All Forum Posts by: Benjamin Ying

 If you're investing long term, then population growth, rental and appreciation growth, and good jobs is not to be overlooked. You basically have "Growing but no cash flow" or "Stagnant growth but good cash flow". Even the stagnant growth cities still tend to appreciate at par with inflation and see rent growth, so I wouldn't count those out. You can always invest in the A/B class areas in these "stagnant" markets where those mico areas are still rapidly growing and in demand.

Overall Ohio has a lot of options to choose from such as Columbus and Dayton/Cleveland.

Happy to discuss one on one.  We go coast to coast with the properties we manage.

@Benjamin Ying,

First off Congrats at making the decision to get started into REI and getting involved with BP. this is a great way to start.

As for your questions.  For OOS investing, one of the most important things to worry about is market.  With the investors I work with, finding a good growth markets in a state that is landlord friendly is the first step.  It is very important to find a market that has good population and job growth.  This will allow you to get in the way of obvious appreciation.  

The next most important thing to find is a good team.  You can do this by finding your own people to fill the positions or use a turnkey option.  I would say that it is very important to have a Property Manager for an OOS investment.  They are the ones protection your investment.  The other important thing that the investors I work with find is that having Boots On The Ground is very important.  This can help with pictures, video, or visits to the property. It will also insure that you are able to find the right submarkets in thew area that you are looking.  Being on the right street is important.   

Lastly, I would never recommend getting into an investment that does not cashflow.  This is the reason for the investment.  Appreciation is a good bonus for long term but the deal is not a good deal if the Cash on Cash return is not there. You will burn yourself out feeding the beast each month.  

I have found in the world that we live in today many of the problems of OOS investing are lessening.  Our world is getting smaller. 

Best of luck, and feel free to connect if you have more questions.

Hi Benjamin! Welcome to BP and I'd love to help answer some of your questions.

1. No, you do not need to sacrifice cash flow for good macros. You can get both in a real estate market. For example, here in Columbus Ohio, you have amazing macros (population growth, job growth, and companies moving and developing here like Intel headquarters, Amazon, FB, Google, Nationwide, and recently Anduril AND you can still find positive cash flow and the 1% rule here PLUS there's AMAZING appreciation potential.

2. You would definitely have an advantage investing in a market if you already know people there but there's tons of investors who invest in markets they have never visited or seen before. So don't be confined to just areas/markets that you know people in! If you have a great investor agent, he'll be able to help with finding you personalized deals, helping you learn good/bad neighborhoods, estimating renovations/scope of work, setting you up with his team, etc.

3. Definitely go with a PM as an OOS investor. You do not want to be taking 2AM calls at night about a clogged toilet from across the US. You can still get positive cash flow even accounting for a PM - tons of my clients do as well!

4. No, it's not. If it's a deal that is in a very very desirable location and has tons of built in equity and appreciation, I would be totally good with negative cash flow for Y1 and Y2. It is really situational and depends on your resources.

Happy to connect and answer any questions you have! :)

@Benjamin Ying

1) Waste of time unless you are buying hundreds of units.

2) Any option to minimize risk is usually a good idea.

3) Always better to visit an area before investing. You may not need to visit each property you buy in that area though.

4) Unless you are buying Class A turnkey, you should have a PMC.

5) See below copy & paste info:

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Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed.

DM us if you’d like to discuss this logical approach in greater detail!

Welcome! Exciting times ahead in your real estate journey. Here’s a quick take:

1. Macro Trends vs. 1% Rule
The 1% rule is handy but not a dealbreaker if macro trends like population and job growth are strong. Focus on overall returns.

2. Provo Connections
Using your friend’s connections in Provo is smart—it lowers risk. Just make sure the numbers still work for your goals.

3. Expanding Metros
Direct flights help, but don’t skip great markets like Columbus or Huntsville if they offer better returns. Strong local teams can bridge the gap.

4. Property Management
For OOS, a property manager is a good idea, especially at first. It’s a cost, but it saves time and headaches.

5. Positive Cash Flow
Immediate cash flow isn’t always possible in growth markets. Just plan for reserves if it takes a year or two to break even.

Take your time, do the research, and trust the process. Good luck—keep us posted!

I would suggest taking a looking at Milwaukee/ Wisconsin as well!

Benjamin-I think you're missing out if you don't look in Cincinnati-one of the strongest rental markets in the country.  I have been a real estate asset manager for 19 years and can attest that we are in full swing.  If you need assistance with such an acquisition please reach out to me.  

Hi Benjamin, 

The answers to your questions ultimately depend on your risk tolerance and investing goals. Purchasing a property that doesn’t meet the 1% rule can absolutely be justified if you’re focused on long-term appreciation, especially in strong growth markets like the ones you mentioned. Over time, rents and property values tend to increase, improving overall returns. Regardless of the market, choosing a reliable property management company is crucial, as their performance can significantly impact your investment’s success.

Good luck!

@Benjamin Ying

1. I would start by looking at the macro trends you mentioned then look at the markets that pop out and compare them side by side and see which best aligns with what your looking for 

2. If that market fits what you are looking for and it's closer then I would invest there, but if it doesn't fit what your looking for from a metric standpoint I wouldn't just invest there because a buddy does. 

3.Being able to get a direct flight helps, but I wouldn't make a decision on a market based on that

4. Yes. Having a PM out of state is important 

5. It depends on the area. If you are investing in an A location in Columbus for example it's not going to cashflow. It's a lot of owner-occupants and those areas usually have investors investing in them because they are stable with access to the best tenants. Those areas will eventually cashflow as you pay down debt but definitely not in year 1