1st Time Out of State Investor
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Kerlous TadresBusiness Member
Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votesHey @Erich M., if cash flow is what you're after, I'd genuinely take a look at Ohio before you lock anything in. I invest here in Columbus and the single-family side is still leasing fast with occupancy sitting above 95%, and our low entry prices plus modest taxes and cheap insurance keep the numbers pencilling a lot easier than most markets.
Kerlous Tadres | Reafco Real Estate539 Reviews
22 Replies
- 2wKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
Hey @Erich M., if cash flow is what you're after, I'd genuinely take a look at Ohio before you lock anything in. I invest here in Columbus and the single-family side is still leasing fast with occupancy sitting above 95%, and our low entry prices plus modest taxes and cheap insurance keep the numbers pencilling a lot easier than most markets.
Kerlous Tadres | Reafco Real Estate539 Reviews - 2wArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 904 votes
Quote from @Erich Moy:
Hi All,
I’m new to the Bigger Pockets community and excited to invest in my 1st out of state investment property!
I’m specifically looking at markets where I can generate a decent amount of cash flow (annual cash on cash return of 8-10%).
Currently looking in the TX/DFW area in cities like Princeton, Sherman etc. Open to exploring other States/Areas as well.
Has anyone purchased investment properties in the DFW area and received positive cash flow? My concerns are the high property taxes rates and a fairly competitive rental market due to supply.
Would appreciate any feedback the community could offer 😀 Thank you and wishing everyone a safe and relaxing long weekend!
Erich
Hey Erich, your concern about DFW is valid, especially with property taxes and the amount of new rental supply. I’d definitely compare some Midwest markets too, particularly Ohio, where the lower entry prices can make 8 to 10% cash-on-cash more realistic. Cleveland, Columbus, and Dayton are worth a look if you’re open to investing outside Texas.
- 2wNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
Hi Erich. There is no cash flow right now on long term rentals in any market - none. Purchasing a rental and putting it into service is expensive, as you'll have thousands and thousands of dollars in unreimbursed costs that will take years to pay off - closing costs, rent-ready costs, lease-up costs, repairs, turnover. Just because you make more than expenses in some random month is, in my opinion, not true cash flow until all the costs I mentioned are paid back. And new investors tend to hit a big cap ex item or a rough turnover and get discouraged when they are not prepared for it.
Unfortunately, returns on non value add LTRs are very, very low right now. I know this is a real estate forum (and I am still buying), but I am encouraging new investors to think very carefully about where to allocate their cash. It's not obvious to me that a random LTR is going to perform well.
Hope this helps - not on here to cheerlead
- 2wErich M.Member since 2026 · 4 posts · 10 votesOP
Thanks Nicholas, I really appreciate your honesty because as a new investor I personally don’t want to lose money and get discouraged on my first investment purchase. I’ll definitely keep this in mind and be cautious before I even consider investing. Thank you again 🙏
- 2wSircalvin HendersonPro MemberReal Estate Agent · Cleveland, OH · Member since 2026 · 7 posts · 4 votesThe market is shifting here in Cleveland also, everyone is scrambling trying to figure out what’s next. I would love to partner with you or anyone. I have a few idea markets that could be possibly changing over to a higher rental market. Some people are packing up and leaving. My city tore down one its eldest projects “Morris Black Housing Development “ also where did former residents relocate too ?Investors are taking a strong position here but everyone is buying the wrong asset class cheap isn’t the best idea in this scenario you must see the market for what’s telling us. Interest rates are increasing 100’s of homes going into foreclosure. Research everything I am telling you guys. I lived here my whole life I know this market. Information is your best friend A.I will provide you with anything you need to know and verify that data. Being a cash investor is your leverage. To decrease the risk increase your know. ~Warren Buffet
- 2wSircalvin HendersonPro MemberReal Estate Agent · Cleveland, OH · Member since 2026 · 7 posts · 4 votes
research the information and my apologies, I wish, I could type as fast as my thoughts travel.
- 2wMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
Since you want cash flow and ready to look at the other states, I would recommend researching the cities in the midwest for an easy entry
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - 1wAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Erich M.:
Hi All,
I’m new to the Bigger Pockets community and excited to invest in my 1st out of state investment property!
I’m specifically looking at markets where I can generate a decent amount of cash flow (annual cash on cash return of 8-10%).
Currently looking in the TX/DFW area in cities like Princeton, Sherman etc. Open to exploring other States/Areas as well.
