First out of state investment: Alabama or Ohio?
Travis SummersPro Member
New to Real Estate · CA · Member since 2026 · 7 posts · 6 votesFirst out of state investment: Alabama or Ohio?
Most Popular Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votesHello @Travis Summers. I always get nervous when new investors say they want cash flow because... there isn't any 'cash flow' right now on long term rentals, in any market, for years and years and years. (Unless you ignore a lot of the expenses involved and just pretend there is... but I'd encourage you not to do that.) Any spreadsheet that shows you netting income in the first year (or first few years) is complete nonsense. Purchasing a rental and putting it into service is expensive, as you'll have thousands and thousands of dollars in costs and expenses - closing costs on the purchase, rent-ready costs, lease-up costs to get rented out, repairs, turnover.
I also think investing OOS below the median price point in any market is exceptionally difficult and much tougher than advertised. None of the agents or lenders you're working with, touting 'cash flow,' are going to take any responsibility if the going gets tough, or something was overlooked, or you have a $3000 tenant turnover in year 3 - that's all 100% going to be on you. If you're serious about this, my recommendation is always to travel to the market in person and do some of the tough work yourself in person setting up a network, getting to know a neighborhood, and looking at properties - and I don't mean two, I mean dozens.
Unfortunately, returns on non value add LTRs are very, very low right now. If you want easy cash flow, buy treasury bills. 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 in a place you've never been to is going to do anything for you. Hope this helps - happy to dialogue further.
Here's some light reading
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
18 Replies
- 1dDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 272 posts · 89 votes
Welcome, @Travis Summers ! For a first long-term rental—especially one managed from a distance—I would focus less on finding the “best” market and more on finding a market where the numbers work and you can build a dependable local team. Louisville may be a good fit, but compare it with any other market using the same criteria: job and population trends, neighborhood-level demand, taxes, insurance, expected repairs, realistic rents, vacancy, and long-term resale potential.
Your property manager will be one of the most important parts of the investment. Interview several before making an offer and ask about their neighborhood experience, tenant screening, leasing times, maintenance process, fees, communication standards, and the types of properties they would avoid. I would also have the manager review prospective properties and rent assumptions so you are not relying solely on an agent’s projections.
When every property starts looking the same, create a simple buy box and scorecard to force meaningful comparisons. Set limits for purchase price, neighborhood quality, age and condition, minimum cash flow after all expenses, cash reserves, and major systems such as the roof, HVAC, plumbing, and foundation. Underwrite conservatively, obtain independent inspections and repair estimates, and do not force a deal just to get started. A straightforward property with modest but durable numbers and a strong manager is often a better first purchase than a deal that looks exceptional on paper but depends on perfect assumptions.
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Divin Kanyama thank you so much for the timely reply, super helpful! It's hard to find a good team that is actually looking to steer you in a good direction and not just get your business!
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes1d
Happy to chat on KC ;)
- 1dRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Travis Summers:
How's it going everyone, I'm new to Bigger pockets and equally as new to investing. I'm looking for a long term rental primarily for cash flow (appreciation would be nice to). I've connected with a couple of real estate agents and lenders, some who manage properties as well. I guess my question is which market better serves a first time investor that is looking to have a property manager handle it once purchased? Also any other advice or tips would be greatly appreciated! I've also been in contact with a agent in Louisville who has been awesome. But after looking at all of the properties tirelessly they are all starting to look the same. I'm not looking to rush into anything, I just want to take the right steps to get into something that isn't a headache from the jump. Thank you!
Ohio is a solid market for first-time investors, but it does not really matter which market you choose as long as you can find a good Realtor, contractor, lender, and property manager.
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Remington Lyman true, thank you
- Rental Property Investor · Grapevine, TX · Member since 2020 · 136 posts · 52 votes1d
Have you looked in Oklahoma? OKC and Tulsa have low taxes, strong rents, and better appreciation numbers compared to Alabama. I buy in both OK and AL. Oklahoma has slightly higher taxes but you're gaining appreciation. I'd look into OK to see if that market is a good fit for you.
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Michael Ewers I have not! My out of state mentality had me convinced it would get wiped out by a tornado! Haha just kidding, I'll check it out though thank you for the response!
- 1dDiana KhanPro MemberAttorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 388 posts · 151 votes
Quote from @Travis Summers:
How's it going everyone, I'm new to Bigger pockets and equally as new to investing. I'm looking for a long term rental primarily for cash flow (appreciation would be nice to). I've connected with a couple of real estate agents and lenders, some who manage properties as well. I guess my question is which market better serves a first time investor that is looking to have a property manager handle it once purchased? Also any other advice or tips would be greatly appreciated! I've also been in contact with a agent in Louisville who has been awesome. But after looking at all of the properties tirelessly they are all starting to look the same. I'm not looking to rush into anything, I just want to take the right steps to get into something that isn't a headache from the jump. Thank you!
