​Newbie Looking To Invest Out Of State

[Sunitha Rao]

Hello everyone!

I’m just starting my real estate journey and am very excited about meeting people on this platform!

I currently work in Boston and am looking to invest out of state because real estate is pretty darn expensive up here. My main focus is on 2-4 unit Class B multifamilies, with ideally 2 bed/1bath units in Indianapolis, and the strategy would be to buy and hold. Given that I am new to the process, investing at a distance, and am working a demanding full time job while balancing the demands of grad school,  I am hoping to find properties via turnkey – as long as that option is feasible from a cash flow perspective – or properties that only need light rehab, updated paint and flooring.

I’m currently working on narrowing down neighborhoods that would make for good investments, so if anyone has recommendations or experiences to share, I’m all ears! Lastly – if there are other metros that any of you feel are good cash flow opportunities with strong market fundamentals for out of state investors, I’d love to hear your thoughts.

Thanks for your time!

-Suni

[Ali Boone]

Hey Suni! I live in LA and also invest out-of-state, and have primarily gone the turnkey route. 

Indy may have 2-4 unit MFRs that could cash flow, but I'm not sure as the turnkey providers haven't really offered them. That either means there aren't any that will cash flow or there aren't enough of them for the turnkey providers to pursue working with them. In my turnkey experience, the Midwest cities have been better for SFRs. Those SFRs have never been the highest cash-flow properties in the nation, but they tend to be extra sturdy, solid, consistent cash flow. So a lot of people like them. Plus there is a more suburban feel to the properties and a lot of people prefer those over urban feels.

Over the last few years, the only markets I've known to do well with turnkey MFRs are Chicago, Philly, and now Baltimore. At one time, Chicago and Philly were the MFR rockstars...both offering urban row house type of properties (but awesome ones), and Chicago had higher price-point ones while Philly was more economical (ex. triplex for $130k with high cash flow). Nowadays, there are still MFRs with the turnkey companies but not as many. I knew of a recent fourplex that just went under contract, but those are far and few between now. Duplexes are the most common.

Anyway, slight ramble. Recommendation-wise, some of that will depend on your budget. No question about it, Baltimore has the highest cash flow for turnkeys right now and with the best appreciation potential. But the way it's all structured, it requires a higher initial investment (that you get back with a refi). Plus Baltimore would be cool because you are out that way anyway, and Philly (if you aren't a Baltimore fan) is right there too. 

Not sure I gave you a ton to help, but feel free to reach out anytime and happy to chat more!