Choosing an OOS Market

Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes

Hello everyone,

I'm a young aspiring real estate investor looking to complete my first deal! At this point I am considering both options (in state & out of state) investing and am trying to weigh out my options on what might be a better fit. Being located in San Diego and not having much capital I am looking at possibly getting started in a cheaper market somewhere else and going that route.

As I start to consider this I was wondering if anyone knew of helpful ways of choosing which market to get my feet wet in flipping/BRRRR'ing. I know this question is very broad since each market depends on so many personal factors about who you are as an investor but I have been having a hard time finding one to even consider to focus on. Right now I have been using a helpful site: areavibes.com to narrow down my search a bit and my criteria has been this..

Cheap (about 60k PP looking at my capital for a down payment & rehab)
Good employment score
Good housing score
Low crime rate

This has helped me find a few cities to research but I am still unsure of which one is a good choice. Does anyone have any recommendations of where to look/what to do when trying to choose which market to hone in on? Also does anyone have any specific markets that they recommend I check out and begin to analyze deals & piece together a team to help me land my first deal?

Anything helps,

Cheers!

2 Reply

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James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

Originally posted by @Corben Briggs:

Hello everyone,

Cheap (about 60k PP looking at my capital for a down payment & rehab)
Good employment score
Good housing score
Low crime rate

Anything helps,

Cheers!

The only market you should attempt to do a flip in is your own. There is almost a 0% chance of success of you doing flips in another market successfully right now. Reason being is you are unfamiliar with the other market & you'll need to hire other people to do all the work for you. Whenever you're doing a business transaction it's important to look at it from all angles. We all understand the value we are receiving from the businesses we are patronizing right? In the case of a grocery store they are providing us with needed groceries like Milk. An auto-shop is providing us with much needed Oil Changes. In exchange for the value we received in the products like Milk & an Oil Change the value the businesses receives from us is enough money to cover their costs + a healthy profit.

Now let's think about a business that provides house flipping services pragmatically. Why would a company do a flip for an out of state investor? What value could an out of state investor provide to a house flipping company? To successfully perform a flip the house flipping company needs to

Spend time & money marketing to distressed sellers to source a deal with a large profit potential
Estimate the ARV of the deal
Estimate the repair costs of the deal
Determine if there is enough profit in the deal to make sense for a flip
Negotiate a sales price with the owner of the property
Hire the General Contractor
Manage the renovation
Ensure the renovation is completed on time & on budget
Market & sell the property for the estimated ARV to ensure they hit the estimated profit margin

After successfully doing all of that why would they then hand over the majority of the profits to you? Let's say you needed to NET $30,000 to consider putting your money in a deal like that. After all you've got risk, you're putting money up to get a return on it. So say we found a deal that would have a spread of $40,000. Why would that company do all of that & give $30,000 of that $40,000 profit to you? Why wouldn't they just keep the entire $40,000 for themselves? What value as a buyer of that product are you providing to them? What value do they receive by setting up a business utilizing that model? The answer is pretty clear. No value is transferred from you to them. So any company utilizing that as a business model doesn't make any sense. As such you'll probably never find what you're looking for.

You could go out of state & invest in the turnkey model. That works for people in your position so long as you can save up enough money to cover down payments on the rental properties. Tons of turnkey markets out there with Real Estate that is dirt cheap compared to what you are used to. Many are well represented by sellers & turnkey operators here on BiggerPockets (myself included) The most popular markets are