Has anyone purchased investment properties in the DFW area and received positive cash flow? My concerns are the high property taxes rates and a fairly competitive rental market due to supply.
Would appreciate any feedback the community could offer 😀 Thank you and wishing everyone a safe and relaxing long weekend!
Erich
I was looking into TX (into the austin market initially) but saw that their prices declined. Since Im from Columbus, I have been investing here buying house-hacks, brrrr investment models, and multi-family.
I own 30 units here now and sell between 100-120+ properties every year. I would suggest looking into cleveland for cashflow. You can hit 1-1.2% rules pretty easily and gain equity through off-market purchases.
ReafCo | Ahmed Group 55 Reviews - 1wHayden GrayPro MemberLender · Colorado / New Mexico · Member since 2024 · 23 posts · 6 votes
Consider New Mexico as well - closer to you and a variety of markets you can be successful in. I manage a portfolio of MTRs here and have had good returns
- 1wJordan RayBusiness MemberReal Estate Agent · Memphis, TN · Member since 2023 · 623 posts · 321 votes
Quote from @Erich M.:
Hi All,
I’m new to the Bigger Pockets community and excited to invest in my 1st out of state investment property!
I’m specifically looking at markets where I can generate a decent amount of cash flow (annual cash on cash return of 8-10%).
Currently looking in the TX/DFW area in cities like Princeton, Sherman etc. Open to exploring other States/Areas as well.
Has anyone purchased investment properties in the DFW area and received positive cash flow? My concerns are the high property taxes rates and a fairly competitive rental market due to supply.
Would appreciate any feedback the community could offer 😀 Thank you and wishing everyone a safe and relaxing long weekend!
Erich
Welcome to BiggerPockets! I’d definitely keep researching DFW if it fits your investment goals, but I wouldn’t be afraid to compare it against other markets before deciding where to put your money. Property taxes, insurance, purchase price, rental competition, and realistic rents can dramatically change that 8–10% cash-on-cash return once you underwrite everything. It’s perfectly fine to learn several markets initially and compare the opportunities, but once you find one that aligns with what you’re trying to accomplish, I’d hone in on that market, become an expert at it, build your team and portfolio there, and expand later. I’m an investor and agent in Memphis, and if cash flow is one of your primary goals, I'd recommend adding Memphis to your research. You can still find properties that meet or exceed the 1% rule while also getting appreciation over time when you buy quality assets in the right neighborhoods. If you're interested in BRRRR/value-add opportunities, we also have local hard money lenders that can finance 100% of the purchase and 100% of the rehab, with many investors getting into deals with around $10,000 out of pocket before refinancing into long-term financing. Whatever market you choose, get really comfortable analyzing rents, ARVs, rehab costs, taxes, insurance, vacancy, maintenance, management, and market trends. Then build a boots-on-the-ground team with an investor-friendly agent who also owns rentals, a strong property manager, a reliable general contractor, and good hard money and DSCR lending contacts. Your 8–10% target is a great starting point for defining your buy box; now it's about finding the market and properties where you can realistically achieve it. Feel free to reach out, talk soon!
Jordan Ray - eXp Realty5110 Reviews - Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes1w
Erich, I have a few out of state investor clients and over the years I have most certainly been exposed to the dos and don'ts as well as I have worked in Hard Money for 5+ years so I know that playing field as well. I'd be happy to hop on a call and answer any questions you may have.
- 1wRudy TaghiPro MemberRealtor · Los Angeles California · Member since 2018 · 11 posts · 3 votes
Hi Erich, I saw your post about looking at DFW for your first out-of-state investment. I'm in California too and work with investment buyers, so your post caught my attention. Are you mainly focused on cash flow, or are you also weighing appreciation and long-term equity growth? I have been actively investing out of CA ever since started back in 2018. I have a STR - SFR in Fort Worth actually. Other than the COVID time (we switched to LTR) it has been positive cash flowing. I got creative on financing it. It is super important to get a good/ creative loan unique to your predicaments aside of finding a good opportunity. It was rather scary to my spouse and I at first. Not anymore though!
- 1wKyle MccawBusiness MemberProperty Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
I’m in DFW and would be careful underwriting an 8–10% cash-on-cash return based on the spreadsheet alone. Sherman can look attractive because of the lower acquisition prices and there is real economic growth coming from TI and the semiconductor industry, but much of the housing stock is older—roughly half of the inventory was built before 1980.