@Travis Summers, I think you’re asking the right question. For a first out of state rental, I would not focus only on whether Alabama or Ohio is the better market. I would look at where you can build a team you trust and make sure the property still works after you account for management, repairs, insurance, taxes, and the other costs that come with owning from a distance.
I’ve had investors come to me excited about a property because the numbers looked good, but once we looked more closely at the title, ownership, contracts, or the condition of the property, there were things they needed to deal with before moving forward. I’ve found that taking a little more time on the first deal can save a lot of headaches later.
I really like this topic because it connects closely to the real estate work I do with investors, especially the due diligence side. You’re right that finding people who are actually looking out for your interests can be difficult. Happy to stay connected, @Travis Summers, and I hope you find a first property that feels right instead of feeling rushed into one.
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Diana Khan id love to stay connected! I appreciate your response. What area are you in?
- 1dArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 921 votes
Quote from @Travis Summers:
How's it going everyone, I'm new to Bigger pockets and equally as new to investing. I'm looking for a long term rental primarily for cash flow (appreciation would be nice to). I've connected with a couple of real estate agents and lenders, some who manage properties as well. I guess my question is which market better serves a first time investor that is looking to have a property manager handle it once purchased? Also any other advice or tips would be greatly appreciated! I've also been in contact with a agent in Louisville who has been awesome. But after looking at all of the properties tirelessly they are all starting to look the same. I'm not looking to rush into anything, I just want to take the right steps to get into something that isn't a headache from the jump. Thank you!
I’d take the time to compare the actual numbers rather than picking a market based on hype. Since you’re already looking at the Midwest, I’d keep Ohio in the mix alongside Alabama and Louisville. For a first out-of-state deal, a strong PM and a solid local team matter as much as the property itself.
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Arman Ahmed definitely will take this into consideration. Thank you!
- New to Real Estate · CA · Member since 2026 · 7 posts · 6 votes1d
@Maurizio Pisciotta thank you for giving me insight on the navikoo's I'll check that out. I appreciate your information!
- 20hNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
Hello @Travis Summers. I always get nervous when new investors say they want cash flow because... there isn't any 'cash flow' right now on long term rentals, in any market, for years and years and years. (Unless you ignore a lot of the expenses involved and just pretend there is... but I'd encourage you not to do that.) Any spreadsheet that shows you netting income in the first year (or first few years) is complete nonsense. Purchasing a rental and putting it into service is expensive, as you'll have thousands and thousands of dollars in costs and expenses - closing costs on the purchase, rent-ready costs, lease-up costs to get rented out, repairs, turnover.
I also think investing OOS below the median price point in any market is exceptionally difficult and much tougher than advertised. None of the agents or lenders you're working with, touting 'cash flow,' are going to take any responsibility if the going gets tough, or something was overlooked, or you have a $3000 tenant turnover in year 3 - that's all 100% going to be on you. If you're serious about this, my recommendation is always to travel to the market in person and do some of the tough work yourself in person setting up a network, getting to know a neighborhood, and looking at properties - and I don't mean two, I mean dozens.
Unfortunately, returns on non value add LTRs are very, very low right now. If you want easy cash flow, buy treasury bills. 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 in a place you've never been to is going to do anything for you. Hope this helps - happy to dialogue further.
Here's some light reading
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 - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes15h
Both Alabama and Ohio offer good cash flow opportunities. One of the most popular cities in Ohio for cash flow is Cleveland. if you're looking at Cleveland, I recommend you read The Ultimate Guide to Grading Cleveland Neighborhoods. It's been used by investors for over 11 years now. Really helps you avoid mistakes and just buying cheap stuff off of Zillow with no context to why it's so cheap.
- Member since 2026 · 2 posts · 0 votes7h
I have a Triplex in Cleveland. Ohio can be a good market if the property is close to jobs or schools and you can find a good property manager. Dealing with bad property managers can really put a dent in the value proposition. Make sure to check out the luxury apartment builds happening in the area. There's a lot of section 8 demand in Ohio.
- 6hAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Good question. Find a good market in the midwest where your investments would make sense from both cashflow vs. appreciation.
You want a market that is tech driven, landlord friendly, and affordable. That will mean more jobs, more income, higher property prices, and better opportunity for your rental to perform better.
Any state in the midwest works. Find a major city and only invest there. Connect with a good investor-focused agent who is also an investor themselves. Have him connect you with his team of contractors, lenders, property managers. Go visit the market.
Your agent will send you good investment opportunities off-market and on-market. Ask for rent comps, sales comps, info on mechanicals, and have agent find out how far on the price you guys can go to make it make sense.
Get inspection/contractor walkthrough, speak to PM on rents, and that is all.
ReafCo | Ahmed Group 530 Reviews - 5hDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
A common issue, so Copy & Paste info 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 building a knowledgeable & trustworthy local team.
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/Market”.
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?
What do you think will happen if you rehab a Class D rental to Class A standards?
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/Market.”
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.
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