Cleveland
Toledo
Memphis
Birmingham
KC
Indy
Detroit

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

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Jonathan Nixon
Rental Property Investor · Fort Lauderdale, FL · Member since 2018 · 86 posts · 33 votes
7y
Things I consider when evaluating a market.
External factors that provide jobs to pay for houses- Colleges, Big business, Population density, Vacation/Tourist attractions
Demographics that are generally balanced are places that I'm interested in. Within those cities neighborhoods that have high % of a specific demographic can be targeted as a niche market.
Weather: Cold weather can cause headaches with vacancies and even some differing repairs/expenses. Warmer weather = generally better (many others agree)
Crime-- usually there's better places within a city, but this I try to look at neighborhood by neighborhood vs overall city. Example: Somewhere like New Orleans the crime map is bad virtually everywhere, but it's a great housing market for many investors despite that.
I avoid places where cost of living is so low that studios and 2BR/1BA are going for 500$/mo or less.
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
7y
Originally posted by @Corben Briggs:
Hello everyone,
I'm a young aspiring real estate investor looking to complete my first deal! At this point I am considering both options (in state & out of state) investing and am trying to weigh out my options on what might be a better fit. Being located in San Diego and not having much capital I am looking at possibly getting started in a cheaper market somewhere else and going that route.
As I start to consider this I was wondering if anyone knew of helpful ways of choosing which market to get my feet wet in flipping/BRRRR'ing. I know this question is very broad since each market depends on so many personal factors about who you are as an investor but I have been having a hard time finding one to even consider to focus on. Right now I have been using a helpful site: areavibes.com to narrow down my search a bit and my criteria has been this..

Cheap (about 60k PP looking at my capital for a down payment & rehab)
Good employment score
Good housing score
Low crime rate
This has helped me find a few cities to research but I am still unsure of which one is a good choice. Does anyone have any recommendations of where to look/what to do when trying to choose which market to hone in on? Also does anyone have any specific markets that they recommend I check out and begin to analyze deals & piece together a team to help me land my first deal?
Anything helps,
Cheers!
No advice on where to go OOS as our OOS foray was not a homerun.
But have you considered a house hack? OOS 75% LTV versus house hack FHA 96.5% LTV. What does this mean for purchase power? The $60K property OOS at 75% LTV will cost you $15K (not including closing costs). That same $15K at 96.5% LTV will get you a $428K RE (not including closing costs). The trick is to find a 96.5% LTV RE that is not bleeding with negative cash flow. Value adds can help here but most take some capital. Try to be creative at finding value adds. Rehabs require little creativity and therefore everyone is looking for simple rehabs. In addition, rehabs require capital.
A recent value add that I saw, but this one required capital, consisted of subdividing a lot and rebuilding the original house (with a monster size house) and adding an ADU. Then to add another house and ADU on the subdivided lot. The purchase of one house (one land cost) he now has 4 houses.
A value add I recently considered was a residential/commercial mixed site. It had a residential duplex, a very small business building, and a larger 2 story business building. We considered converting the upstairs of the two story to communal living. 4 one BR units with 0.5 bath (maybe 0.75) and kitchenette. There would be common kitchen/eating area, a couple full size bathrooms, and a larger social space,
These are examples of creative value adds but not ones appropriate for you. You would need to find a value add that meets your personal constraints.
Good luck
1 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y
I always think it's a million times easier to just ask around for market recommendations and start there, versus trying to find detailed info/stats on your own. That's like the blind leading the blind and does nothing for narrowing down options.
Old article, but ways to find markets to look into-
https://www.biggerpockets.com/renewsblog/out-of-st...
So $60k, is that with or without rehab? It will be tough to find a good property that is already rehabbed for that, but not undoable. But sounds like you might be considering rehabbing? So that would be in addition to the $60k price point?
2 Reply
Corben Briggs
OP
Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes
7y
Originally posted by @Ali Boone:

I always think it's a million times easier to just ask around for market recommendations and start there, versus trying to find detailed info/stats on your own. That's like the blind leading the blind and does nothing for narrowing down options.
Old article, but ways to find markets to look into-
https://www.biggerpockets.com/renewsblog/out-of-st...
So $60k, is that with or without rehab? It will be tough to find a good property that is already rehabbed for that, but not undoable. But sounds like you might be considering rehabbing? So that would be in addition to the $60k price point?
Hi Ali!
Yes you're right I am considering rehabbing but right now I would be looking at a max of about 70k with including closing costs & rehab work. Please correct me if I'm off but I am around 10k-15k capital right now. I was hoping for a cheaper house (40k-50k PP with rehab/closing costs of 10k-20k total) Nothing big just want to start of with something small to gain the experience and hopefully a little bit of capital to repeat!
Also I appreciate you sharing this article with me! I made this thread in hopes that I would also receive recommendations from successful investors that may be able to understand my current situation who know of cheaper markets for me to look into as well as places to find them myself!
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y
Originally posted by @Corben Briggs:

Originally posted by @Ali Boone:
I always think it's a million times easier to just ask around for market recommendations and start there, versus trying to find detailed info/stats on your own. That's like the blind leading the blind and does nothing for narrowing down options.
Old article, but ways to find markets to look into-
https://www.biggerpockets.com/renewsblog/out-of-st...
So $60k, is that with or without rehab? It will be tough to find a good property that is already rehabbed for that, but not undoable. But sounds like you might be considering rehabbing? So that would be in addition to the $60k price point?
Hi Ali!
Yes you're right I am considering rehabbing but right now I would be looking at a max of about 70k with including closing costs & rehab work. Please correct me if I'm off but I am around 10k-15k capital right now. I was hoping for a cheaper house (40k-50k PP with rehab/closing costs of 10k-20k total) Nothing big just want to start of with something small to gain the experience and hopefully a little bit of capital to repeat!
Also I appreciate you sharing this article with me! I made this thread in hopes that I would also receive recommendations from successful investors that may be able to understand my current situation who know of cheaper markets for me to look into as well as places to find them myself!
You're very welcome! Props to you for taking the time to explore and learn.
I assume with those numbers you are planning to finance both the property purchase and the rehab costs? I'm not sure how you will be able to make $10-15k work in this kind of scenario (one challenge will be finding a traditional lender to lend on a $40-50k property, and a distressed one at that, and even then you'd have to have 20% down since you won't be living in it). Do you have the details of the financing worked out? I don't flip or rehab so I don't know all the options for that.
The other last bit I'd say is- if you are taking on a low-income property, that is distressed, will be rehabbing it, and this is all happening long-distance... you are really diving into the deep end without floaties for your first investment! Not to say at all that it's not doable, but each of those factors by themselves increase the risk dramatically. So just be sure you really have a handle on what you are doing...find some advisors and mentors who can help...so you don't end up floating down the river without a paddle (so tempted to make a Bird Box reference here... :) )
1 Reply
Corben Briggs
OP
Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes
7y

You're very welcome! Props to you for taking the time to explore and learn.
I assume with those numbers you are planning to finance both the property purchase and the rehab costs? I'm not sure how you will be able to make $10-15k work in this kind of scenario (one challenge will be finding a traditional lender to lend on a $40-50k property, and a distressed one at that, and even then you'd have to have 20% down since you won't be living in it). Do you have the details of the financing worked out? I don't flip or rehab so I don't know all the options for that.
The other last bit I'd say is- if you are taking on a low-income property, that is distressed, will be rehabbing it, and this is all happening long-distance... you are really diving into the deep end without floaties for your first investment! Not to say at all that it's not doable, but each of those factors by themselves increase the risk dramatically. So just be sure you really have a handle on what you are doing...find some advisors and mentors who can help...so you don't end up floating down the river without a paddle (so tempted to make a Bird Box reference here... :) )
Yes, so I will most likely be looking into a hard money lender for two reasons. 1) because they are more prone to recognize a good deal than a traditional bank would and therefore I will have a higher chance of finding a way to finance the property and 2.) I can use them as good judgement since they will not want the risk themselves if it turns out not to be a good deal based on their perspective. I was looking for a finance option that would include the rehab costs in the loan as well.
I love the movie reference too! I understand this is going to be something that wont be easy however (again correct me if I am wrong) I think this may be the best option for me looking at my capital and the area that I am living. I am not looking for a crazy distressed property which is why I want to focus on one that could use some cosmetic/minor rehabbing with a 10-15k budget. I believe a rehab would be necessary rather than say a turnkey property because I would be able to add forced appreciation and later get it appraised for more & either flip it for profit or rent/refinance it allowing me to get back capital to reinvest in another property.
As far as Advisers/mentors go Bigger Pockets is a resource that I plan to really utilize throughout my venture :)
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Corben Briggs:
Hello everyone,
I'm a young aspiring real estate investor looking to complete my first deal! At this point I am considering both options (in state & out of state) investing and am trying to weigh out my options on what might be a better fit. Being located in San Diego and not having much capital I am looking at possibly getting started in a cheaper market somewhere else and going that route.
As I start to consider this I was wondering if anyone knew of helpful ways of choosing which market to get my feet wet in flipping/BRRRR'ing. I know this question is very broad since each market depends on so many personal factors about who you are as an investor but I have been having a hard time finding one to even consider to focus on. Right now I have been using a helpful site: areavibes.com to narrow down my search a bit and my criteria has been this..

