Out of State Investing-- How to Start

Investor · Collierville, TN 38017 · Member since 2017 · 667 posts · 483 votes

2d

I'll give you the view from the other side of the table — I'm the local operator in Memphis that out-of-state investors hope to find.

Pick the market by the numbers, not vibes. My box: under $100K all-in, ARV $180K–$265K, 3BR Section 8 rents $1,395–$1,950, and it has to hit the 1% rule. Memphis ZIPs like 38109, 38111, 38114, and 38118 still pencil because prices are low and rents are real. If a market can't produce numbers like that, no tool fixes it.

Your PM instinct is right — for your first deal out of state, a good local manager is your whole operation. Interview them like a hire, not a vendor: how many units, average days to lease, do they self-perform maintenance.

One warning: deal flow is the real bottleneck, not money. A PM finds you renters, not deals. Get plugged into local wholesalers before you buy, and never put earnest money down on a deal you can't walk from.

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Mike PaolucciBusiness Member

Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 498 posts · 553 votes

1d

Quote from @Robert Nebel:

Hi everyone,

I am new to real estate, have been on BP for a few months, have been watching/listening to the youtube videos and podcasts. I'm looking for some guidance on where to start my out of state investing joruney.

I currently live in NYC and would rather not live in this area utilizing an FHA as prices can get expensive. So I am looking out of state and wondering where to begin with finding the right market for buy and hold long term investing. Is BP market finder tool up to date with accurate data? Are there other tools I should be utilizing?

Once I find the right market, I will most likely search for a good, local property management company (since this will be my first deal) and then get to analying properties on top of properties to try to find good deals in neighborhoods they are familiar with and have good knowledge of.

If you have any advice or can point me in the right direction, that would be very helpful and appreciated!

Welcome to BP @Robert Nebel

I was in a similar position back in 2020/2021 while living in San Francisco. Nothing made sense and landlord laws also didn't make sense either.

I'd recommend looking at the economics of various markets and see where things are growing both in population & local economy. What companies are actively investing in infrastructure and creating jobs in the market and how does it effect the long term outlook of the individual market.

Once you narrow down the market, figure out the strategy and start building out your team. You'll need investor focused realtors / lenders, property managers and contractors to help you build out the systems. When it comes to the realtor, I'd recommend connecting with ones that actively invest and own properties. There's a lot of realtors out there who don't own property or understand the economics & reality of investing in property.

Happy to answer any additional questions.

[email protected]614-892-9184

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Austin GoetzBusiness Member

Lender · Minneapolis, MN · Member since 2026 · 28 posts · 10 votes

1d

Running the numbers on investment financing is something you will want to do early on. Big difference between the FHA financing (down payment, rate, costs) compared to conventional investment property financing or DSCR financing. Conventional financing comes with a bit more paperwork upfront qualifying you based upon your employment and income keeping your DTI under 50%, but you can see better terms. DSCR financing has less paperwork and qualifies you on the rental income that property would generate, but rates and fees could be higher along with prepayment penalties.

Both are solid options and good to explore both avenues before starting searching for properties.

Happy to be a lending resource for you as you explore your out of state options. Feel free to reach out with any questions or to run through those numbers.

[email protected]952-797-2007

Magnolia Bank

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Christine Kankowski

Real Estate Broker · Temecula, CA · Member since 2014 · 994 posts · 783 votes

1d

I did a lot of research on the areas prior to even looking at houses. Looks at price point vs rent point, Unemployment, income level, Crime, etc. A lot of this can be found on bestplaces.net. From there, you can visit the areas and see what works for you, I like low crime, good schools and im' willing to pay a little premium for nicer areas over ones that have a lot of potential problems.

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Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

1d

Good work on identifying your current market/situation and evaluating different markets that you should look into @Robert Nebel

Tons of investors from NYC, LA and the bay area usually tend to buy real estate in the midwest because it is cheaper, land-lord friendly, and tech companies investing has boosted the economy.

You should do some research and find a good market that has good potential and connect with an investment realtor who can connect you with their team of contractors, lenders, and property managers.

They will also send you off-market and on-market deals that you can buy. Start with turnkey rentals then shift to the BRRRR model and you can recycle your capital and grow your portfolio. Eventually, do a 1031 exchange when you have enough units and exchange it for a large multi-family complex without paying capital gains.

[email protected]614-802-5698

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Dean HarrisBusiness Member

Real Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes

22h

@Robert Nebel Welcome to BP!

I work with OOS investors everyday to source cash flowing deals here in Memphis TN. I am seeing houses that rent for better than the 1% rule, occupied and cash flowing houses that are better than the 1% rule and I also have houses that need minimal repairs so you can place your own tenant if that's your strategy. Be sure to trust your source. We have tons of people tossing out "deals" so be sure to trust your source

I also host a Podcast where we discuss how to invest in Memphis, TN and talk all about deals and what strategies work best in Memphis. You can search it wherever you listen to podcast. You can watch us on Youtube by searching The Investor's Guide to Memphis Real Estate

Best of Luck to you as you get started and dont hesitate to reach out with any questions!

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Out of State Investing-- How to Start

Out of State Investing-- How to Start

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