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Updated over 5 years ago, 05/12/2019
Out of State Investing and Markets
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.
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.
Turnkeys are a great way to earn passive income when you work a 9-5. They are also great for investing OOS as you do not need to do any of the heavy lifting.
Cleveland is a great place to invest. Been here my whole life, and it seems like there has never been a better time to buy. Lots of cool new projects going on around town.
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.
Turnkeys are a great way to earn passive income when you work a 9-5. They are also great for investing OOS as you do not need to do any of the heavy lifting.
Cleveland is a great place to invest. Been here my whole life, and it seems like there has never been a better time to buy. Lots of cool new projects going on around town.
I started buying turnkeys in 2011. From then for a few years after that, Atlanta, Dallas, Houston and Phoenix were all some of the best options. But over time, with prices all going up and investors flocking in, I don't recommend any of those cities anymore. Phoenix lost cash flow quite a few years ago and the others still have some but the returns are pretty squeezed. There's plenty of markets with higher cash flow out there. 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.
@Ali Boone
If your interested in KS MO I can get you in touch w my broker. I'm finding 10% + cash on cash returns w 15-18% projects IRR w 5 year hold.
I purchased 26 units in last 14 months and I’m under contract for 26 more...
Also have great property Mgt so it’s passive. Just pm me
Originally posted by @Jason Graves:
@Ali Boone
If your interested in KS MO I can get you in touch w my broker. I'm finding 10% + cash on cash returns w 15-18% projects IRR w 5 year hold.
I purchased 26 units in last 14 months and I’m under contract for 26 more...
Also have great property Mgt so it’s passive. Just pm me
Wowza. That's quite the scaling. Good for you. I currently don't deal with any properties outside of those offered by actual turnkey providers. No capacity to analyze that many on an individual basis.
Originally posted by @William Kim:
Low prices and high demand for rentals.
@William Kim, As @Ali Boone said.. Dallas, Houston, Phoenix, Atlanta were great investment market, unfortunately no more cash flow. OH cities doing good but not sure about those market in next recession. I did not see major employer moving to those area.
@Jason Graves, I heard KS is great market. Your progress in really impressive. Are you investing in MF or 26 SF? Can you please introduce me to your broker.
@Shital Thakkar great point about employment! Also, what's your exit strategy? I was looking in Memphis for a while but I decided against it because it seemed like your only option to sell it to another investor, and not on the retail market. That concerned me.
@Greg Junge, I am 100% agree with you about exit strategy. Memphis has very low % of ownership. That means only option is to sale it to another investor. Everything works in current market condition but considering down market in future... It is safe bet is to stay where population trends is up.
According to latest Census data, here are top 10 Metro...
@Shital Thakkar Thanks for posting this information. Living in Phoenix, I know that Maricopa County here is growing very rapidly and people are moving here in large numbers. Housing prices are still high and most SFH's won't pencil out, but if you can find a good value add MF opportunity, that's a good play right now.
Also, I'm looking into the Tampa and Orlando markets for OOS investing, because they too have god numbers when it comes to in migration, employment, etc. Are you investing in any areas with turnkey, or in cities from that list you posted?
@Shital Thakkar, I noticed the following about your list:
1. Not rustbelt/flyover areas
2. Properties are NOT $60k, they are usually much more.
The problem with MI, IN, OH, and the rest of the 'rustbelt' is that people are LEAVING there. Most of them are leaving for the places that you listed above.
The rustbelt is a pure cashflow play. There won't be much appreciation. Supply, demand, price. Supply gets larger, demand goes down, price goes down.
I believe that you are better off choosing one of the 10 places you listed above and go there. You will ALWAYS have a primary market for your SFR's that you won't have in 'flyover' country.
The minus is that if you buy in one of these 10 places, you better bring your checkbook to make it cashflow.
After all, no one keeps their properties 'forever'. Even if they think they will. Stuff happens, focus changes, lifestyle changes, etc.
@Greg Junge, i have investments in Dallas market and actively looking in Austin & Houston market.
@Alan Grobmeier, agree with your regarding rust belt and need higher cash for properties in this top 10 list.
@Jason Graves
I’m interested in kansas city area for a turnkey next month. I would like your broker info
The Midwest and the Rustbelt is where it's at! Prices here are so low, but rent keeps going up. Also, lots of companies are creating new jobs here.
Try looking at this list:
https://www.forbes.com/sites/ingowinzer/2019/01/07/2019-best-markets-for-real-estate-investments/
In my opinion (mostly based on reading BP forums for the past decade) the best markets for rental properties (turnkey or otherwise) are (in no particular order):
Indy
Cleveland and other smaller Ohio cities like Dayton, Toledo, Columbus
Kansas City
Jacksonville
Memphis - I get the exit strategy argument but there are some excellent operators here
Birmingham
Louisville - Not sure of any operators though
Charlotte
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Seems like the sweet spot is 65K - 125K across the board.
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To me it seems like Dallas, Houston, Atlanta, Denver and Vegas seem to be priced out of that sweet spot. ???
Just my opinions!
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.
Originally posted by @William Kim:
Phoenix hasn't had cash flow in years. Houston and Dallas kind of sort of have it, but it's gotten so low that I don't do anything there anymore. Memphis still has cash flow and good providers, but I've never liked the market so I don't do anything there. Atlanta still has some but the one turnkey provider there that I think has always had the best properties is incredibly difficult to work with...all to not get the highest returns anymore. I do work with turnkeys in other markets though. Reach out anytime and I can show you cash flows or whatever you want to see.
Given your criteria (100-200k in B/C neighborhoods), you can certainly find cash flowing deals in any of the markets you mentioned. But some will have more cash flow over others. I focus on CoC returns, but I've seen other investors who don't mind less returns as long as they are investing in A/B neighborhoods. I recommend first defining your goals and risk level and go from there. I invest in turnkeys myself so if you need some guidance don't hesitate to message me. Good luck!
@Shital Thakkar That's a good point about a major employer in OH. Still interested in Houston and Dallas. Any advice in looking there? Have you considered any city in NC?
@Ryan Mullin have you seen good signs in KC and Charlotte? I heard some good things about NC, but need to dig in some more.
@Jonathan Oh Thanks, Jonathan. I am pretty risk adverse/conservative, so iId preferably stay out of C class neighborhoods and want to be in markets that are stable and have projected growth. But I know with that comes higher property prices though I'm unsure if that prices me out (considering my range).
Between us and our investors, we're 450 doors deep in Indy.... Great market here!
We focus on turnkey in Kansas City and we have had great success in our market. Please reach out if you would like more information.
The most important factor is finding a good company to partner with in a strong market. Review their policies and check to see if they have good in-house property management. A good company in a strong market should be able to offer inventory with safe and consistent returns.
Feel free to reach out to me with any questions.