Cheap (about 60k PP looking at my capital for a down payment & rehab)
Good employment score
Good housing score
Low crime rate
This has helped me find a few cities to research but I am still unsure of which one is a good choice. Does anyone have any recommendations of where to look/what to do when trying to choose which market to hone in on? Also does anyone have any specific markets that they recommend I check out and begin to analyze deals & piece together a team to help me land my first deal?
Anything helps,
Cheers!
The only market you should attempt to do a flip in is your own. There is almost a 0% chance of success of you doing flips in another market successfully right now. Reason being is you are unfamiliar with the other market & you'll need to hire other people to do all the work for you. Whenever you're doing a business transaction it's important to look at it from all angles. We all understand the value we are receiving from the businesses we are patronizing right? In the case of a grocery store they are providing us with needed groceries like Milk. An auto-shop is providing us with much needed Oil Changes. In exchange for the value we received in the products like Milk & an Oil Change the value the businesses receives from us is enough money to cover their costs + a healthy profit.
Now let's think about a business that provides house flipping services pragmatically. Why would a company do a flip for an out of state investor? What value could an out of state investor provide to a house flipping company? To successfully perform a flip the house flipping company needs to
- Spend time & money marketing to distressed sellers to source a deal with a large profit potential
- Estimate the ARV of the deal
- Estimate the repair costs of the deal
- Determine if there is enough profit in the deal to make sense for a flip
- Negotiate a sales price with the owner of the property
- Hire the General Contractor
- Manage the renovation
- Ensure the renovation is completed on time & on budget
- Market & sell the property for the estimated ARV to ensure they hit the estimated profit margin
After successfully doing all of that why would they then hand over the majority of the profits to you? Let's say you needed to NET $30,000 to consider putting your money in a deal like that. After all you've got risk, you're putting money up to get a return on it. So say we found a deal that would have a spread of $40,000. Why would that company do all of that & give $30,000 of that $40,000 profit to you? Why wouldn't they just keep the entire $40,000 for themselves? What value as a buyer of that product are you providing to them? What value do they receive by setting up a business utilizing that model? The answer is pretty clear. No value is transferred from you to them. So any company utilizing that as a business model doesn't make any sense. As such you'll probably never find what you're looking for.
You could go out of state & invest in the turnkey model. That works for people in your position so long as you can save up enough money to cover down payments on the rental properties. Tons of turnkey markets out there with Real Estate that is dirt cheap compared to what you are used to. Many are well represented by sellers & turnkey operators here on BiggerPockets (myself included) The most popular markets are
- Cleveland
- Toledo
- Memphis
- Birmingham
- KC
- Indy
- Detroit
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
3 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y
Originally posted by @Corben Briggs:

You're very welcome! Props to you for taking the time to explore and learn.
I assume with those numbers you are planning to finance both the property purchase and the rehab costs? I'm not sure how you will be able to make $10-15k work in this kind of scenario (one challenge will be finding a traditional lender to lend on a $40-50k property, and a distressed one at that, and even then you'd have to have 20% down since you won't be living in it). Do you have the details of the financing worked out? I don't flip or rehab so I don't know all the options for that.
The other last bit I'd say is- if you are taking on a low-income property, that is distressed, will be rehabbing it, and this is all happening long-distance... you are really diving into the deep end without floaties for your first investment! Not to say at all that it's not doable, but each of those factors by themselves increase the risk dramatically. So just be sure you really have a handle on what you are doing...find some advisors and mentors who can help...so you don't end up floating down the river without a paddle (so tempted to make a Bird Box reference here... :) )
Yes, so I will most likely be looking into a hard money lender for two reasons. 1) because they are more prone to recognize a good deal than a traditional bank would and therefore I will have a higher chance of finding a way to finance the property and 2.) I can use them as good judgement since they will not want the risk themselves if it turns out not to be a good deal based on their perspective. I was looking for a finance option that would include the rehab costs in the loan as well.
I love the movie reference too! I understand this is going to be something that wont be easy however (again correct me if I am wrong) I think this may be the best option for me looking at my capital and the area that I am living. I am not looking for a crazy distressed property which is why I want to focus on one that could use some cosmetic/minor rehabbing with a 10-15k budget. I believe a rehab would be necessary rather than say a turnkey property because I would be able to add forced appreciation and later get it appraised for more & either flip it for profit or rent/refinance it allowing me to get back capital to reinvest in another property.
As far as Advisers/mentors go Bigger Pockets is a resource that I plan to really utilize throughout my venture :)
Well just be sure as you use BiggerPockets as a resource that you still know who you are talking to on it. There is no checks and balances on here...really anyone can say anything they want. So don't trust just any information you read.
I think I mentioned her before, but I would definitely reach out to or look up @Lisa Phillips. She's got a major niche in the sub30k market and does a lot of what you are talking about doing. And she's legit. You just want to make sure you are getting help from proven sources.
Best of luck!
1 Reply
Corben Briggs
OP
Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes
7y
The only market you should attempt to do a flip in is your own. There is almost a 0% chance of success of you doing flips in another market successfully right now. Reason being is you are unfamiliar with the other market & you'll need to hire other people to do all the work for you. Whenever you're doing a business transaction it's important to look at it from all angles. We all understand the value we are receiving from the businesses we are patronizing right? In the case of a grocery store they are providing us with needed groceries like Milk. An auto-shop is providing us with much needed Oil Changes. In exchange for the value we received in the products like Milk & an Oil Change the value the businesses receives from us is enough money to cover their costs + a healthy profit.
Now let's think about a business that provides house flipping services pragmatically. Why would a company do a flip for an out of state investor? What value could an out of state investor provide to a house flipping company? To successfully perform a flip the house flipping company needs to

Spend time & money marketing to distressed sellers to source a deal with a large profit potential
Estimate the ARV of the deal
Estimate the repair costs of the deal
Determine if there is enough profit in the deal to make sense for a flip
Negotiate a sales price with the owner of the property
Hire the General Contractor
Manage the renovation
Ensure the renovation is completed on time & on budget
Market & sell the property for the estimated ARV to ensure they hit the estimated profit margin
After successfully doing all of that why would they then hand over the majority of the profits to you? Let's say you needed to NET $30,000 to consider putting your money in a deal like that. After all you've got risk, you're putting money up to get a return on it. So say we found a deal that would have a spread of $40,000. Why would that company do all of that & give $30,000 of that $40,000 profit to you? Why wouldn't they just keep the entire $40,000 for themselves? What value as a buyer of that product are you providing to them? What value do they receive by setting up a business utilizing that model? The answer is pretty clear. No value is transferred from you to them. So any company utilizing that as a business model doesn't make any sense. As such you'll probably never find what you're looking for.
You could go out of state & invest in the turnkey model. That works for people in your position so long as you can save up enough money to cover down payments on the rental properties. Tons of turnkey markets out there with Real Estate that is dirt cheap compared to what you are used to. Many are well represented by sellers & turnkey operators here on BiggerPockets (myself included) The most popular markets are