That older inventory can produce a better-looking cap rate, but deferred CapEx, HVAC, plumbing, electrical, foundations, and ongoing maintenance can eat that perceived yield pretty quickly. Sherman rents have also softened recently, so I would underwrite today's rent, not projected rent growth.
Princeton is almost the opposite problem: much newer housing, but tremendous new construction means your rental is competing against builders and other investor-owned homes, and values are down about 10% year over year.
In either market, I'd underwrite property taxes, insurance, vacancy, management, maintenance and CapEx before deciding you really have an 8–10% return. A newer house at a slightly lower projected yield can easily outperform an older "cash-flow" property once you own both for five years.
McCaw Property Management4.4900 Reviews - 1wJames JonesPro MemberInvestor · Collierville, TN 38017 · Member since 2017 · 585 posts · 443 votes
Erich - Memphis operator, twenty-two years, few hundred doors, and I have no dog in the DFW fight. But I want to point at something, because I think you already answered your own question and haven't noticed.
You named two concerns: high property taxes and a competitive rental market from supply. Those aren't side risks to your plan. They are the two things that most directly destroy cash-on-cash return, and in the specific towns you named they're both structural rather than temporary.
Taxes first, because it's the one people underweight. Property tax is not a line item, it's a permanent haircut on your yield that compounds against you as assessments rise. A two-percent-plus effective rate versus a one-percent market is not a small difference - on a $300K house it's roughly $3,000 a year of pure spread, forever, before you've paid for anything that improves the property. Run your own numbers, but do it as a percentage of gross rent rather than as a dollar figure. That's where it gets uncomfortable.
Now supply, and this is the sharper one. Princeton and Sherman are new-construction growth corridors. That means your competition for tenants isn't the other landlord down the street - it's a builder with unsold inventory who would rather lease a house than carry it, and who can offer a brand new home with a warranty and a concession. You cannot out-position that with a resale, and it caps your rent growth for as long as they're still building. Rent stagnation plus rising assessments is precisely the combination that turns a projected 9 percent into a realized 4.
THE TRADE NOBODY TELLS FIRST-TIME OUT-OF-STATE BUYERS
8 to 10 percent cash-on-cash is achievable. It just isn't available in easy markets, and that's not an accident. In a growing, high-tax, heavily-built exurb, everyone can see the opportunity and the yield gets competed away. The places where that return still exists are places where the OPERATING problem is harder - older housing stock, tenant bases that need real screening, contractors who need supervision, neighborhoods where being wrong by a few blocks matters. The yield isn't compensation for risk in the abstract. It's compensation for work.
So the real question isn't which market. It's which problem you'd rather own. A newer house in a growth suburb at a 5 percent return is a fine asset that mostly manages itself. A 9 percent return in a cheaper metro is a small business, and it will behave like one. Both are legitimate. Picking the second one and expecting the first one's workload is how people from expensive coastal markets get hurt buying cheap houses.
Two practical things before you buy anywhere, and they cost you nothing. Get an insurance quote on a specific address BEFORE you finish underwriting, not after - insurance has moved enough in the last three years that it breaks deals that penciled on last year's assumptions, and it's the number most spreadsheets still carry as a guess. And interview property managers before you pick the market, not after you own something. If you can't find a manager you'd trust in a market, that market isn't available to you no matter what the numbers say, and finding that out in week one is free.
Happy to look at a real address in any market you're considering and tell you what I'd worry about - including the ones I don't operate in. The failure modes are the same everywhere and I've seen most of them.
- 1wBradley BuxtonBusiness MemberReal Estate Agent · NV · Member since 2023 · 1k+ posts · 710 votes
The easy solution is to buy all cash and you will be best position to cash flow. I assume that is not an option so looking at the entire picture. Where do you live? Did you factor in travel costs? Build in a savings for bad tradesmen, evictions etc. There are lots of markets to invest. One factor that is hard to control is property taxes, TX is not so friendly. If you know the market well and you can acquire and manage a property cheaper you might have an advantage. TX tends to have inventory creep meaning there is a new house 5 miles away that is nicer than yours and can rent for the same. Buying in your local market to start is generally the path that offer the lowest risk. Look at states with low property taxes, population growth, economic diversification, and limited housing supply. Consider your tenant profile, students, professionals, etc... lastly what is your time and energy capital to go to a market build your team.
