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Updated over 6 years ago on . Most recent reply

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Michael Schaper
  • Phoenix, AZ
10
Votes |
9
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Should I choose to invest out of state?

Michael Schaper
  • Phoenix, AZ
Posted
I’m from Arizona and I’d like to invest in properties here, although from what I’ve read on BP, it seems like the best place to invest your money is the Midwest, specifically Texas. I am new and I have only spent the last few days analyzing properties although I don’t plan on purchasing anything until next year. All the properties I have seemed to analyze have been from Nextdoor and even when I price them at 20-30% less than the asking price they still don’t seem to even pass the 1% test, and CoC is very low. Now there are two things that could be the problem, either I’m looking at the wrong properties and analyzing them incorrectly, or most places in PHX just aren’t very good investments(too expensive for the rent) I’ve also calculated homes based on their mortgages and what the homeowner’s are renting them for and there is no way they aren’t losing money ($230-260k properties being rented for 1300-1400/ month) So my next thought was “where would be a better place to invest my money? I started reading and everyone raves about Texas. So I guess my question is, Would I be better off just waiting for an amazing deal in PHX(which would most likely be a BRRR sort of property, or investing somewhere like Texas where renting makes much more sense by the numbers. Or are there any PHX investors here that could tell me that there are real deals here in AZ and that I just haven’t taken enough time to know the market?

Most Popular Reply

User Stats

277
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269
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Matthew John
  • Rental Property Investor
  • Metro Detroit, MI
269
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277
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Matthew John
  • Rental Property Investor
  • Metro Detroit, MI
Replied

@Michael Schaper The Midwest is not Texas. As a general rule of thumb, the more expensive a market is, the more likely it won't cash flow. 

In the Midwest states, Michigan, Ohio, Indiana, Illinois, Wisconsin, Missouri, etc, there are houses you can find for under 100k and they will rent for ~$1000/month. These are the perfect opportunity for BRRRRs because you can acquire them for 30-50k, put 15-20k into them, and they're worth 85k-110k (at least in my market). 

If you're considering investing out of State and have money, I would find some experienced players in the market you're interested in and connect with them. Maybe become a Lender for them on a few deals and you will learn a TON about their market all while passively collecting interest checks. 

Texas is hot (literally), but it's not the Midwest. If you really like that State, then find a city where your ideal strategy works and connect with someone more experienced if you want to get your foot in the door.  

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