Cleveland
Toledo
Memphis
Birmingham
KC
Indy
Detroit
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
Hey James sorry for the late response as I have been out of town the last few days! I wanted to respond to you since I was very intrigued by some of the comments that you made. So you are saying that it is not possible for me to perform a rehab/flip investment anywhere outside of my local market? Not even by following the same strategies that @David Greene highlights in his book, "long distance real estate investing?
As of right now I am not looking for a house flipping company or an organization to actually do the flip for me I am focused on finding a market so that way I can set up a team to help me complete a flip myself. This would pertain to finding an investor friendly realtor, a reputable contractor, a reasonable lender, etc. I'm not sure if I am following you as if the deals makes sense why wouldn't someone be able to build a team that would be able to successfully/ethically perform a rehab in a different OOS market? For instance why would a realtor/seller care where the investor who purchases the property lives? As long as everyone benefits I dont see why living in a different market would have any influence aside from it being structured a little different (how they are paid, communication, contracts drafted/signed etc.)
I have thought about turn-key investments however I don't believe that will give me much experience at all considering I would most likely be buying it right before it hits the market. There doesn't seem to be any opportunity for forced appreciation there. Yes, there will be a significant less amount of risk but also a less returns. If i were to place all of my capital into a turn key investment it would be a decent amount of time before I am able to regain that liquid cash for another deal.
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Corben Briggs:
The only market you should attempt to do a flip in is your own. There is almost a 0% chance of success of you doing flips in another market successfully right now. Reason being is you are unfamiliar with the other market & you'll need to hire other people to do all the work for you. Whenever you're doing a business transaction it's important to look at it from all angles. We all understand the value we are receiving from the businesses we are patronizing right? In the case of a grocery store they are providing us with needed groceries like Milk. An auto-shop is providing us with much needed Oil Changes. In exchange for the value we received in the products like Milk & an Oil Change the value the businesses receives from us is enough money to cover their costs + a healthy profit.
Now let's think about a business that provides house flipping services pragmatically. Why would a company do a flip for an out of state investor? What value could an out of state investor provide to a house flipping company? To successfully perform a flip the house flipping company needs to

Spend time & money marketing to distressed sellers to source a deal with a large profit potential
Estimate the ARV of the deal
Estimate the repair costs of the deal
Determine if there is enough profit in the deal to make sense for a flip
Negotiate a sales price with the owner of the property
Hire the General Contractor
Manage the renovation
Ensure the renovation is completed on time & on budget
Market & sell the property for the estimated ARV to ensure they hit the estimated profit margin
After successfully doing all of that why would they then hand over the majority of the profits to you? Let's say you needed to NET $30,000 to consider putting your money in a deal like that. After all you've got risk, you're putting money up to get a return on it. So say we found a deal that would have a spread of $40,000. Why would that company do all of that & give $30,000 of that $40,000 profit to you? Why wouldn't they just keep the entire $40,000 for themselves? What value as a buyer of that product are you providing to them? What value do they receive by setting up a business utilizing that model? The answer is pretty clear. No value is transferred from you to them. So any company utilizing that as a business model doesn't make any sense. As such you'll probably never find what you're looking for.
You could go out of state & invest in the turnkey model. That works for people in your position so long as you can save up enough money to cover down payments on the rental properties. Tons of turnkey markets out there with Real Estate that is dirt cheap compared to what you are used to. Many are well represented by sellers & turnkey operators here on BiggerPockets (myself included) The most popular markets are

Cleveland
Toledo
Memphis
Birmingham
KC
Indy
Detroit
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
Hey James sorry for the late response as I have been out of town the last few days! I wanted to respond to you since I was very intrigued by some of the comments that you made. So you are saying that it is not possible for me to perform a rehab/flip investment anywhere outside of my local market? Not even by following the same strategies that @David Greene highlights in his book, "long distance real estate investing?
As of right now I am not looking for a house flipping company or an organization to actually do the flip for me I am focused on finding a market so that way I can set up a team to help me complete a flip myself. This would pertain to finding an investor friendly realtor, a reputable contractor, a reasonable lender, etc. I'm not sure if I am following you as if the deals makes sense why wouldn't someone be able to build a team that would be able to successfully/ethically perform a rehab in a different OOS market? For instance why would a realtor/seller care where the investor who purchases the property lives? As long as everyone benefits I dont see why living in a different market would have any influence aside from it being structured a little different (how they are paid, communication, contracts drafted/signed etc.)
I have thought about turn-key investments however I don't believe that will give me much experience at all considering I would most likely be buying it right before it hits the market. There doesn't seem to be any opportunity for forced appreciation there. Yes, there will be a significant less amount of risk but also a less returns. If i were to place all of my capital into a turn key investment it would be a decent amount of time before I am able to regain that liquid cash for another deal.
As mentioned in my original response why would a company do that for you? What do you bring to the table? What is the benefit to them for working with you in this capacity? Why would they do all the work while you retain the majority of the profit? Why wouldn't they just flip the house themselves? You are essentially asking someone to run the ball 99 yards & then toss it to you for the touchdown. Why?
0 Reply
Corben Briggs
OP
Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes
7y