- 1wJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 887 votes
Hey @Erich M. ! Welcome to BiggerPockets! Your concerns with DFW are definitely worth considering. Property taxes, insurance, and increasing rental supply can make it challenging to hit an 8–10% CoC return, especially when you're underwriting conservatively.
For a first out-of-state investment, I'd compare several markets rather than limiting yourself to DFW. Look closely at the full expense picture, realistic rents, vacancy, maintenance, CapEx, and property management before deciding where the numbers work best.
I’m a real estate agent based in Memphis, TN, and I work with out-of-state investors building long-term rental portfolios. Memphis is one market I’d encourage you to research if cash flow and a lower entry point are priorities.
If you ever want to explore Memphis, compare numbers, or talk through what the market looks like for an out-of-state investor, I’d be happy to connect and help. Best of luck with your first investment!
- 1wJosh HandlerPro MemberContractor · Memphis, TN · Member since 2026 · 48 posts · 54 votes
Erich, I'm going to give you the one piece of this nobody has covered, and I'm deliberately not going to pitch you a market. Disclosure first: I run a construction company in Memphis, and James Jones who posted above is my partner, so count us as one voice rather than two. I don't operate in Texas and have nothing to sell you there.
Here's what I'd be worried about in your position, sitting in Oakland.
Every number in your spreadsheet is checkable from your desk except one. Taxes you can look up. Insurance you can get quoted, and James is right that you should do it before you finish underwriting rather than after. Rents you can comp. But condition you cannot check from Oakland, and condition is the variable with the widest error bar by a wide margin. A house that needs 8,000 and a house that needs 40,000 look identical in listing photos, and the gap between those two numbers is your entire first year of return and then some.
Kyle made the point that roughly half of Sherman's stock is pre-1980. Here's what that means physically rather than statistically. Pre-1980 in North Texas means slab on grade sitting on expansive clay, and that soil moves with moisture more than almost anywhere in the country. When a slab moves, the thing that breaks is the drain line underneath it, because cast iron doesn't flex. So the failure you're exposed to isn't cosmetic and it isn't even really the foundation, it's a plumbing repair that requires opening concrete to reach. That is the most expensive category of surprise available in that housing stock and it is completely invisible in every photo, every inspection summary that says "foundation appears serviceable," and every spreadsheet in this thread including yours.
The good news is that Texas hands you the exact tool to solve this and almost no first-time buyer uses it correctly. You get an option period. It's a paid, unrestricted right to walk. Most people spend it on a general inspection and a negotiation over a GFCI. What I'd do with it on any pre-1980 slab house:
Get a static or hydrostatic test on the sewer line under the slab. This is the single highest-value few hundred dollars you will spend and it either clears the biggest risk or hands you a walk-away.
Get a foundation company out separately from the general inspector. Generalists say "monitor it." You want somebody who prices repairs to tell you what they'd charge, because that's a number and "monitor it" isn't.
Get a contractor, not an inspector, to walk it and write you a line-item scope of what it actually takes to make it rent-ready. An inspection report tells you what's wrong. A scope tells you what it costs, and those are very different documents. Pay for it if you have to. A few hundred dollars to convert your biggest unknown into a number is the best-value spend in the whole transaction.
One broader thing, offered as a contractor rather than as anybody's competition. Several people here have now named several markets, and most of us get paid in the one we named, myself included if you'd come asking about mine. That doesn't make anyone dishonest, it just means the advice is structurally tilted. The test I'd apply to any of us is whether the person is willing to tell you something that costs them. So here's mine: whatever market you pick, the first deal matters much less than you think, and the thing that will actually determine whether you're still doing this in three years is whether you built a reserve and whether you have somebody local who will tell you the truth about a house before you own it. Not which metro you chose.
Good luck with it. Ask the condition question everywhere and you'll be ahead of most first-time out-of-state buyers regardless of where you land.
- Real Estate Broker · Member since 2024 · 125 posts · 60 votes6d
@Erich M. Your DFW tax + supply concerns are the yield killers, not side notes. 8-10% CoC on a first OOS buy is doable, but usually not in easy growth exurbs where builders compete for tenants. Underwrite today's rent, get an insurance quote before you finish the sheet, and interview PM before you pick the market. If the operating problem is too light, the yield usually is too. Are you optimizing for true cash flow after 8-10% PM + reserves, or a cleaner Class B hold at a lower CoC?
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