Out of State Investing and Markets

[William Kim]

I've been reading and receiving a lot of great advice/recommendations on BP about certain investment strategies and how to go about them.  One of the strategies that we are seriously considering and likely starting off with (have yet to purchase first investment property) is an out-of-state rental property (whether it be SF or multi).  As the preference is to continue working full-time with my current job, we are looking to find turnkey properties as we currently don't have the time to manage the property, don't have experience with any boots on the ground, and want to gain experience through working with the provider and the potential PM.  

In looking for a good deal, we are trying to determine a market that would be turnkey friendly and have cash-flowing opportunities (positive of course) with appreciation not necessary but icing on the cake.  This would be a long term hold/play.  In browsing the forums, I've been seeing cities thrown out here and there such as OKC, cities in OH (Cleveland, Dayton), Atlanta, Dallas and Houston.  Have also seen Phoenix.  

Has anyone had experience investing in these cities?  With turnkeys?  Or any other cities you would recommend?  And perhaps cities/areas of cities to stay away from?  We're looking to stay in the B/C class neighborhoods (preferably B) and maybe in the $100-200K range.  Would appreciate any feedback here!  Thanks in advance.  

[Alyssa Dyer]

Originally posted by @Ali Boone:

 OKC may have it but I don't know any turnkey providers out there to know much about it. 

Happy to chat if you want to message anytime.

I'm a bit biased since I live / work here but I am a huge fan of OKC's market. Good for cash flow. It's super steady. Not great for appreciation of course. 

Happy to help answer any questions for you guys or help if I can! 

[Ali Boone]

Originally posted by @Alyssa Dyer:

I'm a bit biased since I live / work here but I am a huge fan of OKC's market. Good for cash flow. It's super steady. Not great for appreciation of course. 

Happy to help answer any questions for you guys or help if I can! 

I'm not opposed to it at all. I just don't have any turnkey contacts there right now and that's all I work with.

[William Kim]

@Jeff Schechter Thanks for commenting. I hadn't thought about Indy too much. What kind of returns are you seeing there CoC or cash flow?

[William Kim]

@Nicholas Parish Thanks, Nicholas.  I'll certainly keep your company in mind.  How long have you guys been in business?

[William Kim]

@Alyssa Dyer Thanks, Alyssa.  What type of cash flow are you seeing around there?  How many properties do you have there? 

[Alyssa Dyer]

Originally posted by @Ali Boone:

Originally posted by @Alyssa Dyer:

I'm a bit biased since I live / work here but I am a huge fan of OKC's market. Good for cash flow. It's super steady. Not great for appreciation of course. 

Happy to help answer any questions for you guys or help if I can! 

I'm not opposed to it at all. I just don't have any turnkey contacts there right now and that's all I work with.

 Let’s chat!!

[Alyssa Dyer]

Originally posted by @William Kim:

@Alyssa Dyer Thanks, Alyssa.  What type of cash flow are you seeing around there?  How many properties do you have there? 

Totally depends on the property! Do you like A class? C class? 

Only about 10 doors for buy and hold.  

I could upload a couple proformas or my rent roll for you if that’s helpful?

[William Kim]

@Alyssa Dyer i like A/B class properties that cash flow.

[Alyssa Dyer]

Originally posted by @William Kim:

@Alyssa Dyer i like A/B class properties that cash flow.

 Typically b class can get about 1% rent to value. A class you’re really lucky to get that. Typically a little less. 

Does that help?

[Ryan Mullin]

https://www.forbes.com/sites/ellenparis/2019/04/29...

Just gonna leave this right here..  :)   

[Ariel Ben-David]

Hi @Jason Graves, would you be willing to connect and share your broker’s information?

[Lane Kawaoka]

@William Kim

90-120k is the sweet spot for cashflow. Stay above 900 a month rents.

[James Wise]

Originally posted by @William Kim:

I've been reading and receiving a lot of great advice/recommendations on BP about certain investment strategies and how to go about them.  One of the strategies that we are seriously considering and likely starting off with (have yet to purchase first investment property) is an out-of-state rental property (whether it be SF or multi).  As the preference is to continue working full-time with my current job, we are looking to find turnkey properties as we currently don't have the time to manage the property, don't have experience with any boots on the ground, and want to gain experience through working with the provider and the potential PM.  

In looking for a good deal, we are trying to determine a market that would be turnkey friendly and have cash-flowing opportunities (positive of course) with appreciation not necessary but icing on the cake.  This would be a long term hold/play.  In browsing the forums, I've been seeing cities thrown out here and there such as OKC, cities in OH (Cleveland, Dayton), Atlanta, Dallas and Houston.  Have also seen Phoenix.  

Has anyone had experience investing in these cities?  With turnkeys?  Or any other cities you would recommend?  And perhaps cities/areas of cities to stay away from?  We're looking to stay in the B/C class neighborhoods (preferably B) and maybe in the $100-200K range.  Would appreciate any feedback here!  Thanks in advance.  

WIlliam there are tons of 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.

[Marisa R.]

Originally posted by @Michael P.:

Rust belt will turn around eventually but you’ll have to hold through the next recession plus another 5-10 years.  But why not hold if it throws off good cash.

I have purchased 10 in Detroit in last 12 months, yes cashflow is good. Growth is happening, some areas are gentrifying. Bagley, East English Village, Redford, Fitgerald..... to name a few

I am watching prices rise

But let me assure you its not a walk in the park, you need to get it right for assets to perform