Out of state investing for fatFIRE?

[Ellie Narie]

I live in a state with high real estate prices where the cash on cash return isn't any good, it's more of an appreciation game here. My goal is to make 100k a year "passively" (or at least achieve financial independence). 

If I start investing say 40-60k a year into real estate in a low cost area (looking at Cleveland or Indianapolis), get a 20% cash on cash, it'll take me around 6-7 years to achieve that 100k yearly passive income. 

I would prefer to do my own research and use zillow to buy properties instead of turn-key companies, since I think the cash-on-cash would be much greater. I would use property management companies to manage the properties. 

Does anyone have experience with this type of goal? How do you settle on which market to buy in? I don't have any relatives or friends in any of the low cost markets. 

I have landlord experience in my own market and have been able to achieve good appreciation, but the little cash flow just doesn't make sense for my goals. 

[Corby Goade]

Quote from @Ellie Narie:

I live in a state with high real estate prices where the cash on cash return isn't any good, it's more of an appreciation game here. My goal is to make 100k a year "passively" (or at least achieve financial independence). 

If I start investing say 40-60k a year into real estate in a low cost area (looking at Cleveland or Indianapolis), get a 20% cash on cash, it'll take me around 6-7 years to achieve that 100k yearly passive income. 

I would prefer to do my own research and use zillow to buy properties instead of turn-key companies, since I think the cash-on-cash would be much greater. I would use property management companies to manage the properties. 

Does anyone have experience with this type of goal? How do you settle on which market to buy in? I don't have any relatives or friends in any of the low cost markets. 

I have landlord experience in my own market and have been able to achieve good appreciation, but the little cash flow just doesn't make sense for my goals. 

I live next door to you in Idaho and have lots of experience in markets like yours in Ashland. I'd suggest you rethink your strategy. Investing in apprecaiting markets will be much more difficult in the short term, but infinitely more profitable in the long term. There are really two types of ROI you'll see initially, depending on your market(appreciating VS cashflowing), as you've suggested, but the returns are likely different than you think they are. Here are the general highlights:

Low cost, cash flowing markets: Immediate cash flow. Usually lower quality tenants, higher vacancy rates, higher Capex, maintenance and turnover costs. Lower appreciation, rent increases usually track wth inflation, so over time, your ROI doesn't increase and equity doesn't provide you with leverage. 

Higher Cost, lower cash flowing markets: Opposite of the above in basically every way. More passive, higher quality tenants and holding costs. Rent increases are based on supply and demand and typically increase at a much higher rate than inflation, which means over time, your ROI increases exponentially. Appreciation is typically more aggressive and reliable over time, so as your value silently grows, you can leverage and scale your portolio much faster, and as your ROI grows exponentially across your portfolio, not ony will you likely achieve FIRE more quickly, but you'll create generational wealth.

I'm definitely biased because I've seen what this type of investing can do for my own family and have also seen so many investors pivot after seeing the reality of those high cash flow investments. 

One final thought- I'm defintely not suggsesting you invest in Oregon, WAY too tenant friendly, but there are markets out there that are landlord friendly and tick all of those other boxes. 

Best of luck!