost nobody is going to tell you to underwrite the building itself.

One practical suggestion. Whatever two or three markets you land on, find a contractor in each and ask them to walk a house you're seriously considering during your inspection period. Plenty will do it for free or close to it, because that's how we meet clients. You'll learn more in an hour with someone who has to actually fix the thing than in a month of spreadsheets.