Advice on out of state, multi-family, buy-and-hold properties

[Kevin Johnston]

Hi All

I'm very new to BP, and to real estate investing in general, so I've come to the forums for wisdom.

I live in California, which makes getting started in real estate rather difficult, and I'm looking at out of state markets to find buy-and-hold properties that I can rent out in more affordable range. The problem is, I don't even know where to start. So rather than shooting in the dark, I thought I'd ask for guidance.

I'm looking for an region where the median income is at least 3x the median rent prices, where less than 12% of the population is below the poverty line, and where the population growth over the last ten years exceeds 10%. Further, I don't want to buy in a flood zone, or in a high crime area.

Any suggestions on places to start? Or maybe places I can go to get this information?

Cheers!

[James Wise]

Originally posted by @Kevin Johnston:

Hi All

I'm very new to BP, and to real estate investing in general, so I've come to the forums for wisdom.

I live in California, which makes getting started in real estate rather difficult, and I'm looking at out of state markets to find buy-and-hold properties that I can rent out in more affordable range. The problem is, I don't even know where to start. So rather than shooting in the dark, I thought I'd ask for guidance.

I'm looking for an region where the median income is at least 3x the median rent prices, where less than 12% of the population is below the poverty line, and where the population growth over the last ten years exceeds 10%. Further, I don't want to buy in a flood zone, or in a high crime area.

Any suggestions on places to start? Or maybe places I can go to get this information?

Cheers!

Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cleveland, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

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.