Out of State vs. Local for First Property

[Ben Nadeau]

Hey BP community, I'm at a stage in my learning process where I am ready to pull the trigger on my first investment property, pending current economic uncertainties but that is a post I've seen covered plenty already so we wont get into that! It'll be a single-family, long-term, buy and hold rental using BRRRR. In my analysis of local (Bend, OR) and a couple out of state markets, it is, as suspected, very clear that my local markets rent to price ratio is unfavorable (think $350k house rents for $1600). Flipping in my local market seems to be the most logical strategy but I'm aspiring for long-term holds.

I am moderately handy and want to stick local for my first deal to cut costs of the rehab and have the overall comfort of having this investment close by. Being able to manage the rehab, DIY when I can, cut out property management to start off, etc. are all enticing me to stay local. Local market does not have many fixer uppers hitting the market, but I need to search harder off-market. Best current opportunity... I recently found a potential deal in a town 45 mins away, $105k asking, complete rehab need estimated at $65k, ARV = $220k, estimated rent is between $1250-1350. Downfalls, it is small town that has had history of getting hit hard in recessions with high unemployment and decreased property values. Positive, Facebook and Apple have built data centers here in the last couple years bringing some higher paying jobs.

I have a potential boots on the ground partner in one of the out of state markets (Chattanooga, TN), and after market analysis I believe Chatt to be a great opportunity long-term. Rentals cash flow, there seems to be plenty of fixer upper properties, solid appreciation, the city has seen some tech coming in, etc. 

Anyways, I'm reaching out to see who has been in a similar situation (tough local market vs out of state) and what option you ended up taking? Would you take that same route if done again, what did you learn, is out of state investing not as daunting as it may seem at first? Thanks Everyone!

[Travis Turner]

@Ben Nadeau

Based on the 1% rule if your into that P-ville home for $170k amd should rent it for $1750.

However that town should have some real good appreciation as more people are getting priced out of your town and heading that direction.

I'm in the same boat (and state) as you and am looking out of state right now for my first investment. None of the areas around here make sense to invest with the current sales prices and rent.

Has Bend cracked down on the STR market there?

That almost seems like a better idea there with all the draws there (I was in Redmond last week)

The markets Im looking at have homes from $40-$80k amd rent from $800-$1k per month.

Even though they aren't A class properties those numbers make more sense then buying a fixer here for $90k that needs $60k worth of work that rents for &1k.

Good luck