As mentioned in my original response why would a company do that for you? What do you bring to the table? What is the benefit to them for working with you in this capacity? Why would they do all the work while you retain the majority of the profit? Why wouldn't they just flip the house themselves? You are essentially asking someone to run the ball 99 yards & then toss it to you for the touchdown. Why?
As I mentioned before I am not looking for a company that does all of this work for investors as a service. I am looking to build a team of people to help succeed in out of state investing myself. So to answer your questions, why would an agent help me find a distressed house with profitable investment potential? Because he/she makes commission off of the sale between myself and the seller. Why would a general contractor do the rehab work it requires to raise value before selling it at a higher price? Because that is there job and their company's livelihood.
Again I am not looking to work with one sole company to do all of these steps before letting me reap the profits at the end. I am looking to quarterback the entire operation with the help of my team to lead me to the end zone while funding the entire drive.
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Corben Briggs:

As mentioned in my original response why would a company do that for you? What do you bring to the table? What is the benefit to them for working with you in this capacity? Why would they do all the work while you retain the majority of the profit? Why wouldn't they just flip the house themselves? You are essentially asking someone to run the ball 99 yards & then toss it to you for the touchdown. Why?
As I mentioned before I am not looking for a company that does all of this work for investors as a service. I am looking to build a team of people to help succeed in out of state investing myself. So to answer your questions, why would an agent help me find a distressed house with profitable investment potential? Because he/she makes commission off of the sale between myself and the seller. Why would a general contractor do the rehab work it requires to raise value before selling it at a higher price? Because that is there job and their company's livelihood.
Again I am not looking to work with one sole company to do all of these steps before letting me reap the profits at the end. I am looking to quarterback the entire operation with the help of my team to lead me to the end zone while funding the entire drive.
Don't see it working for you my man. None of the people mentioned above are going to give you the time of day if they are any good at their jobs. You're brand new with no experience in the business & from another state so no experience in the market. Doesn't make any sense for them to spend time on you. Way to many moving parts need to fall into place for any of them to make any money. Essentially them working with you would be like a car salesman talking to 4 year olds about cars because eventually they will turn 16 & need to buy a car.
Don't start off in business with a broken plan. Set yourself up for success. Focus on another route. This one's a dog.
0 Reply
Wesley I.
Investor · San Diego, CA · Member since 2019 · 286 posts · 135 votes
7y
@Corben Briggs
I hear you. I’m in San Diego myself and am doing research on OOS investing. My advise to you is to just keep at it, it’s an uphill battle but just keep going.
Best of luck.
0 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
Actually many California towns away from coast is still affordable and cash flow. I suggest you find one < 2 hours away initially so you can manage and get the experience. The out of state in mid-west or south can be problematic. No appreciation in most places still affordable.
Not all property managers can take care of them as good as you. I would not want to file another state income tax if I can stay in the same state. Vegas is a popular place for California investors.
Sam Shueh
1 Reply
Bryan ZuetelPro Member
Attorney · Orange County, CA · Member since 2017 · 242 posts · 99 votes
7y
@Corben Briggs, if you want to stay in state, check out some areas in east and northeast San Diego County, parts of Riverside County, and Imperial County. If you want to go out of state but stay reasonably close, try Phoenix or Las Vegas. If you're willing to go anywhere in the country, check out the 2019 top markets from Realtor.com, Zillow, and other websites.
1 Reply
Corben Briggs
OP
Rental Property Investor · boston, MA · Member since 2018 · 48 posts · 12 votes
7y
Originally posted by @Bryan Zuetel:

@Corben Briggs, if you want to stay in state, check out some areas in east and northeast San Diego County, parts of Riverside County, and Imperial County. If you want to go out of state but stay reasonably close, try Phoenix or Las Vegas. If you're willing to go anywhere in the country, check out the 2019 top markets from Realtor.com, Zillow, and other websites.
Thanks Bryan! This is honesty very helpful. Short and to the point!
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