First Time Buyer - Where do I start? (Out-of-State)

[Hana Bae]

Hi BP Community -  I want to buy my first property this year or early next year but I am very new to the game. I've been listening to various podcasts and doing my research.. I am going to start reading some books as well, but I am hoping to get some advice!

Some info about me: I live in California and am looking to buy something out-of-state as property prices here are out of my reach. Being an out-of-state investor, I am looking for 2-4 unit homes that are turnkey (if reasonably priced) or very close to it that can produce cash flow. I am looking at properties less than $200K, ideally less than $100K dependent on city/state, with a 20% down payment. 

1. How did you choose which city/state?  I have a current list going but can't seem to narrow it down! Should I keep my list open and wait for the right deal to come up or should I choose a city/state then look there?

2. I prefer properties that have current tenants so I can create cash flow from Day 1. This is assuming rent is on par with the market.. What is your preference? 

3. Feeding from the Question2.. how do you know if a city is a strong rental market? I'm terrified that I will buy a vacant property and I won't be able to fill it within a month/2 months max. 

4. I've been using Trulia for their crime map, Rentometer and Craigslist to estimate rent in the area, colleges and universities to help determine popularity.. what else should I be looking at? How do I find information regarding overall city growth - job market, population growth, etc? 

5. Is visiting your property (I'm out-of-state) prior to buying crucial? For any out-of-state investors here who can provide some insight, if you have a property manager, do you ever have to go visit your property?

6. Any other tips for a first time out-of-state buyer? Any good resources you recommend?

Thank you so much!

[James Wise]

Originally posted by @Hana Bae:

Hi BP Community -  I want to buy my first property this year or early next year but I am very new to the game. I've been listening to various podcasts and doing my research.. I am going to start reading some books as well, but I am hoping to get some advice!

Some info about me: I live in California and am looking to buy something out-of-state as property prices here are out of my reach. Being an out-of-state investor, I am looking for 2-4 unit homes that are turnkey (if reasonably priced) or very close to it that can produce cash flow. I am looking at properties less than $200K, ideally less than $100K dependent on city/state, with a 20% down payment. 

1. How did you choose which city/state?  I have a current list going but can't seem to narrow it down! Should I keep my list open and wait for the right deal to come up or should I choose a city/state then look there?

2. I prefer properties that have current tenants so I can create cash flow from Day 1. This is assuming rent is on par with the market.. What is your preference? 

3. Feeding from the Question2.. how do you know if a city is a strong rental market? I'm terrified that I will buy a vacant property and I won't be able to fill it within a month/2 months max. 

4. I've been using Trulia for their crime map, Rentometer and Craigslist to estimate rent in the area, colleges and universities to help determine popularity.. what else should I be looking at? How do I find information regarding overall city growth - job market, population growth, etc? 

5. Is visiting your property (I'm out-of-state) prior to buying crucial? For any out-of-state investors here who can provide some insight, if you have a property manager, do you ever have to go visit your property?

6. Any other tips for a first time out-of-state buyer? Any good resources you recommend?

Thank you so much!

 Tons of out of state / turnkey markets out there. Many are well represented by sellers & turnkey operators here on BiggerPockets. 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.